Purchase Agreement

Note Purchase Agreement

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RENAL CARE GROUP INC | National Nephrology Associates, Inc | J.P. Morgan Securities Inc. | RBC Dominion Securities Corporation

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Title: Purchase Agreement
Governing Law: New York Date: 4/16/2004
Industry: Healthcare Facilities Law Firm: Kaye Scholer LLP; Fried, Frank, Harris, Shriver & Jacobson; J.W. Childs Associates, L.P.

Purchase Agreement, Parties: renal care group inc , national nephrology associates inc , j.p. morgan securities inc. , rbc dominion securities corporation

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EXHIBIT 4.4

EXECUTION COPY

National Nephrology Associates, Inc.

and

The Guarantors named herein

$160,000,000

9% Senior Subordinated Notes due 2011

Purchase Agreement

dated October 16, 2003

Banc of America Securities LLC

J.P. Morgan Securities Inc.

RBC Dominion Securities Corporation

Harris Nesbitt Corp.

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Table of Contents

<TABLE>

<S> <C>

SECTION 1. Representations and Warranties.........................................................2

(a) No Registration Required........................................................................2

(b) No Integration of Offerings or General Solicitation.............................................3

(d) The Offering Memorandum and the Preliminary Offering Memorandum.................................3

(e) The Purchase Agreement..........................................................................4

(f) The Registration Rights Agreement and DTC Agreement.............................................4

(g) Authorization of the Securities and the Exchange Securities.....................................4

(h) Authorization of the Indenture..................................................................5

(i) Description of the Securities and the Indenture.................................................5

(j) No Material Adverse Change......................................................................5

(k) Independent Accountants.........................................................................6

(l) Preparation of the Financial Statements.........................................................6

(m) Incorporation and Good Standing of the Company and its Subsidiaries.............................6

(n) Capitalization and Other Capital Stock Matters..................................................7

(o) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required......7

(p) No Material Actions or Proceedings..............................................................8

(q) Intellectual Property Rights....................................................................9

(r) All Necessary Permits, etc......................................................................9

(s) Medicare/Medicaid Participation.................................................................9

(t) Other Healthcare Regulatory Matters............................................................10

(u) Title to Properties............................................................................11

(v) Tax Law Compliance.............................................................................12

(w) Company Not an "Investment Company"............................................................12

(x) Insurance......................................................................................12

(y) No Price Stabilization or Manipulation.........................................................12

(z) Solvency.......................................................................................12

(aa) No Unlawful Contributions or Other Payments....................................................13

(bb) MD&A...........................................................................................13

(cc) Company's Accounting System....................................................................13

(dd) Compliance with Environmental Laws.............................................................14

(ee) ERISA Compliance...............................................................................14

(ff) Guarantor Subsidiaries.........................................................................15

(gg) Credit Agreement...............................................................................15

(hh) Compliance with Regulation S...................................................................15

(ii) Taxes; Fees....................................................................................15

(jj) No Labor Disputes..............................................................................15

(kk) Minute Books and Records.......................................................................16

SECTION 2. Purchase, Sale and Delivery of the Securities.........................................16

(a) The Securities.................................................................................16

(b) The Closing Date...............................................................................16

(d) Delivery of Offering Memorandum to the Initial Purchasers......................................17

(e) Initial Purchasers as Qualified Institutional Buyers...........................................17

SECTION 3. Additional Covenants..................................................................17

(a) Initial Purchasers' Review of Proposed Amendments and Supplements..............................17

(b) Additional Information, Amendments and Supplements to the Offering Memorandum and Other

Securities Act Matters.........................................................................18

</TABLE>

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<TABLE>

<S> <C>

(d) Blue Sky Compliance............................................................................18

(e) The Depositary.................................................................................19

(f) Additional Issuer Information..................................................................19

(g) Agreement Not To Offer or Sell Additional Securities...........................................19

(h) No Integration of Offerings or General Solicitation............................................19

(i) Legended Securities............................................................................20

(j) PORTAL.........................................................................................20

SECTION 4. Payment of Expenses...................................................................20

SECTION 5. Conditions of the Obligations of the Initial Purchasers...............................21

(a) Accountants' Comfort Letter....................................................................21

(b) No Material Adverse Change or Ratings Agency Change............................................21

(d) Credit Agreement Opinion.......................................................................21

(e) Opinion of Counsel for the Initial Purchasers..................................................22

(f) Officers' Certificate..........................................................................22

(g) Chief Financial Officer's Certificate..........................................................22

(h) Bring-down Comfort Letter......................................................................22

(i) PORTAL Listing.................................................................................22

(j) Other Agreements...............................................................................23

(k) Credit Agreement...............................................................................23

(l) Additional Documents...........................................................................23

SECTION 6. Reimbursement of Initial Purchasers' Expenses.........................................23

SECTION 7. Offer, Sale and Resale Procedures.....................................................24

SECTION 8. Indemnification.......................................................................25

(a) Indemnification of the Initial Purchasers......................................................25

(b) Indemnification of the Company and their Guarantors and their Directors and Officers...........26

(d) Settlements....................................................................................27

SECTION 9. Contribution..........................................................................28

SECTION 10. Termination of this Agreement.........................................................29

SECTION 11. Representations and Indemnities to Survive Delivery...................................29

SECTION 12. Notices...............................................................................30

SECTION 13. Successors............................................................................31

SECTION 14. Partial Unenforceability..............................................................31

SECTION 15. Governing Law Provisions..............................................................31

(a) Consent to Jurisdiction........................................................................31

SECTION 16. Default of One or More of the Several Initial Purchasers..............................31

SECTION 17. Tax Disclosure........................................................................32

SECTION 18. General Provisions....................................................................32

SCHEDULE A - Initial Purchasers

EXHIBIT A - List of Subsidiaries

EXHIBIT B-1 - Form of Opinion of Kaye Scholer LLP

EXHIBIT B-2 - Form of Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz

PC ANNEX I - Resale Pursuant to Regulation S or Rule 144A

</TABLE>

<PAGE>

Purchase Agreement

October 16, 2003

BANC OF AMERICA SECURITIES LLC

J.P. MORGAN SECURITIES INC.

RBC DOMINION SECURITIES CORPORATION

HARRIS NESBITT CORP.

As Initial Purchasers

c/o BANC OF AMERICA SECURITIES LLC

9 West 57th Street

New York, New York 10019

Ladies and Gentlemen:

Introductory. National Nephrology Associates, Inc., a Delaware

corporation (the "Company"), proposes to issue and sell to Banc of America

Securities LLC, J.P. Morgan Securities Inc., RBC Dominion Securities Corporation

and Harris Nesbitt Corp. (collectively, the "Initial Purchasers"), acting

severally and not jointly, the respective amounts set forth in Schedule A of a

$160,000,000 aggregate principal amount of the Company's 9% Senior Subordinated

Notes due 2011 (the "Notes").

The Notes will be issued pursuant to an indenture, to be dated as of

October 22, 2003 (the "Indenture"), among the Company, the Guarantors (as

defined below) and Wells Fargo Bank Minnesota, N.A., as trustee (the "Trustee").

Notes issued in book-entry form will be issued in the name of Cede & Co., as

nominee of The Depository Trust Company (the "Depositary") pursuant to a DTC

letter of representations, to be dated as of the Closing Date (as defined in

Section 2) (the "DTC Agreement"), among the Company, the Guarantors, the Trustee

and the Depositary.

The holders of the Notes will be entitled to the benefits of a

registration rights agreement, to be dated as of October 22, 2003 (the

"Registration Rights Agreement"), among the Company, the Guarantors and the

Initial Purchasers, pursuant to which the Company and the Guarantors will agree

to file, within 180 days of the Closing Date, a registration statement with the

Commission registering the Exchange Securities (as defined below) under the

Securities Act.

The payment of principal, premium and Liquidated Damages (as defined in

the Indenture), if any, and interest on the Notes and the Exchange Notes (as

defined below) will be fully and unconditionally guaranteed on a senior

subordinated unsecured basis, jointly and severally by (i) all of the wholly

owned subsidiaries of the Company and (ii) any wholly owned subsidiary of the

Company formed or acquired after the Closing Date or any other subsidiary that

executes an additional guarantee in accordance with the terms of the Indenture,

and their respective successors and assigns (collectively, the "Guarantors"),

pursuant to their guarantees (the "Guarantees"). The Notes and the Guarantees

attached thereto are herein collectively referred to as the "Securities"; and

the Exchange Notes and the Guarantees attached thereto are herein collectively

referred to as the "Exchange Securities."

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At or prior to the Closing Date, the Company will enter into a new

senior secured credit facility, consisting of a $75 million five-year revolving

credit facility, with a syndicate of lenders led by Bank of America, N.A.,

substantially as described in the Offering Memorandum and as set forth in a

credit agreement, to be dated as of the Closing Date, between the Company, the

Guarantors, Bank of America, N.A. as administrative agent, L/C issuer and swing

line lender, the lender parties named therein and Banc of America Securities LLC

as sole lead arranger and sole book manager, together with any collateral and

other ancillary documents related thereto (the "Credit Agreement"). As more

specifically provided for in the Credit Agreement, it is a condition to the

closing of the Credit Agreement that the Company shall have received at least

$160 million in gross cash proceeds from the issuance and sale of the

Securities. The Company will use the net proceeds from the issuance and sale of

the Securities, along with borrowing under the Credit Agreement, to, among other

things, repay borrowings under the Company's existing credit facility.

The Company and the Guarantors understand that the Initial Purchasers

propose to make an offering of the Securities on the terms and in the manner set

forth herein and in the Offering Memorandum (as defined below) and agree that

the Initial Purchasers may resell, subject to the conditions set forth herein,

all or a portion of the Securities to purchasers (the "Subsequent Purchasers")

at any time after the date of this Agreement. The Securities are to be offered

and sold to or through the Initial Purchasers without being registered with the

Securities and Exchange Commission (the "Commission") under the Securities Act

of 1933, as amended (the "Securities Act," which term, as used herein, includes

the rules and regulations of the Commission promulgated thereunder), in reliance

upon exemptions therefrom. The terms of the Securities and the Indenture will

require that investors who acquire Securities expressly agree that Securities

may only be resold or otherwise transferred, after the date hereof, if such

Securities are registered for sale under the Securities Act or if an exemption

from the registration requirements of the Securities Act is available (including

the exemptions afforded by Rule 144A ("Rule 144A") or Regulation S ("Regulation

S") thereunder).

The Company and the Guarantors have prepared and delivered to each

Initial Purchaser copies of a Preliminary Offering Memorandum, dated October 6,

2003 (the "Preliminary Offering Memorandum"), and have prepared and will deliver

to each Initial Purchaser, copies of the Offering Memorandum, dated October 16,

2003, describing the terms of the Securities, each for use by such Initial

Purchaser in connection with its solicitation of offers to purchase the

Securities. As used herein, the "Offering Memorandum" shall mean, with respect

to any date or time referred to in this Agreement, the Company's Offering

Memorandum, dated October 16, 2003, including amendments or supplements thereto

and any exhibits thereto, in the most recent form that has been prepared and

delivered by the Company and the Guarantors to the Initial Purchasers in

connection with their solicitation of offers to purchase Securities.

The Company and the Guarantors hereby confirm their respective

agreements with the Initial Purchasers as follows:

SECTION 1. Representations and Warranties. Each of the Company and the

Guarantors, jointly and severally, hereby represents, warrants and covenants to

each Initial Purchaser as follows:

(a) No Registration Required. Subject to compliance by the Initial

Purchasers with the representations and warranties set forth in Section

2 hereof and with the procedures set forth in Section 7 hereof, it is

not

<PAGE>

necessary in connection with the issuance and sale of the Securities to

the Initial Purchasers and the offer, sale and delivery of the

Securities to each Subsequent Purchaser in the manner contemplated by

this Agreement and the Offering Memorandum to register the Securities

under the Securities Act or, until such time as the Exchange Securities

are issued pursuant to an effective registration statement, to qualify

the Indenture under the Trust Indenture Act of 1939 (the "Trust

Indenture Act," which term, as used herein, includes the rules and

regulations of the Commission promulgated thereunder).

(b) No Integration of Offerings or General Solicitation. The Company

has not, and none of the Company's subsidiaries or Affiliates (as such

term is defined in Rule 501 under the Securities Act (each, an

"Affiliate")) have, directly or indirectly, solicited any offer to buy

or offered to sell, and will not, directly or indirectly, solicit any

offer to buy or offer to sell, in the United States or to any United

States citizen or resident, any security which is or would be

integrated with the sale of the Securities in a manner that would

require the Securities to be registered under the Securities Act. None

of the Company, the Guarantors, any of their subsidiaries or

Affiliates, or any person acting on its or any of their behalf (other

than the Initial Purchasers, as to whom the Company and the Guarantors

make no representation, warranty or covenant) has engaged or will

engage, in connection with the offering of the Securities, in any form

of general solicitation or general advertising within the meaning of

Rule 502 under the Securities Act. With respect to those Securities

sold in reliance upon Regulation S, (i) none of the Company, the

Guarantors, any of their subsidiaries or Affiliates or any person

acting on its or any of their behalf (other than the Initial

Purchasers, as to whom the Company and the Guarantors make no

representation, warranty or covenant) has engaged or will engage in any

directed selling efforts within the meaning of Regulation S and (ii)

each of the Company, the Guarantors, any of their subsidiaries or

Affiliates and any person acting on its or their behalf (other than the

Initial Purchasers, as to whom the Company and the Guarantors make no

representation, warranty or covenant) has complied and will comply with

the offering restrictions set forth in Regulation S.

for resale pursuant to Rule 144A and will not be, at the Closing Date,

of the same class as securities listed on a national securities

exchange registered under Section 6 of the Exchange Act or quoted in a

U.S. automated interdealer quotation system.

(d) The Offering Memorandum and the Preliminary Offering Memorandum.

Each of the Offering Memorandum and Preliminary Offering Memorandum

does not, and at the Closing Date the Offering Memorandum will not,

include an untrue statement of a material fact or omit to state a

material fact necessary in order to make the statements therein, in the

light of the circumstances under which they were made, not misleading;

provided that this representation, warranty and agreement shall not

apply to statements in or omissions from the Offering Memorandum made

in reliance upon and in conformity with information furnished to the

Company or any Guarantor in writing by the Initial Purchasers expressly

for use in the Offering Memorandum. Each of the Preliminary Offering

Memorandum and the Offering Memorandum, as of its date, contains all

the information specified in, and meeting the requirements of, Rule

144A. Neither the

<PAGE>

Company nor any of the Guarantors have distributed, and the Company and

the Guarantors will not distribute, prior to the later of the Closing

Date and the completion of the Initial Purchasers' distribution of the

Securities, any offering material in connection with the offering and

sale of the Securities other than the Preliminary Offering Memorandum

or the Offering Memorandum.

(e) The Purchase Agreement. This Agreement has been duly authorized,

executed and delivered by, and is a valid and binding agreement of, the

Company and each of the Guarantors, enforceable in accordance with its

terms, except as rights to indemnification and contribution hereunder

may be limited by applicable law or against public policy and subject

to bankruptcy, insolvency, fraudulent conveyance, reorganization,

moratorium or other laws of general applicability relating to or

affecting the rights and remedies of creditors or by general principles

of equity (whether considered in a proceeding at law or in equity).

(f) The Registration Rights Agreement and DTC Agreement. The

Registration Rights Agreement has been duly authorized by the Company

and each of the Guarantors and, at the Closing Date, will be duly

executed and delivered by, and will be a valid and binding agreement

of, the Company and each of the Guarantors, enforceable in accordance

with its terms, except as rights to indemnification and contribution

thereunder may be limited by applicable law or against public policy

and subject to bankruptcy, insolvency, fraudulent conveyance,

reorganization, moratorium or other laws of general applicability

relating to or affecting the rights and remedies of creditors or by

general principles of equity (whether considered in a proceeding at law

or in equity). At the Closing Date, the DTC Agreement will be duly

authorized, executed and delivered by, and will be a valid and binding

agreement of, the Company, enforceable in accordance with its terms,

subject to bankruptcy, insolvency, fraudulent conveyance,

reorganization, moratorium or other laws of general applicability

relating to or affecting the rights and remedies of creditors or by

general principles of equity (whether considered in a proceeding at law

or in equity). Pursuant to the Registration Rights Agreement, the

Company and the Guarantors each will agree to file with the Commission,

under the circumstances set forth therein, (i) a registration statement

under the Securities Act relating to another series of debt securities

of the Company with terms substantially identical to the Notes (the

"Exchange Notes") to be offered in exchange for the Notes (the

"Exchange Offer") and (ii) to the extent required by the Registration

Rights Agreement, a shelf registration statement pursuant to Rule 415

of the Securities Act relating to the resale by certain holders of the

Notes, and in each case, to use its reasonable best efforts to cause

such registration statements to be declared effective.

(g) Authorization of the Securities and the Exchange Securities. (i)

The Notes to be purchased by the Initial Purchasers from the Company

are in the form contemplated by the Indenture, have been duly

authorized for issuance and sale pursuant to this Agreement and the

Indenture and, at the Closing Date, will have been duly executed by the

Company and, when authenticated in the manner provided for in the

Indenture and delivered against payment of the purchase price therefor,

will constitute valid and binding obligations of the Company,

enforceable in accordance with their terms, subject to bankruptcy,

insolvency, fraudulent conveyance, reorganization, moratorium or other

laws of general applicability relating to or affecting the rights and

remedies of creditors or by general principles of equity (whether

considered in a

<PAGE>

proceeding at law or in equity) and will be entitled to the benefits of

the Indenture. (ii) The Exchange Notes have been duly and validly

authorized for issuance by the Company, and when issued and

authenticated in accordance with the terms of the Indenture, the

Registration Rights Agreement and the Exchange Offer, will constitute

valid and binding obligations of the Company, enforceable against the

Company in accordance with their terms, subject to bankruptcy,

insolvency, fraudulent conveyance, reorganization, moratorium or other

laws of general applicability relating to or affecting the rights and

remedies of creditors or by general principles of equity (whether

considered in a proceeding at law or in equity) and will be entitled to

the benefits of the Indenture. (iii) The Guarantees of the Notes are in

the form contemplated by the Indenture, have been duly authorized for

issuance and sale pursuant to this Agreement and the Indenture and, at

the Closing Date, will have been duly executed by each of the

Guarantors and, when the Notes have been authenticated in the manner

provided for in the Indenture and delivered against payment of the

purchase price therefor, will constitute valid and binding agreements

of the Guarantors, enforceable in accordance with their terms, subject

to bankruptcy, insolvency, fraudulent conveyance, reorganization,

moratorium or other laws of general applicability relating to or

affecting the rights and remedies of creditors or by general principles

of equity (whether considered in a proceeding at law or in equity) and

will be entitled to the benefits of the Indenture. (iv) The Guarantees

of the Exchange Notes will be in the form contemplated by the

Indenture, will have been duly authorized for issuance and sale

pursuant to the Indenture and when issued and authenticated in

accordance with the terms of the Indenture, will constitute valid and

binding agreements of the Guarantors, enforceable in accordance with

their terms, subject to bankruptcy, insolvency, fraudulent conveyance,

reorganization, moratorium or other laws of general applicability

relating to or affecting the rights and remedies of creditors or by

general principles of equity (whether considered in a proceeding at law

or in equity) and will be entitled to the benefits of the Indenture.

(h) Authorization of the Indenture. The Indenture has been duly

authorized by the Company and each of the Guarantors and, at the

Closing Date, will have been duly executed and delivered by the Company

and each of the Guarantors and will constitute a valid and binding

agreement of the Company and each of the Guarantors, enforceable

against the Company and each of the Guarantors in accordance with its

terms, except as the enforcement thereof may be limited by bankruptcy,

insolvency, fraudulent conveyance, reorganization, moratorium or other

similar laws relating to or affecting the rights and remedies of

creditors or by general equitable principles (whether considered in a

proceeding at law or in equity).

(i) Description of the Securities and the Indenture. The Notes, the

Guarantees of the Notes and the Indenture conform, or will conform, in

all material respects to the respective statements relating thereto

contained in the Offering Memorandum. The Exchange Notes and the

Guarantees of the Exchange Notes will conform in all material respects

to the respective statements relating thereto contained in the Offering

Memorandum and the registration statement relating to the Exchange

Securities at the time such registration statement becomes effective.

(j) No Material Adverse Change. Except as otherwise disclosed in the

Offering Memorandum, subsequent to the

<PAGE>

respective dates as of which information is given in the Offering

Memorandum: (i) there has been no material adverse change in the

condition, financial or otherwise, or in the earnings, business,

operations or prospects, whether or not arising from transactions in

the ordinary course of business, of the Company and its subsidiaries,

considered as one entity (any such change is called a "Material Adverse

Change"); (ii) the Company and its subsidiaries, considered as one

entity, have not incurred any material liability or obligation (in any

such case, other than with respect to any fees payable in connection

with the offering of the Securities), indirect, direct or contingent,

not in the ordinary course of business nor entered into any material

transaction or agreement not in the ordinary course of business; and

(iii) except for the accrual of dividends on the Company's Series C

Preferred Stock, there has been no dividend or distribution of any kind

declared, paid or made by the Company or, except for dividends paid to

the Company or other subsidiaries, any of its subsidiaries on any class

of capital stock or repurchase or redemption by the Company or any of

its subsidiaries of any class of capital stock.

(k) Independent Accountants. KPMG LLP, who have expressed their opinion

with respect to the financial statements (which term as used in this

Agreement includes the related notes thereto) included in the Offering

Memorandum, are independent public or certified public accountants

within the meaning of Regulation S-X under the Securities Act and the

Exchange Act.

(l) Preparation of the Financial Statements. The financial statements,

together with the related schedules and notes, included in the Offering

Memorandum present fairly, in all material respects, the consolidated

financial position of the Company and its subsidiaries as of and at the

dates indicated and the results of their operations and cash flows for

the periods specified, subject, in the case of interim financial

statements, to year-end adjustments. Such financial statements have

been prepared in conformity with generally accepted accounting

principles as applied in the United States of America, applied on a

consistent basis throughout the periods involved, except as may be

expressly stated in the related notes thereto. The financial statements

included in the Offering Memorandum comply as to form with the

requirements applicable to registration statements on Form S-1 under

the Securities Act. The financial data set forth in the Offering

Memorandum under the captions "Offering Memorandum Summary--Summary

Financial Data" and "Selected Consolidated Financial Data" present

fairly the historical financial information set forth therein on a

basis consistent with that of the audited and unaudited financial

statements contained in the Offering Memorandum. No pro forma financial

statements would be required by Regulation S-X under the Securities Act

to be included in the Offering Memorandum if the Offering Memorandum

were a registration statement on Form S-1 under the Securities Act.

(m) Incorporation and Good Standing of the Company and its

Subsidiaries. Each of the Company and its subsidiaries has been duly

incorporated or formed and is validly existing as a corporation,

partnership or limited liability company in good standing under the

laws of the jurisdiction of its incorporation or formation and has

corporate power and authority to own, lease and operate its properties

and to conduct its business as described in the Offering Memorandum

and, in the case of the Company and

<PAGE>

the Guarantors, to enter into and perform its obligations under each of

this Agreement, the Registration Rights Agreement, the DTC Agreement,

the Securities, the Exchange Securities, the Indenture and the Credit

Agreement to which it is a party. Each of the Company and each

subsidiary is duly qualified as a foreign corporation, partnership or

limited liability company, as applicable, to transact business and is

in good standing in each jurisdiction in which such qualification is

required, whether by reason of the ownership or leasing of property or

the conduct of business, except for such jurisdictions where the

failure to so qualify or to be in good standing would not, individually

or in the aggregate, result in a Material Adverse Change.

(n) Capitalization and Other Capital Stock Matters. At June 30, 2003,

on a consolidated basis, after giving pro forma effect to the issuance

and sale of the Securities pursuant hereto, the application of the net

proceeds therefrom and the closing of the Credit Agreement, the Company

would have an authorized and outstanding capitalization as set forth in

the Offering Memorandum under the caption "Capitalization" (other than

for subsequent issuances of capital stock, if any, pursuant to employee

benefit plans described in the Offering Memorandum or upon exercise or

conversion of outstanding options or convertible securities described

in the Offering Memorandum). All of the outstanding shares of capital

stock of the Company have been duly authorized and validly issued, are

fully paid and nonassessable and have been issued in compliance with

federal and state securities laws. None of the outstanding shares of

Common Stock were issued in violation of any preemptive rights, rights

of first refusal or other similar rights to subscribe for or purchase

securities of the Company. There are no authorized or outstanding debt

securities convertible into or exchangeable or exercisable for any

capital stock of the Company or any of its subsidiaries other than

those accurately described in the Offering Memorandum. The description

of the Company's stock option plan, and the options or other rights

granted thereunder, set forth in the Offering Memorandum accurately and

fairly describes such plans. All of the issued and outstanding capital

stock or limited liability company interests of each subsidiary has

been duly authorized and validly issued, is fully paid and

nonassessable and, to the extent owned by the Company, directly or

through subsidiaries, free and clear of any security interest,

mortgage, pledge, lien, encumbrance or claim. The Company does not own

or control, directly or indirectly, any corporation, association or

other entity other than the subsidiaries listed in Exhibit A hereto.

(o) Non-Contravention of Existing Instruments; No Further

Authorizations or Approvals Required. Neither the Company nor any of

its subsidiaries is in violation of its charter or by-laws or is in

default (or, with the giving of notice or lapse of time, would be in

default) ("Default") under any indenture, mortgage, loan or credit

agreement, note, contract, franchise, lease, license or other

instrument to which the Company or any of its subsidiaries is a party

or by which it or any of them may be bound or to which any of the

property or assets of the Company or any of its subsidiaries is subject

(each, an "Existing Instrument"), except for such Defaults as would

not, individually or in the aggregate, result in a Material Adverse

Change and except for Defaults that have been waived or suspended in

writing and disclosed in the Offering Memorandum. The execution,

delivery and performance of this Agreement, the Registration Rights

Agreement, the Credit Agreement and the Indenture by the Company and

each Guarantor party thereto, the Company's execution, delivery and

performance of the DTC Agreement and the issuance and delivery of the

Securities or the Exchange Securities, and consummation of

<PAGE>

the transactions contemplated hereby and thereby and by the Offering

Memorandum (i) will not result in any violation of the provisions of

the charter, by-laws, partnership agreement, operating agreement or

other similar constitutive document of the Company or any subsidiary,

(ii) will not conflict with or constitute a breach of, or Default or a

Debt Repayment Triggering Event (as defined below) under, or result in

the creation or imposition of any lien, charge or encumbrance upon any

property or assets of the Company or any of its subsidiaries pursuant

to, or require the consent of any other party to, any Existing

Instrument, except for such conflicts, breaches, Defaults, liens,

charges or encumbrances as would not, individually or in the aggregate,

result in a Material Adverse Change, and (iii) will not result in any

violation of any law, administrative regulation or administrative or

court decree applicable to the Company or any subsidiary. No consent,

approval, authorization or other order of, or registration or filing

with, any court or other governmental or regulatory authority or

agency, is required for the Company's or any Guarantor's execution,

delivery and performance of this Agreement, the Registration Rights

Agreement, the DTC Agreement, the Credit Agreement or the Indenture, to

which it is a party, or the issuance and delivery of the Securities or

the Exchange Securities, or consummation of the transactions

contemplated hereby and thereby and by the Offering Memorandum, except

such as have been obtained or made by the Company or the Guarantors and

are in full force and effect under the Securities Act, applicable state

securities or blue sky laws and except such as may be required by

federal and state securities laws with respect to the Company's and the

Guarantors' obligations under the Registration Rights Agreement and

issuance of the Exchange Securities and the Guarantees thereof. As used

herein, a "Debt Repayment Triggering Event" means any event or

condition which gives, or with the giving of notice or lapse of time

would give, the holder of any note, debenture or other evidence of

indebtedness (or any person acting on such holder's behalf) the right

to require the repurchase, redemption or repayment of all or a portion

of such indebtedness by the Company or any of its subsidiaries.

(p) No Material Actions or Proceedings. Except as otherwise disclosed

in the Offering Memorandum, to the Company's or any Guarantor's

knowledge, there are no legal or governmental actions, suits,

investigations or proceedings pending or threatened against or

affecting the Company or any of its subsidiaries, or the officers,

directors, employees or agents (as defined in 42 C.F.R. Part 420

Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) of the Company or any

of its subsidiaries, which has as the subject thereof any property

owned or leased by, the Company or any of its subsidiaries, where in

any such case there is a reasonable possibility that such action, suit

or proceeding might be determined adversely to the Company or such

subsidiary and any such action, suit, investigation or proceeding, if

so determined adversely, would reasonably be expected to result in a

Material Adverse Change or materially and adversely affect the

consummation of the transactions contemplated by this Agreement,

including, without limitation, any such action, suit, investigation or

proceeding pursuant to federal or state laws or regulations (i)

prohibiting the payment or receipt of remuneration for patient

referrals, (ii) prohibiting the filing of false claims, (iii)

prescribing conditions of participation for certification by the

Medicare and Medicaid programs and any other federal or state

healthcare program or (iv) providing for coverage and reimbursement

under Medicare, Medicaid and any other federal or state healthcare

program.

<PAGE>

(q) Intellectual Property Rights. The Company and its subsidiaries own,

possess or license sufficient trademarks, trade names, patent rights,

copyrights, licenses, approvals, trade secrets and other similar rights

(collectively, "Intellectual Property Rights") reasonably necessary to

conduct their businesses as now conducted; and the expected expiration

of any of such Intellectual Property Rights would not result in a

Material Adverse Change. Neither the Company nor any of its

subsidiaries has received any notice of infringement or conflict with

asserted Intellectual Property Rights of others, which infringement or

conflict, if the subject of an unfavorable decision, ruling or filing

would result in a Material Adverse Change. Neither the Company nor any

of its subsidiaries is in default under the terms of any license or

similar agreement related to any Intellectual Property Rights necessary

to conduct their business as now conducted or contemplated except as

would not result in a Material Adverse Change.

(r) All Necessary Permits, etc. The Company and each subsidiary possess

such valid and current certificates, authorizations, qualifications,

licenses, permits, consents or approvals (including certificates of

need, licenses, pharmacy licenses, Medicare and Medicaid provider

agreements, accreditations and other similar documentation, or

approvals of any local health departments) issued by the appropriate

municipal, state, federal or foreign regulatory agencies or bodies

necessary to conduct their respective businesses as now conducted

except as would not result in a Material Adverse Change, and neither

the Company nor any subsidiary has received any notice of proceedings

relating to the revocation or modification of, or non-compliance with,

any such certificate, authorization or permit which, individually or in

the aggregate, if the subject of an unfavorable decision, ruling or

finding, would not reasonably be expected to result in a Material

Adverse Change.

(s) Medicare/Medicaid Participation. To the knowledge of the Company

and each subsidiary, none of the Company, any of its subsidiaries, any

existing or designated officers or directors of the Company or the

respective subsidiary, any agent (as defined in 42 C.F.R. Section

1001.1001(a)(2)) acting on behalf of the Company, or managing employee

(as defined in SSA Section 1126(b) or any regulations promulgated

thereunder) acting on behalf of the Company: (1) has had a material

civil monetary penalty assessed against it under Section 1128A of the

SSA or any regulations promulgated thereunder; (2) has been excluded

from participation under the Medicare program or a federal or state

healthcare program; or (3) has been convicted (as that term in defined

in 42 C.F.R. Section 1001.2) of any of the following categories of

offenses as described in SSA Section 1128(a) and (b)(1), (2), (3) or

any regulations promulgated thereunder: (i) criminal offenses relating

to the delivery of an item or service under Medicare or any federal or

state healthcare program; (ii) criminal offenses under federal or state

law relating to patient neglect or abuse in connection with the

delivery of a healthcare item or service; criminal offenses under

federal or state law relating to fraud, theft, embezzlement, breach of

fiduciary responsibility, or other financial misconduct in connection

with the delivery of a healthcare item or service or with respect to

any act or omission in a program operated by or financed in whole or in

part by any federal, state or local governmental agency; (iii) federal

or state laws relating to the interference with or obstruction of any

investigation into any criminal offense described above in this

paragraph; or (iv) criminal offenses under federal or state law

relating to the unlawful manufacture, distribution, prescription or

dispensing of a controlled substance. The Company, a subsidiary, or an

entity owned in whole or in part

<PAGE>

by the Company or a subsidiary has a Medicare provider number, and

materially meets all applicable Medicare conditions of participation,

in each locale, as applicable, in which the Company, such subsidiary or

such entity bills directly to Medicare for services furnished by the

Company, such subsidiary or such entity. The Company, a subsidiary, or

an entity owned in whole or in part by the Company or a subsidiary has

a Medicaid provider number, and a participating provider agreement, and

materially satisfies all applicable Medicaid conditions of coverage, in

each state, as applicable, in which the Company, such subsidiary, or

such other entity bills directly to such state's Medicaid agency for

services provided by the Company, such subsidiary, or such other entity

for Medicaid patients.

The Company, the Guarantors and their officers and directors,

and persons who provide professional services under agreements with the

Company and the employees of the subsidiaries of the Company have not,

on behalf of the Company, knowingly and willfully, except where,

individually or in the aggregate, it would not reasonably be expected

to result in a Material Adverse Change: (i) made or caused to be made a

false statement or representation of a material fact in any application

for any benefit or payment; (ii) made or caused to be made any false

statement or representation of a material fact for use in determining

rights to any benefit or payment; (iii) presented or caused to be

presented a claim for reimbursement under Medicare, Medicaid or other

federal or state healthcare program that is (A) for an item or service

that the person presenting or causing to be presented knows or should

know was not provided as claimed, or (B) for an item or service and the

person presenting knows or should know that the claim is false or

fraudulent; (iv) failed to disclose knowledge of the occurrence of any

event affecting the initial or continued right of a claimant to any

benefit or payment on its own behalf or on behalf of another, with

intent to fraudulently secure such benefit or payment in a greater

amount or quantity than is due or when no such benefit or payment is

authorized if such event results in an improper benefit to the Company;

or (v) made or caused to be made or induced or sought to induce the

making of any false statement or representation (or knowingly and

willfully omitted to state a fact required to be stated therein or

necessary to make the statements contained therein not misleading) of a

material fact with respect to (a) the conditions or operations of a

facility in order that the facility may qualify for Medicare, Medicaid

or other federal or state healthcare program certification, or (b)

information required to be provided under Section 1124A of the Social

Security Act (42 U.S.C. Section 1320a-3a).

To the knowledge of the Company and the Guarantors, there are

no Medicare or Medicaid recoupment or recoupments of any other

third-party payor being sought, threatened, requested or claimed

against the Company or any Subsidiary that could reasonably be expected

to result in a Material Adverse Change.

(t) Other Healthcare Regulatory Matters. To the knowledge of the

Company and each Guarantor, except as otherwise described in the

Offering Memorandum, none of (i) the Company, any of its subsidiaries,

or the officers, directors, employees, or agents (as defined in 42

C.F.R. Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) of the

Company or any of its subsidiaries, or (ii) any entity which the

Company or any of its subsidiaries manages ("Managed Entity") has (and

with respect to the officers, directors, agents and employees of the

Company or any of its subsidiaries or any employee of any Managed

Entity as described above, only as to any activity during their

employment or association with the Company, any subsidiary of the

Company or any Managed Entity) (A) been charged with, or has been or is

being

<PAGE>

investigated with respect to, any activity that materially contravenes

or could materially contravene or constitutes or could constitute a

material violation of any Healthcare Law (defined below), or (B)

knowingly and willfully engaged in any activity that materially

contravenes or constitutes a material violation of any Healthcare Law

during their employment or association with the Company, any

subsidiary, or any Managed Entity, which could reasonably be expected

to result in a Material Adverse Change. To the knowledge of the Company

and each Guarantor, no person who has a direct or indirect ownership

interest of 5% or more (as those terms are defined in 42 C.F.R. Part

420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) in the Company or

any subsidiary, has been charged with, or has been or is being

investigated with respect to, any activity involving the Company or any

subsidiary that materially contravenes or could materially contravene

or constitutes or could constitute a material violation of any

Healthcare Law except as described in the Offering Memorandum. To the

knowledge of the Company and each Guarantor and except as described in

the Offering Memorandum, none of the officers, directors and agents of

any Managed Entity has been charged with, or has (A) been or is being

investigated with respect to, any activity during their employment or

association with any Managed Entity that materially contravenes or

could materially contravene or constitutes or could constitute a

material violation of any Healthcare Law, or (B) engaged in any

activity during their employment or association with the Company, any

subsidiary or any Managed Entity that materially contravenes or

constitutes a material violation of any Healthcare Law. To the

knowledge of the Company and each Guarantor and except as described in

the Offering Memorandum, no person who has a direct or indirect

ownership interest of 5% or more (as those terms are defined in 42

C.F.R. Part 420 Subpart C and 42 C.F.R. Section 1001.1001(a)(2)) in a

Managed Entity has been charged with, or has been or is being

investigated with respect to, any activity in connection with the

Managed Entity that materially contravenes or could materially

contravene or constitutes or could constitute a material violation of

any Healthcare Law. "Healthcare Law" means the following laws or

regulations relating to the regulation of the healthcare industry or to

payment for services rendered by healthcare providers: (i) Sections

1877, 1128, 1128A or 1128B of the Social Security Act ("SSA"); (ii) any

prohibition on the making of any false statement or misrepresentation

of material facts to any governmental agency that administers a federal

or state healthcare program (including, but not limited to, Medicare,

Medicaid, and the federal Civilian Health and Medical Plan of the

Uniformed Services); (iii) the licensure, certification or registration

requirements of healthcare facilities, services or equipment; (iv) any

state certificate of need or similar law governing the establishment of

healthcare facilities or services or the making of healthcare capital

expenditures; (v) any state law relating to fee-splitting or the

corporate practice of medicine; (vi) any state physician self-referral

prohibition or state anti-kickback law; (vii) any criminal offense

relating to the delivery of, or claim for payment for, a healthcare

item or service under any federal or state healthcare program; (viii)

any federal or state law relating to the interference with or

obstruction of any investigation into any criminal offense; and (ix)

any criminal offense under federal or state law relating to the

unlawful distribution, prescription or dispensing of a controlled

substance.

(u) Title to Properties. The Company and each of its subsidiaries has

good and marketable title to all the properties and assets reflected as

owned in the financial statements referred to in Section 1(l) above (or

elsewhere in the Offering Memorandum), in each case free and clear of

any security interests, mortgages, liens, encumbrances, equities,

claims and other defects, except as would not reasonably expected to

result in a Material Adverse Change.

<PAGE>

The real property, improvements, equipment and personal property held

under lease by the Company or any subsidiary are held under valid and

enforceable leases, with such exceptions as would not reasonably be

expected to result in a Material Adverse Change.

(v) Tax Law Compliance. The Company and its subsidiaries have filed all

material federal, state and foreign income and franchise tax returns

required to have been filed and have paid all taxes shown on such

returns as due and payable and, if due and payable, any related or

similar assessment, fine or penalty levied against any of them. The

Company and each Guarantor have made adequate charges, accruals and

reserves in accordance with generally accepted accounting principles

applied in the United States in the applicable financial statements

referred to in Section 1(l) above in respect of all federal, state and

foreign income and franchise taxes for all periods as to which the tax

liability of the Company or any of its subsidiaries has not been

finally determined except when such failure would not reasonably be

expected to result in a Material Adverse Change.

(w) Company Not an "Investment Company". The Company has been advised

of the rules and requirements under the Investment Company Act of 1940,

as amended (the "Investment Company Act"). The Company is not, and

after receipt of payment for the Securities will not be, an "investment

company" within the meaning of Investment Company Act and will conduct

its business in a manner so that it will not become subject to the

Investment Company Act.

(x) Insurance. Each of the Company and its subsidiaries are insured by

recognized, financially sound institutions (or are self-insured at

prudent levels) with policies in such amounts and with such deductibles

and policy limits and covering such risks as are generally deemed

adequate and customary for their businesses including, but not limited

to, policies covering professional liability and malpractice. The

Company has no reason to believe that it or any subsidiary will not be

able (i) to renew its existing insurance coverage as and when such

policies expire or (ii) to obtain adequate and comparable coverage as

may be necessary or appropriate to conduct its business as now

conducted and at a cost that would not result in a Material Adverse

Change.

(y) No Price Stabilization or Manipulation. None of the Company, the

Guarantors or any of their respective Affiliates has taken or will

take, directly or indirectly, any action designed to or that might be

reasonably expected to cause or result in stabilization or manipulation

of the price of any security of the Company to facilitate the sale or

resale of the Securities.

(z) Solvency. The Company and each of the Guarantors is (except to the

extent the Company and/or such Guarantors may be deemed insolvent by

reason of a default under its existing credit facility), and

immediately after the Closing Date will be, Solvent. As used herein,

the term "Solvent" means, with respect to the Company or any Guarantor

on a particular date, that on such date (i) the fair market value of

the assets of the Company or such Guarantor, as the case may be, is

greater than the total amount of liabilities (including

<PAGE>

contingent liabilities) of the Company or such Guarantor, as the case

may be, (ii) the present fair salable value of the assets of the

Company or such Guarantor, as the case may be, is greater than the

amount that will be required to pay the probable liabilities of the

Company or such Guarantor, as the case may be, on its debts as they

become absolute and matured, (iii) the Company or such Guarantor, as

the case may be, is able to realize upon its assets and pay its debts

and other liabilities, including contingent obligations, as they

mature, (iv) the Company or such Guarantor, as the case may be, does

not intend to, and does not believe that it will, incur debts or

liabilities beyond such entity's ability to realize upon its assets and

pay its debts and other liabilities, including contingent obligations,

as they mature in their ordinary course, and (v) the Company or such

Guarantor, as the case may be, does not have unreasonably small

capital.

(aa) No Unlawful Contributions or Other Payments. Neither the Company

nor any of its subsidiaries nor, to the best of the Company's and the

Guarantors' knowledge, any employee or agent of the Company or any

subsidiary, has made any contribution or other payment to any official

of, or candidate for, any federal, state or foreign office in violation

of any law or of the character necessary to be disclosed in the

Offering Memorandum in order to make the statements therein not

misleading.

(bb) MD&A. There are no transactions, arrangements or other

relationships, including but not limited to off balance sheet

transactions, which would be required to be included in the Offering

Memorandum by Item 303 of Regulation S-K under the Securities Act if

the issuance of the Securities were being registered under the

Securities Act, which are not so described in the Offering Memorandum.

(cc) Company's Accounting System. The Company on a consolidated basis,

and each of the Company's subsidiaries, maintain a system of accounting

controls sufficient to provide reasonable assurances that (i)

transactions are executed in accordance with management's general or

specific authorization; (ii) transactions are recorded as necessary to

permit preparation of financial statements in conformity with generally

accepted accounting principles applied in the United States and to

maintain accountability for assets; (iii) access to assets is permitted

only in accordance with management's general or specific authorization;

(iv) the recorded accountability for assets is compared with existing

assets at reasonable intervals and appropriate action is taken with

respect to any differences; (v) material information relating to the

Company and its consolidated subsidiaries is promptly made known to the

officers responsible for establishing and maintaining the system of

internal control over financial reporting; and (vi) any significant

deficiencies or material weaknesses in the design or operation of

internal control over financial reporting which are reasonably likely

to materially and adversely affect the Company's ability to record,

process, summarize and report financial information, and any fraud

whether or not material that involves management or other employees who

have a significant role in the Company's internal control over

financial reporting, are adequately and promptly disclosed to the

Company's independent auditors and the audit committee of the Company's

board of directors.

<PAGE>

(dd) Compliance with Environmental Laws. Except as would not,

individually or in the aggregate, result in a Material Adverse Change

(i) the Company and each of its subsidiaries have all permits,

authorizations and approvals required under any Environmental Laws (as

defined below) and are in compliance with their requirements, (ii)

neither the Company nor any of its subsidiaries is in violation of any

federal, state, local or foreign law or regulation relating to

pollution or protection of human health or the environment (including,

without limitation, ambient air, surface water, groundwater, land

surface or subsurface strata) or wildlife, including without

limitation, laws and regulations relating to emissions, discharges,

releases or threatened releases of chemicals, pollutants, contaminants,

wastes, toxic substances, hazardous substances, petroleum and petroleum

products (collectively, "Materials of Environmental Concern"), or

otherwise relating to the manufacture, processing, distribution, use,

treatment, storage, disposal, transport or handling of Materials of

Environmental Concern (collectively, "Environmental Laws"), which

violation includes, but is not limited to, noncompliance with any

permits or other governmental authorizations required for the operation

of the business of the Company or its subsidiaries under applicable

Environmental Laws, or noncompliance with the terms and conditions

thereof, nor has the Company or any of its subsidiaries received any

written communication, whether from a governmental authority, citizens

group, employee or otherwise, that alleges that the Company or any of

its subsidiaries is in violation of any Environmental Law; (iii) there

is no claim, action or cause of action filed with a court or

governmental authority, no investigation with respect to which the

Company has received written notice, and no written notice by any

person or entity alleging potential liability for investigatory costs,

cleanup costs, governmental responses costs, natural resources damages,

property damages, personal injuries, attorneys' fees or penalties

arising out of, based on or resulting from the presence, or release

into the environment, of any Material of Environmental Concern at any

location owned, leased or operated by the Company or any of its

subsidiaries, now or in the past (collectively, "Environmental

Claims"), pending or, to the best of the Company's or any Guarantors'

knowledge, threatened against the Company or any of its subsidiaries or

any person or entity whose liability for any Environmental Claim the

Company or any of its subsidiaries has retained or assumed either

contractually or by operation of law; and (iv) to the Company's and the

Guarantors knowledge, there are no past or present actions, activities,

circumstances, conditions, events or incidents, including, without

limitation, the release, emission, discharge, presence or disposal of

any Material of Environmental Concern, that reasonably could result in

a violation of any Environmental Law or form the basis of a potential

Environmental Claim against the Company or any of its subsidiaries or

against any person or entity whose liability for any Environmental

Claim the Company or any of its subsidiaries has retained or assumed

either contractually or by operation of law.

(ee) ERISA Compliance. The Company and its subsidiaries and any

"employee benefit plan" (as defined under the Employee Retirement

Income Security Act of 1974, as amended, and the regulations and

published interpretations thereunder (collectively, "ERISA"))

established or maintained by the Company, its subsidiaries or their

"ERISA Affiliates" (as defined below) are in compliance in all respects

with ERISA, except where any non-compliance would not result reasonably

be expected to result in a Material Adverse Change. "ERISA Affiliate"

means, with respect to the Company or a subsidiary, any member of any

group of organizations described in Sections 414(b), (c), (m) or (o) of

the Internal Revenue Code of 1986, as amended, and the regulations and

published interpretations thereunder (the "Code") of which the Company

or such subsidiary is a member. No "reportable event" (as defined under

ERISA) has occurred or is reasonably expected to occur with respect to

<PAGE>

any "employee benefit plan" established or maintained by the Company,

its subsidiaries or any of their ERISA Affiliates. No "employee benefit

plan" established or maintained by the Company, its subsidiaries or any

of their ERISA Affiliates, if such "employee benefit plan" were

terminated, would have any "amount of unfunded benefit liabilities" (as

defined under ERISA). Neither the Company, its subsidiaries nor any of

their ERISA Affiliates has incurred or reasonably expects to incur any

liability under Title IV of ERISA with respect to termination of, or

withdrawal from, any "employee benefit plan" or (ii) Sections 412,

4971, 4975 or 4980B of the Code. Each "employee benefit plan"

established or maintained by the Company, its subsidiaries or any of

their ERISA Affiliates that is intended to be qualified under Section

401 of the Code is so qualified and nothing has occurred, whether by

action or failure to act, which would cause the loss of such

qualification.

(ff) Guarantor Subsidiaries. All of the wholly owned su

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