RENAL CARE GROUP INC, 10-Q, 1996-05-20

RENAL CARE GROUP INC
10-Q, 1996-05-20
MISC HEALTH & ALLIED SERVICES, NEC

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended March 31, 1996

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

For the transition period fro to
-------------- --------------

Commission File No. 0-27640

RENAL CARE GROUP, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
Delaware 62-1622383
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>

1801 West End Ave., Suite 1100, Nashville, Tennessee 37203
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (615) 321-2333

Indicate by check mark whether the Registrant (1) 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 (or for such shorter that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days).

Yes X No
----- -----

Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.

<TABLE>
<S> <C>
Class Outstanding at May 10, 1996
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value 9,857,000

</TABLE>
<PAGE> 2
RENAL CARE GROUP, INC.
INDEX

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

General Information: 1

Consolidated Balance Sheets -
December 31, 1995 and March 31, 1996 (unaudited) 2

Consolidated Statements of Operations -
For the three months ended March 31, 1995 and 1996 (unaudited) 3

Consolidated Statements of Cash Flows -
For the three months ended March 31, 1995 and 1996 (unaudited) 4

Statement of Changes in Stockholders' Equity -
For the three months ended March 31, 1996 (unaudited) 5

Notes to Consolidated Financial Statements 6-8

Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations 9-10

PART II - OTHER INFORMATION

Item 1. Legal Proceedings 11

Item 2. Changes in Securities 11

Item 3. Defaults upon Senior Securities 11

Item 4. Submission of Matters to a Vote of Security Holders 11

Item 5. Other Information 11

Item 6. Exhibits and Reports on Form 8-K 11-12

</TABLE>
<PAGE> 3

PART I - FINANCIAL INFORMATION

ITEM I - Financial Statements

GENERAL INFORMATION

Renal Care Group, Inc. ("RCG" or the "Company") was incorporated in June 1995
for the purpose of acquiring five dialysis businesses ("Founding Groups").
Simultaneously with the Company's initial public offering on February 7, 1996,
the Company acquired these businesses in a purchase transaction using
historical cost accounting, since no single owner of any Founding Group held
more than a 50% equity interest in the Company as of the closing of the
offering.

The accompanying statements of operations and cash flows for the period ended
March 31, 1996 include the consolidated results of operations and cash flows of
the five dialysis businesses for the period from February 1, 1996 ("Effective
Date") through March 31, 1996 (two months). The Company had no operations
prior to February 1, 1996.

1
<PAGE> 4
RENAL CARE GROUP, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ---------
(unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $1,000 $32,313
Accounts receivable, net 372 13,875
Inventories - 1,458
Prepaid expenses - 286
Other - 134
------ -------
Total current assets 1,372 48,066
Property, plant and equipment, net - 12,644
Intangible assets, net - 2,926
Other assets 8 910
------ -------
Total assets $1,380 $64,546
====== =======
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ - $ 4,520
Accrued expenses 6 6,353
Senior subordinated convertible notes 1,380 1,380
------ -------
Total current liabilities 1,386 12,253
Deferred income taxes - 971
------ -------
Total liabilities 1,386 13,224
Stockholders' equity:
Common stock, $.01 par value, - 93
22,000 shares authorized, 9,319
shares issued and outstanding
Additional paid-in capital 49,955
Retained earnings (6) 1,274
------ -------
Total stockholders' equity (6) 51,322
------ -------
Total liabilities and stockholders'
equity $1,380 $64,546
====== =======
</TABLE>

See accompanying notes to Consolidated Financial Statements.

2
<PAGE> 5
RENAL CARE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
unaudited

<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
March 31, 1995 March 31, 1996
-------------- --------------
<S> <C> <C>
Net revenue $ - $12,823

Operating costs and expenses:
Patient care costs - 9,403
General and administrative expenses - 930
Provision for doubtful accounts - 263
Depreciation and amortization - 363
------ -------
Total operating costs and expenses - 10,959

Income from operations - 1,864
Interest income, net - 190
------ -------
Income before income taxes - 2,054
Provision for income taxes - 780
------ -------
Net income $ - $ 1,274
====== =======

Net Income Per Share $ - $ 0.13

Weighted average shares outstanding - 10,142
</TABLE>

See accompanying notes to Consolidated Financial Statements.

3
<PAGE> 6
RENAL CARE GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
unaudited

<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 1995 Ended March 31, 1996
------------------- --------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ - $ 1,274
Adjustments to reconcile net income to net cash provided by
operating activities (net of effect of combination):
Depreciation and Amortization - 363
Income taxes payable - 780
Accounts receivable, net - 25
Inventories - 203
Prepaid expenses and other current assets - 686
Accounts payable - (154)
Other accrued liabilities - 1,094
-------- --------
Net cash provided by operating activities - 4,271
-------- --------
Cash flows from investing activities:
Cash distributions paid to Founders - (39,909)
Additions to property and equipment - (2,526)
Additions to other assets - 1,945
Founders cash contribution - 4,893
-------- --------
Net cash used in investing activities - (35,597)
-------- --------
Cash flows from financing activities:
Cash paid in connection with organization of the Company
and the initial public offering - (2,901)
Proceeds from initial public offering, net of underwriting
discounts and commissions - 75,079
Retirement of Founders long-term borrowings - (8,539)
-------- --------
Net cash provided by financing activities - 63,639
-------- --------
Net increase in cash and cash equivalents - 32,313

Cash and cash equivalents, beginning of period - -
-------- --------
Cash and cash equivalents, end of period $ - $ 32,313
======== ========
Supplemental disclosure:
Interest paid $ - $ 211
======== ========
Schedule of non cash investing and financing transactions:
Common stock issued to Founders in the combination $ - $ 17,779
======== ========
Non-cash conversion of redeemable preferred stock to common
stock $ - $ 2,451
======== ========
</TABLE>

See accompanying notes to Consolidated Financial Statements.

4
<PAGE> 7
RENAL CARE GROUP, INC.
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
For the Three Months Ended March 31, 1996
(in thousands)
unaudited
<TABLE>
<CAPTION>
Common Stock Total
------------ Additional Retained Shareholders
Shares Amount Paid-in Capital Earnings Equity
------ ------ --------------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 - $ - $ - $ - $ -
----- ---- ------- ------ -------
Issuance of Common Stock in public offering,
net of underwriting discounts and
commissions 4,485 45 75,034 - 75,079

Initial public offering costs - - (2,901) - (2,901)

Cash distributions paid
to Founding groups - - (39,909) - (39,909)

Issuance of stock portion of consideration
to Founding Groups 4,834 48 17,731 - 17,779

Net Income - - - 1,274 1,274
----- ---- ------- ------ -------
9,319 $ 93 $49,955 $1,274 $51,322
===== ==== ======= ====== =======
</TABLE>

5
<PAGE> 8
RENAL CARE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996
(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

Overview

In February 1996, Renal Care Group, Inc., a Delaware Corporation (The
"Company") acquired simultaneously with the closing of its initial public
offering (the "Offering"), five companies: Kidney Care, Inc. ("KCI"), and
Medical Enterprises, Ltd. ("MEL") (KCI and MEL collectively "Kidney Care"),
D.M.N. Professional Corporation ("DMN"), Tyler Nephrology Associates, P.A.
("TNA"), Kansas Nephrology Association ("KNA"), and Renal Care Group, Inc., a
Tennessee Corporation ("RCG"). These five businesses, together with the
Company, are referred herein as the "Founding Companies" and the transaction
described above is referred to herein as the "Combination." The Company is a
specialized provider of nephrology services.

Interim Financial Statements

In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature. Operating results for interim periods are not necessarily
indicative of results which may be expected for the year as a whole. It is
suggested that these financial statements be read in conjunction with the
financial statements of Renal Care Group Inc. and Founding Companies and the
related notes thereto included in the Company's Registration Statement on Form
S-1 (File No. 33-80221) declared effective by the Securities and Exchange
Commission on February 6, 1996.

Transitional Report

No transitional report is included in this Form 10-Q for the Company's
predecessor, Kidney Care, Inc., which had a January 31, year-end, since its
operations are included in these consolidated financial statements from February
1, 1996, the "effective date" of its acquisition by Renal Care Group, Inc.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements of Renal Care Group, Inc. include the
accounts of the Company and its subsidiaries. All intercompany transactions
have been eliminated in consolidation.

Net income per share has been computed based on the weighted average shares
outstanding of 10,142,000 which consists of 4,834,000 shares issued to owners
of the Founding Centers; 4,485,000 shares issued in connection with the
Company's initial public offering and 823,000 shares related to outstanding
options and warrants.

6
<PAGE> 9
RENAL CARE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

NOTE 3 - INITIAL PUBLIC OFFERING

In February 1996, the Company completed an initial public offering, which
involved a sale to the public of 4,485,000 shares of Common Stock at $18.00
per share. The net proceeds to the Company from the Offering net of
underwriting discounts and commissions were approximately $75,079,000. Costs
incurred in connection with organization of the Company and the initial public
offering were $2,901,000. Of the net proceeds, $39,909,000 were used to pay
the cash portion of the consideration for the Combined Companies and $8,539,000
was used to repay indebtedness assumed by the Company.

NOTE 4 - ACQUISITIONS

On April 26, 1996, the Company completed a merger with Mainline Suburban
Dialysis of Wynnewood, Pennsylvania which operates five dialysis centers
serving approximately 350 patients in the suburban Philadelphia area. The
transaction will be accounted for as a pooling of interests. In consideration
for the transaction, the Company issued 538,000 shares of its common stock.
Pro Forma combined operating information had the Founding Companies combined as
of January 1, 1996 and had this acquisition been consummated at the beginning
of the first quarter of 1996 are as follows:

<TABLE>
<S> <C>
Revenues $22.204
Net income $ 2,063
Earnings per share $ .21

Weighted average shares
outstanding 10,013,000

</TABLE>

7
<PAGE> 10
RENAL CARE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

ITEM 2. Management's Discussion And Analysis of Financial Condition And
Results of Operations.

Overview

As discussed in Item 1, the Company conducted no operations until it acquired
five dialysis business and simultaneously completed an initial public offering
in February 1996. The following pro forma statements of operations are
presented as if the Company and the five dialysis businesses had been combined
as of the beginning of the periods presented.

RENAL CARE GROUP, INC.
PRO FORMA COMBINED RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
Three Months Ended
March 31, 1995 March 31, 1996
-------------- --------------
<S> <C> <C>
Net revenue $17,439,000 $19,199,000

Operating costs and expenses:
Patient care costs 12,874,000 14,130,000
General and administrative expenses 1,414,000 1,363,000
Provision for doubtful accounts 344,000 388,000
Depreciation and amortization 468,000 536,000
----------- -----------
Total cost and expenses 15,100,000 16,417,000

Income from operations 2,339,000 2,782,000
Interest income, net (56,000) 96,000
----------- -----------
Income before income taxes 2,283,000 2,878,000
Provision for income taxes 868,000 1,094,000
----------- -----------
Net income $ 1,415,000 $ 1,784,000
=========== ===========

Net income per common share $ 0.17 $ 0.19

Weighted average number of common
shares and equivalents outstanding 8,142,000 9,475,000

</TABLE>

8
<PAGE> 11
RENAL CARE GROUP, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS (PRO FORMA)

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

Net Revenue. Net revenue increased from $17.4, million for the three
months ended March 31, 1995 to $19.2 million for the three months ended March
31, 1996, an increase of $1.8 million or 10.3%. This increase resulted
primarily from a 6.4% increase in the number of treatments from 101,225 in the
1995 period to 107,695 in the 1996 period and a 2.3% increase in the average
revenue per treatment from $172 in 1995 to $176 in 1996. The remaining revenue
increase is a result of higher than expected management fees and higher than
expected earnings of 50% owned partnerships in Mississippi and Kansas. The
revenue per treatment increase is due to an increase in higher revenue
generating acute treatments and greater than expected erythropoietin (EPO)
utilization.

Patient Care Costs. Patient care costs consist of costs directly related
to the care of patients, including direct labor, drugs and other medical
supplies, and operational costs of facilities. Patient care costs increased
from $12.9 million for the three months ended March 31, 1995 to $14.1 million
for the three months ended March 31, 1996, an increase of $1.2 million or
9.3%. This increase was due to the increase in the number of associated
treatments, which caused a corresponding increase in the use of drugs and
supplies. Patient care costs as a percent of net revenue decreased from 73.8%
in the 1995 period to 73.6% in the 1996 period. Average patient care cost per
treatment increased from $127 in 1995 to $131 in 1996 or 3.1%. This increase
is due to normal healthcare inflation, higher than expected EPO and other drug
utilization costs, and the increase in higher cost acute treatments.

General and Administrative Expenses. General and administrative expenses
include corporate office costs and clinic costs not directly related to the
care of patients, including clinic administration, accounting, billing, and
information systems. General and administrative expenses remained constant at
$1.4 million for the three months ended March 31, 1995 when compared to the
same three months ended March 31, 1996. General and administrative expenses
decreased as a percent of revenue in the 1996 period by 1% primarily due to the
higher revenues for the quarter.

Provision for Doubtful Accounts. The provision for doubtful accounts
increased from $344,000 for the three months ended March 31, 1995 to $388,000
for the three months ended March 31, 1996. Provision for doubtful accounts as
a percentage of net revenue was 2.0% in the 1995 period and remained at 2.0% in
the 1996 period. The provision for doubtful accounts is a function of patient
mix, billing practices and other factors. It is the Company's practice to
reserve for doubtful accounts in the period in which revenue is recognized
based on management's estimate of the net collectibility of accounts
receivable.

Depreciation and Amortization. Depreciation and amortization increased
from $468,000 for the three months ended March 31, 1995 to $536,000 for the
three months ended March 31, 1996, an increase of 68,000 or 14.5%. This net
increase was due to the purchase of patient care facilities previously leased
from certain Founders and the addition of fixed assets in the normal course of
business.

Income from Operations. Income from operations increased from $2.4
million for the three months ended March 31, 1995 to $2.8 million for the three
months ended March 31, 1996, an increase of $400,000 or 16.7%. Income from
operations as a percent of net revenue increased from 13.8% in the 1995 period
to 14.6% in the 1996 period. Income from operations increased due to increases
in net revenue in excess of patient care costs, which was primarily due to an
increase in the growth rate of the number any type of treatments.

Interest Income/Expense. Interest expense decreased from $56,000 for the
three months ended March 31, 1995 to income net of expense of $96,000 for the
three months ended March 31, 1996, a net increase of $152,000. This net
increase was due to the pay-off of substantially all borrowings of the Founders
at the time of the initial public offering through the use of proceeds.

9
<PAGE> 12
RENAL CARE GROUP, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- (Continued)

LIQUIDITY AND CAPITAL RESOURCES

In February 1996, the Company completed its public offering of 4,485,000 shares
of common stock at $18.00 per share. The proceeds, net of underwriting
discounts and expenses of the offering were approximately $75,079,000.
Concurrent with the completion of the offering the Company paid approximately
$39,909,000 to the stockholders of the Founding Companies and issued 4,834,000
shares of its common stock to such stockholders.

Working capital at March 31, 1996 was $35,813,000 and cash and cash equivalents
were $32,313,000. Net cash generated from operations during the first period
of operations was $4,271,000.

During the first two months of 1996, the Company's capital expenditures were
$2,526,000. The Company repaid $8,539,000 in February 1996 of debt that was
assumed from the Founding Centers. At March 31, 1996 the Company had
$1,380,000 of outstanding Convertible Senior Subordinated Promissory Notes due
in December 1996 that are convertible into common stock at $7.50 per share.

The Company has a commitment from a bank to borrow up to $35,000,000 to be used
for acquisitions, working capital and capital expenditures and expects an
agreement to be in place prior to the end of the second quarter of 1996.
Management believes that its existing cash balances and cash generated from
operations will be sufficient to fund the Company's planned capital
expenditures through the remainder of 1996.

10
<PAGE> 13
PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None

ITEM 2. CHANGES IN SECURITIES.

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K.
(a) Exhibits

3.1 Amended and Restated Certificate of Incorporation of
the Registrant (incorporated by reference from
Exhibit 3.1 to Registration Statement on Form S-1,
Registration Statement No. 33-80221).
3.2 Amended and Restated By-law of the Registrant
(incorporated by reference from Exhibit 3.2 to
Registration Statement on Form S-1, Registration
Statement No. 33-80221).
4.1 See Exhibits 3.1 and 3.2 for provisions of the
Amended and Restated Certificate of Incorporation and
By-laws of the Registrant defining rights of holders
of Common Stock of the Registrant.
4.2 Specimen Stock Certificate for the Common Stock of
the Registrant (incorporated by reference from
Exhibit 4.2 to Registration Statement on Form S-1,
Registration Statement No. 33-80221).
10.1 Employment Agreement, dated February 6, 1996, between
the Company and Sam A. Brooks.
10.2 Employment Agreement, dated February 12, 1996,
between the Company and Ron Hinds.
10.4 Employment Agreement, dated April 1, 1994,
between the Company and Joseph Cashia.
10.5 Employment Agreement, dated February 12, 1996,
between the Company and Anne B. Bower.
10.6 Medical Director Services Agreement, dated February
12, 1996, between the Company and Kansas Nephrology
Physicians, P.A.
10.7 Medical Director Services Agreement, dated February
12, 1996, between the Company and Indiana Dialysis
Management, P.C.
10.8 Medical Director Services Agreement, dated February
12, 1996, between the Company and Tyler Dialysis &
Transplant Associates, P.A.
10.9 Lease Agreement, dated February 5, 1996, between the
Company and MEL, Inc. relating to approximately
20,000 square feet of space.
10.10 Lease Agreement, dated February 12, 1996, among the
Company and Thomas A. Lowery, M.D., James R. Cotton,
M.D., Roy D. Gerard, M.D., and Kevin A. Curran, M.D.,
relating to property in Carthage, Texas.
10.11 Lease Agreement, dated February 12, 1996, among the
Company and Thomas A. Lowery, M.D., James R. Cotton,
M.D., Roy D. Gerard, M.D., and Kevin A. Curran, M.D.,
relating to property in Tyler, Texas.

11
<PAGE> 14
10.13 Sublease Agreement, dated February 12, 1996, with
Tyler Nephrology Associates, Inc.
10.14 Dialysis Center Management Agreement, dated May 11,
1994, between Renal Care Group, Inc. (of Tennessee)
and Vanderbilt University (incorporated by
reference from Exhibit 10.14 to Registration
Statement on Form S-1, Registration Statement No.
33-80221).
10.15 1996 Outside Director Stock Option Plan (incorporated
by reference from Exhibit 10.15 to Registration
Statement on Form S-1, Registration Statement No.
33-80221).
10.16 1996 Stock Option Plan (incorporated by reference
from Exhibit 10.16 to Registration Statement on Form
S-1, Registration Statement No. 33-80221).
10.17 Employee Stock Purchase Plan (incorporated by
reference from Exhibit 10.17 to Registration
Statement on Form S-1, Registration Statement No.
33-80221).
10.18 Agreement between the Company and Healthcare
Suppliers, Inc. dated December 7, 1995 (incorporated
by reference from Exhibit 10.18 to Registration
Statement on Form S-1, Registration Statement No.
33-80221).
27 Financial Data Schedule

(b) Reports on Form 8-K

1. A Form 8-K was filed on March 22, 1996 reporting a
change in the registrants year-end from June 30 to a
December 31 year-end.

2. A Form 8-KA filed on May 3, 1996 amending Form 8-K
filed on March 22, 1996.

12
<PAGE> 15
SIGNATURE

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.

RENAL CARE GROUP, INC.
--------------------------------------
(Registrant)

May 20, 1996 BY: /s/ ROBERT K. STILLWELL
- --------------------- -----------------------------------
(Date) Robert K. Stillwell
Vice President,
Chief Accounting Officer

May 20, 1996 BY: /S/ RONALD HINDS
- --------------------- -----------------------------------
(Date) Ronald Hinds
Executive Vice President,
Chief Financial Officer

<PAGE> 1
EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of February 6, 1996, by and
between RENAL CARE GROUP, INC., a Delaware corporation (the "Company"), and Sam
A. Brooks, Jr. (hereinafter "Employee").

WITNESSETH:

WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company, on the terms and conditions contained herein;
and

WHEREAS, in serving as an employee of the Company, Employee has and
will participate in the use and development of confidential proprietary
information about the Company, its customers and suppliers, and the methods
used by the Company and its employees in competition with other companies, as
to which the Company desires to protect fully its rights; and

WHEREAS, the Company wishes to enter into an agreement with Employee
whereby Employee shall agree not to compete with the Company in any current or
future business activity conducted or entered into by the Company and to hold
certain information obtained by and through Employee's employment in
confidence.

NOW, THEREFORE, in consideration of the compensation payable to
Employee by the Company pursuant to this Agreement, and the mutual promises,
covenants, representations and warranties contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do agree as
follows:

1. Employment.

Effective upon the closing of the Company's initial public
offering of its Common Stock registered on Form S-1 filed with the Securities
and Exchange Commission (the "Public Offering"), the Company hereby employs
Employee, and Employee hereby agrees to accept employment with the Company,
upon the terms and conditions hereinafter set forth. In the event that the
Public Offering shall not close by June 1, 1996, then this Agreement shall be
null and void without having become effective.

2. Term.

This Agreement shall begin on the closing of the Public
Offering (the "Effective Date"), and shall continue for an initial period of
thirty-six (36) months (the "Initial Period"), subject to earlier termination
by Employee or the Company as hereinafter provided. This Agreement shall renew
for additional terms of twelve (12)

<PAGE> 2

months each, subject to earlier termination as hereinafter provided, on the
same terms and conditions (subject to mutually agreeable modifications, if
any).

3. Compensation and Benefits.

(a) Base Compensation: The Company shall pay Employee an
annual salary of Two Hundred Fifty Thousand Dollars ($250,000), as may be
adjusted as provided herein (the "Base Compensation"), payable according to the
pay periods of the Company as may be in effect from time to time. Such
payments shall be prorated for periods less than a full pay period. The Base
Compensation shall be subject to withholding for federal, state and local
payroll and all other taxes or withholdings applicable to Employee. Any
increases of the Base Compensation shall be at the discretion of the Company,
provided that any decreases to the then current Base Compensation shall require
the consent of Employee.

(b) Benefits: During the term of this Agreement,
Employee shall also be entitled to participate in the insurance and other
fringe benefits made available generally to similar employees of the Company,
as such benefits may be determined from time to time by the Company, provided
that Employee shall have at least four (4) weeks of paid vacation time. In
addition, Employee shall be entitled to receive the following additional
benefits from the Company: (i)aduring the term of this Agreement, the Company
will provide term life insurance coverage of Two Million Dollars ($2,000,000)
on Employee's life with the death benefit to be payable to Employee's estate or
as otherwise directed in writing by Employee; and (ii)aduring the term of this
Agreement, the Company will provide customary long term disability insurance
coverage at sixty percent (60%) of Employee's Base Compensation.

(c) Bonuses: In addition to the Base Compensation
payable to Employee pursuant to Section 3(a) above, the Employee is entitled to
an annual bonus equal to seventy-five percent (75%) of the Employee's annual
Base Compensation payable within sixty (60) days of the end of each fiscal year
of the Company if and only if the Company met or exceeded the earnings per
share projection specified by the Compensation Committee of the Board of
Directors of the Company for such fiscal year (the "Annual Bonus").

(d) Expenses: The Company shall reimburse Employee for
any and all expenses reasonably incurred by Employee incident to the
performance of the duties imposed upon Employee hereunder.

(e) Offering: In connection with Employee's efforts
prior to the effective date of this Agreement to effect the Public Offering,
upon the closing of the Public Offering, the Company will pay Employee One
Hundred Thousand Dollars ($100,000) out of the Company's proceeds from the
Public Offering.

-2-
<PAGE> 3

4. Duties, Extent of Services.

Employee is engaged as President and Chief Executive Officer
and shall perform such duties and responsibilities as are typically incident
thereto, and shall perform in a faithful and competent manner such additional
duties as may be reasonably assigned from time to time by the Company. Such
duties shall be performed on a full-time basis for the Company at the Company's
offices in Nashville Tennessee. Employee may be required, from time to time,
to perform his duties temporarily hereunder at such other place or places as
the Company shall reasonably designate or as the interests of the Company may
reasonably require, provided that such period does not exceed thirty (30)
consecutive days without Employee's consent and that during any such period
Employee is able to return to Nashville, Tennessee at the Company's expense for
weekends.

Employee shall devote all of Employee's business time, attention,
knowledge, and skill solely to the business and interest of the Company, and
the Company shall be entitled to all the benefits, profits, and other issues
arising from, or incident to, all work, services, and advice of Employee;
provided, however, that the Company agrees and acknowledges that Employee may
continue to serve as a member of the boards of directors of other companies,
including serving as Chairman of National Imaging Affiliates, Inc., and may
continue to devote a reasonable amount of time to such service, without
violating the terms of this Agreement.

5. Termination.

This Agreement may be terminated by the parties in the manners
specified below:

(a) Termination without Cause. Either the Company or the
Employee may terminate Employee's employment under this Agreement at any time
for any reason upon thirty (30) day's prior written notice to the other party.

(b) Termination for Cause.

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<PAGE> 4

than Section 6. In the event of any termination for cause pursuant to the
provisions of (ii), (iii), (iv) or (v) of this subsection, the Company shall
give Employee written notice prior to such termination detailing the specific
acts, actions, failures, or events upon which the forecast termination is
based, and Employee shall have fifteen (15) days after such written notice to
cease such actions or otherwise correct any such failure or breach. If
Employee does not cease such action or otherwise correct such failure or breach
within such fifteen day time period, or having once received such written
notice and ceased such actions or corrected such failure or breach, Employee at
any time thereafter again so acts, fails or breaches, the Company may terminate
this Agreement immediately.

The employment of Employee hereunder shall be
automatically terminated by the death or disability of Employee as outlined
below.

(i) Disability. The Company may terminate this
Agreement at the time Employee shall have been Disabled for a continuous period
of six (6) months during any continuous twelve month period. For purposes of
this Paragraph 5(c)(i), the term "Disabled" shall mean Employee's inability to
perform the essential functions of his duties, with or without reasonable
accommodation. During Employee's six month-period of Disability or such longer
wait period as may be provided for in any policy of disability that may be
maintained by the Company for the benefit of Employee, the Company agrees to
continue to pay Employee's Base Compensation (less regular withholdings for
payroll or other taxes and other required or proper items, and less any
payments from all disability plans provided by the Company). In the event of a
termination of Employee on account of Disability, however, the Company shall be
obligated to pay only Employee's Base Compensation that has been earned through
the effective date of termination (less regular withholdings for payroll or
other taxes and other required or proper items, and less any payments from all
disability plans provided by the Company).

(ii) Death. In the event Employee shall die
during the term of this Agreement, this Agreement shall terminate and
Employee's estate shall receive the remainder of the Base Compensation set
forth in Section 3(a) hereof accrued to the last day of the month in which
death occurs.

(d) Post-Termination Compensation. Except as provided in
Section 5(c) above, upon termination of this Agreement, Employer shall be
relieved of all of its obligations hereunder notwithstanding any period of time
remaining under the initial or any renewal term, subject to the foregoing:

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<PAGE> 5

the Company's last completed fiscal year, payable without interest in equal
amounts according to the pay periods of the Company for a period of twelve (12)
months after the termination date. Any wages earned from any employment
obtained by Employee during such period of severance (which Employee shall in
good faith pursue) shall reduce the payments due under this subsection 5(d)(i).
In the event that Employee terminates his or her employment under Section 5(a)
above, the Company's obligation to pay Employee's Base Compensation shall
terminate as of the date of termination.

(ii) Termination for Cause. In the event that the
Company terminates Employee's employment hereunder with Cause under Section
5(b) above, then Employee shall, after the effective date of such termination,
as Employee's sole and exclusive remedy, receive the Base Compensation (as then
in effect) for a period of one (1) month after the termination date.

(iii) Termination following Change in Control. If
within twelve (12) months following a Change in Control (as defined below),
either (A) the Company terminates the employment of Employee hereunder without
Cause under Section 5(a) above or (B) Employee resigns from a declined
reassignment of a job that is not reasonably equivalent in responsibility or
compensation or that is not in the same geographic area, then, in lieu of any
other compensation that may be specified herein, Employee shall receive an
amount equal to three (3) multiplied by the sum of the annual Base Compensation
(as then in effect) plus the Annual Bonus (if any) paid or to be paid to
Employee in connection with the Company's last completed fiscal year, payable
without interest in equal amounts according to the pay periods of the Company
for a period of thirty-six (36) months from the date of termination in the same
manner as the Base Compensation was being paid as of the date of termination,
provided, however, that the payment provided for hereunder may at the option of
the Company be paid in a single lump-sum payment, to be paid not later than
thirty (30) days after termination and with the amount determined by
discounting said payments to their present value within the meaning of Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the "Code").

(e) Change in Control. "Change in Control" means a
change in control of the Company after the Public Offering of a nature that
would be required to be reported (assuming such event has not been "previously
reported") in response to Item 1(a) of a Current Report on Form 8-K pursuant to
Section 13 of 15(d) of the Exchange Act of 1934 (the "Exchange Act"); provided
that, without limitation, a Change in Control shall also be deemed to have
occurred at such time as:

(i) any "person" within the meaning of Section
14(d) of the Exchange Act, other than the Company, a subsidiary, or any
employee benefit plan(s) sponsored by the Company or any Subsidiary, is or has
become the "beneficial owner," as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of 25% or more of the combined voting power of the
outstanding securities of the Company ordinarily having the right to vote at
the election of directors; or

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<PAGE> 6

(ii) individuals who constitute the Board
immediately prior to any meeting of stockholders (the "Incumbent Board") have
ceased for any reason to constitute at least a majority thereof, provided that
any person becoming a director whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least three-quarters
(3/4) of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director without objection to such nomination) shall
be, for purposes of this Agreement, considered as though such person were a
member of the Incumbent Board; or

(iii) upon approval by the Company's stockholders
of a reorganization, merger, share exchange or consolidation, other than one
with respect to which those persons who were the beneficial owners, immediately
prior to such reorganization, merger, share exchange or consolidation, of
outstanding securities of the Company ordinarily having the right to vote in
the election of directors own, immediately after such transaction, more than
75% of the outstanding securities of the resulting corporation ordinarily
having the right to vote in the election of directors; or

(iv) upon approval by the Company's stockholders
of a complete liquidation and dissolution of the Company or the sale or other
disposition of all or substantially all of the assets of the Company other than
to a Subsidiary.

Notwithstanding the occurrence of any of the foregoing, the Board may
determine, if it deems it to be in the best interest of the Company and
consistent with a good faith interpretation of this Agreement, that an event or
events otherwise constituting a Change in Control shall not be so considered.
Such determination shall be effective if it is made by the Board prior to the
occurrence of an event that otherwise would be or probably will lead to a
Change in Control or after such event if made by the Board a majority of which
is composed of directors who were members of the Board immediately prior to the
event that otherwise would be or probably will lead to a Change in Control.
Upon such determination, such event or events shall not be deemed to be a
Change in Control for any purposes hereunder.

6. Nondisclosure, Confidentiality; Competition.

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<PAGE> 7

is then conducting activities that are competitive with those of the business
of the Company or its affiliates, in either case within a geographic territory
defined as the greater of (I) a seventy-five (75) mile radius of any renal
dialysis center, unit or facility owned or operated by the Company or an
affiliate of the Company (an "RCG Center"), or (II) the geographic area, as
narrowly construed as is practicable, from which the Company received patients
at each of the RCG Centers. For purposes of this Section, the "business of the
Company or its affiliates" shall mean owning or operating a renal dialysis
center, unit or facility, and providing practice management services to
nephrologists.

(b) Employee further agrees that, for a period of three
(3) years after the termination of Employee's employment with the Company,
Employee will keep confidential and not directly divulge, or allow through a
lack of reasonable care to be divulged to anyone, or use or otherwise
appropriate for Employee's own benefit or for the benefit of others, any
knowledge or information of a confidential nature with respect to the Company's
and its affiliates' current business, the Company itself, or any of its
affiliates, including all trade secrets, pricing information, marketing
information or technical information (hereinafter referred to as the
"Confidential Data"), except for (i) a disclosure that is required by law; or
(ii) information that has been made generally available to the public by the
act of one who has the right to disclose such information. Employee hereby
acknowledges and agrees that the prohibitions against disclosure of
Confidential Data recited herein are in addition to, and not in lieu of, any
rights or remedies which the Company may have available pursuant to the laws of
any jurisdiction or at common law to prevent the disclosure of confidential
information, and the enforcement by the Company of its rights and remedies
pursuant hereto shall not be construed as a waiver of any other rights or
available remedies which the Company may possess in law or equity. Employee
acknowledges that the Company has taken reasonable and appropriate steps to
ensure the confidentiality and non-disclosure of all such Confidential Data. For
purposes of this Section, the Company's and its affiliates' "current business"
shall mean owning or opening a renal dialysis center, unit or facility.

(c) Employee further agrees that, for a period of three
(3) years after the termination of Employee's employment with the Company,
Employee will not, for his own benefit or the benefit of others, solicit any
person or entity that has or has had, or disrupt or attempt to disrupt, any
relationship, contractual or otherwise, with the Company or an affiliate of the
Company (including any patient, payor, physician, provider, managed care
organization or supplier) at any time during Employee's employment with the
Company, for the purpose of assisting, or creating such a relationship for, any
business entity that is competitive with the Company or an affiliate of the
Company. For purposes of this Section, a business entity is competitive with
the Company or an affiliate of the Company if it provides or offers any renal
dialysis service that is provided by the Company or an affiliate of the
Company.

(d) Employee further agrees that, for a period of three
(3) years after the termination of Employee's employment with the Company,
Employee shall not induce,

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<PAGE> 8

nor attempt to induce, any employee of the Company, or any of its affiliates,
to terminate such employee's association with the Company or any of its
affiliates.

(e) These post-employment covenants are considered by the
parties hereto to be fair, reasonable and integral for the protection of the
Company. The parties mutually agree that if a violation of any of these
covenants occurs, such violation or any threatened violation will cause
irreparable injury to the Company and the remedy at law for any such violation
or threatened violation will be inadequate. The parties acknowledge that these
covenants will survive, and remain in effect and enforceable after, termination
of this Agreement.

(f) Employee agrees to indemnify and hold harmless the
Company from and against any and all claims, causes of action, damages and/or
any other losses suffered or incurred by the Company as a result of any breach
or purported breach by Employee of any agreement applicable to Employee which
existed prior to the time of the entering into of this Agreement. Such
obligations of Employee to indemnify and hold harmless Company shall include
any and all costs of defense of any such claim or threatened claim, including
reasonable attorneys' fees.

7. Severability.

The parties hereto hereby expressly agree and contract that it
is not the intention of either party to violate any public policy, or any
statutory or common law, and that if any paragraph, sentence, clause or
combination of the same of this Agreement shall be in violation of the laws of
any state where applicable, such paragraph, sentence, clause or the combination
of the same shall be void in the jurisdictions where it is unlawful, and the
remainder thereof shall remain binding on the parties hereto. It is the
intention of the parties to make the covenants of this Agreement binding only
to the extent that they may be lawfully done under existing applicable laws.
In the event that any part of any term or covenant of this Agreement is
determined by a court of law or equity to be overly broad or otherwise
unenforceable, the parties hereto agree that such court shall be empowered to
substitute, and it is the intent of the parties hereto that such court
substitute, a reasonably judicially enforceable term or limitation in the place
of such unenforceable term or covenant, and that as so modified this Agreement
shall be fully enforceable.

8. Entire Agreement; Modification.

This Agreement constitutes the entire agreement between the
parties and supersedes any and all prior understandings or agreements, and any
changes or additions hereto must be in writing and signed by both parties.

-8-
<PAGE> 9

9. Assignment.

(a) The rights and benefits of Employee under this
Agreement, other than accrued and unpaid amounts due under Section 3(a) hereof,
are personal to Employee and shall not be assignable.

(b) This Agreement may not be assigned by the Company
except to an affiliate of the Company, provided, however, that if the Company
shall merge or effect a consolidation or share exchange with or into, or sell
or otherwise transfer substantially all its assets to, another business entity,
the Company may assign its rights hereunder to that business entity without the
consent of the Employee provided that it causes such business entity to assume
the Company's obligations under this Agreement.

10. Notice.

The references to the notice periods of certain "days"
contained in this Agreement shall mean calendar days. Any notice provided for
in this Agreement shall be delivered to Employee at the most recent address of
Employee listed in the Company's then current employment records. Notice to
the Company shall be delivered to the following address: c/o Renal Care Group,
Inc., 1801 West End, Suite 1100, Nashville, Tennessee 37203, Attention:
President.

11. Waiver.

The waiver by any party to this Agreement of a breach of any of the
provisions contained herein shall not operate or be construed as a waiver of
any subsequent breach.

12. Disputes and Governing Law.

The Company and Employee agree that any dispute arising in connection
with, or relating to, this Agreement or the termination of this Agreement, to
the maximum extent allowed by applicable law, shall be subject to resolution
through informal methods and, failing such efforts, through arbitration.
Either party may notify the other party of the existence of a dispute by
written notice to the address indicated above in Section 10. The parties shall
thereafter attempt in good faith to resolve their differences within thirty
(30) days after the receipt of such notice. If the dispute cannot be resolved
within such 30-day period, either party may file a written demand for
arbitration with the other party. The arbitration shall proceed in accordance
with the terms of the Federal Arbitration Act and the rules and procedures of
the American Arbitration Association. A single arbitrator shall be appointed
through the American Arbitration Association's procedures to resolve the
dispute.

The parties agree that in the event arbitration is necessary, the laws
of the State of Tennessee and any applicable federal law shall apply. The
place of the arbitration shall be Nashville, Tennessee.

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<PAGE> 10

The award of the arbitrator shall be binding and conclusive upon the
parties. Either party shall have the right to have the award made the judgment
of a court of competent jurisdiction in the State of Tennessee.

IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the day and year first above written.

COMPANY:

RENAL CARE GROUP, INC.

By: /s/ Harry R. Jacobson
--------------------------
Harry R. Jacobson, M.D.
Chairman of the Board

[Corporate Seal]

EMPLOYEE:

/s/ Sam A. Brooks, Jr. (Seal)
----------------------------------
Sam A. Brooks, Jr.

-10-

<PAGE> 1

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of February 12, 1996, by
and between RENAL CARE GROUP, INC., a Delaware corporation (the "Company"), and
Ronald Hinds (hereinafter "Employee").

WITNESSETH:

WHEREAS, the Company desires to employ Employee, and Employee desires
to be employed by the Company, on the terms and conditions contained herein;
and

1. Employment.

2. Term.

months each, subject to earlier termination as hereinafter provided, on the
same terms and conditions (subject to mutually agreeable modifications, if
any).

3. Compensation and Benefits.

(a) Base Compensation: The Company shall pay Employee an
annual salary of One Hundred Seventy-Five Thousand Dollars ($175,000), as may
be adjusted as provided herein (the "Base Compensation"), payable according to
the pay periods of the Company as may be in effect from time to time. Such
payments shall be prorated for periods less than a full pay period. The Base
Compensation shall be subject to withholding for federal, state and local
payroll and all other taxes or withholdings applicable to Employee. Any
increases of the Base Compensation shall be at the discretion of the Company,
provided that any decreases to the then current Base Compensation shall require
the consent of Employee.

(c) Bonuses: In addition to the Base Compensation
payable to Employee pursuant to Section 3(a) above, from time to time Employee
may be entitled to an annual bonus as determined in the sole discretion of the
Company.

(d) Expenses: The Company shall reimburse Employee for
any and all expenses reasonably incurred by Employee incident to the
performance of the duties imposed upon Employee hereunder.

4. Duties, Extent of Services.

Employee is engaged as Executive Vice President, Chief
Financial Officer, Secretary and Treasurer and shall perform such duties and
responsibilities as are typically incident thereto, and shall perform in a
faithful and competent manner such additional duties as may be reasonably
assigned from time to time by the Company. Such duties shall be performed on a
full-time basis for the Company at the Company's offices in Nashville
Tennessee. Employee may be required, from time to time, to perform his duties
temporarily hereunder at such other place or places as the Company shall
reasonably designate or as the interests of the Company may reasonably require,
provided that such period does not exceed thirty (30) consecutive days without
Employee's consent and that during any such period Employee is able to return
to Nashville, Tennessee at the Company's expense for weekends.

Employee shall devote all of Employee's business time, attention,
knowledge, and skill solely to the business and interest of the Company, and
the Company shall be entitled

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<PAGE> 3

to all the benefits, profits, and other issues arising from, or incident to,
all work, services, and advice of Employee.

5. Termination.

This Agreement may be terminated by the parties in the manners
specified below:

(b) Termination for Cause.

The Company may terminate this Agreement on written
notice at any time for "cause." For purposes of this Agreement, "cause" shall
mean: (i) Employee is convicted of, pleads guilty to, or confesses to a felony
or any crime involving any act of dishonesty, fraud, misappropriation,
embezzlement or moral turpitude, in which event the Company may terminate this
Agreement immediately, (ii) the misconduct or gross negligence by Employee in
connection with the performance of Employee's duties hereunder, (iii) the
engaging by Employee in any fraudulent, disloyal or unprofessional conduct
which results in an injury to the Company, its affiliates or any of its or
their centers, monetarily or any otherwise, (iv) Employee breaches any
provisions of Section 6 of this Agreement, or (v) the failure by Employee to
otherwise substantially perform his duties with the Company (other than any
such failure resulting from the disability of Employee under Section 5(c)(i))
or the breach of any provision of this Agreement other than Section 6. In the
event of any termination for cause pursuant to the provisions of (ii), (iii),
(iv) or (v) of this subsection, the Company shall give Employee written notice
prior to such termination detailing the specific acts, actions, failures, or
events upon which the forecast termination is based, and Employee shall have
fifteen (15) days after such written notice to cease such actions or otherwise
correct any such failure or breach. If Employee does not cease such action or
otherwise correct such failure or breach within such fifteen day time period,
or having once received such written notice and ceased such actions or
corrected such failure or breach, Employee at any time thereafter again so
acts, fails or breaches, the Company may terminate this Agreement immediately.

The employment of Employee hereunder shall be
automatically terminated by the death or disability of Employee as outlined
below.

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<PAGE> 4

duties, with or without reasonable accommodation. During Employee's six
month-period of Disability or such longer wait period as may be provided for in
any policy of disability that may be maintained by the Company for the benefit
of Employee, the Company agrees to continue to pay Employee's Base Compensation
(less regular withholdings for payroll or other taxes and other required or
proper items, and less any payments from all disability plans provided by the
Company). In the event of a termination of Employee on account of Disability,
however, the Company shall be obligated to pay only Employee's Base
Compensation that has been earned through the effective date of termination
(less regular withholdings for payroll or other taxes and other required or
proper items, and less any payments from all disability plans provided by the
Company).

(i) Termination without Cause. In the event that
the Company terminates Employee's employment hereunder without Cause under
Section 5(a) above, then Employee shall, after the effective date of such
termination, as Employee's sole and exclusive remedy, receive the Base
Compensation (as then in effect) for a period of twelve (12) months after the
termination date. Any wages earned from any employment obtained by Employee
during such period of severance (which Employee shall in good faith pursue)
shall reduce the payments due under this subsection 5(d)(i). In the event that
Employee terminates his or her employment under Section 5(a) above, the
Company's obligation to pay Employee's Base Compensation shall terminate as of
the date of termination.

(ii) Termination for Cause. In the event that the
Company terminates Employee's employment hereunder with Cause under Section
5(b) above, then Employee shall, after the effective date of such termination ,
as Employee's sole and exclusive remedy, receive the Base Compensation (as then
in effect) for a period of one (1) month after the termination date.

(iii) Termination following Change in Control. If
within twelve (12) months following a Change in Control (as defined below),
either (A)#the Company terminates the employment of Employee hereunder without
Cause under Section 5(a) above or (B) Employee resigns from a declined
reassignment of a job that is not reasonably equivalent in responsibility or
compensation or that is not in the same geographic area, then, in lieu of any
other compensation that may be specified herein, Employee shall continue to
receive the Base Compensation (as then in effect) for a period of thirty-six
(36) months from the date of termination payable in the same manner as it

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<PAGE> 5

was being paid as of the date of termination, provided, however, that the
salary payment provided for hereunder may at the option of the Company be paid
in a single lump-sum payment, to be paid not later than thirty (30) days after
termination and with the amount determined by discounting said payments to
their present value within the meaning of Section 280G(d)(4) of the Internal
Revenue Code of 1986, as amended (the "Code").

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<PAGE> 6

in Control shall not be so considered. Such determination shall be effective
if it is made by the Board prior to the occurrence of an event that otherwise
would be or probably will lead to a Change in Control or after such event if
made by the Board a majority of which is composed of directors who were members
of the Board immediately prior to the event that otherwise would be or probably
will lead to a Change in Control. Upon such determination, such event or
events shall not be deemed to be a Change in Control for any purposes
hereunder.

6. Nondisclosure, Confidentiality; Competition.

(a) Employee agrees that, during the term of this
Agreement and of Employee's employment by the Company, and for a period of one
(1) year after the termination of Employee's employment with the Company,
Employee will not in any manner, directly or indirectly, by himself or in
conjunction with any other person, (i) conduct any of the activities or perform
any of the responsibilities or duties that Employee provided the Company during
his employment by the Company for any business entity that is competitive with
the business of the Company or its affiliates or (ii) establish or own any
financial, beneficial or other interest in (other than an interest consisting
of less than one percent (1%) of a class of publicly traded security), make any
loan to or for the benefit of, or render any managerial, marketing or other
business advice, to any entity that is then conducting activities that are
competitive with those of the business of the Company or its affiliates, in
either case within a geographic territory defined as the greater of (I) a
seventy-five (75) mile radius of any renal dialysis center, unit or facility
owned or operated by the Company or an affiliate of the Company (an "RCG
Center"), or (II) the geographic area, as narrowly construed as is practicable,
from which the Company received patients at each of the RCG Centers. For
purposes of this Section, the "business of the Company or its affiliates" shall
mean owning or operating a renal dialysis center, unit or facility, and
providing practice management services to nephrologists.

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<PAGE> 7

possess in law or equity. Employee acknowledges that the Company has taken
reasonable and appropriate steps to ensure the confidentiality and
non-disclosure of all such Confidential Data. For purposes of this Section,
the Company's and its affiliates' "current business" shall mean owning or
opening a renal dialysis center, unit or facility.

(d) Employee further agrees that, for a period of three
(3) years after the termination of Employee's employment with the Company,
Employee shall not induce, nor attempt to induce, any employee of the Company,
or any of its affiliates, to terminate such employee's association with the
Company or any of its affiliates.

7. Severability.

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<PAGE> 8

the remainder thereof shall remain binding on the parties hereto. It is the
intention of the parties to make the covenants of this Agreement binding only
to the extent that they may be lawfully done under existing applicable laws.
In the event that any part of any term or covenant of this Agreement is
determined by a court of law or equity to be overly broad or otherwise
unenforceable, the parties hereto agree that such court shall be empowered to
substitute, and it is the intent of the parties hereto that such court
substitute, a reasonably judicially enforceable term or limitation in the place
of such unenforceable term or covenant, and that as so modified this Agreement
shall be fully enforceable.

8. Entire Agreement; Modification.

9. Assignment.

(a) The rights and benefits of Employee under this
Agreement, other than accrued and unpaid amounts due under Section 3(a) hereof,
are personal to Employee and shall not be assignable.

10. Notice.

11. Waiver.

The waiver by any party to this Agreement of a breach of any of the
provisions contained herein shall not operate or be construed as a waiver of
any subsequent breach.

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<PAGE> 9

12. Disputes and Governing Law.

IN WITNESS WHEREOF, the Company and Employee have executed this
Agreement on the day and year first above written.

COMPANY:

RENAL CARE GROUP, INC.

By: /s/ Harry R. Jacobson
-------------------------
Harry R. Jacobson, M.D.
Chairman of the Board

[Corporate Seal]

EMPLOYEE:

/s/ Ronald Hinds (Seal)
------------------------------
Ronald Hinds

-9-

<PAGE> 1

EXHIBIT 10.5

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of February 12, 1996, by
and between RENAL CARE GROUP, INC., a Delaware corporation ("Company"), and
Anne N. Bower (hereinafter "Employee").

WITNESSETH:

WHEREAS, the Company desires to employ Employee and Employee desires
to be employed by the Company on the terms and conditions contained herein; and

WHEREAS, the Company wishes to enter into an agreement with Employee
whereby Employee shall agree not to compete with the Company in any current or
future business activity conducted or entered into by Company and to hold
certain information obtained by and through Employee's employment in
confidence.

NOW, THEREFORE, in consideration of the compensation payable to
Employee by Company pursuant to this Agreement, and the mutual promises,
covenants, representations and warranties contained herein, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do agree as
follows:

1. Employment.

The Company hereby employs the Employee and the Employee
hereby agrees to accept employment with the Company upon the terms and
conditions hereinafter set forth.

2. Term.

This Agreement shall begin on the date hereof (the "Effective
Date"), and shall continue for an initial period of thirty-six (36) months (the
"Initial Period") subject to earlier termination by Employee or the Company as
hereinafter provided. This Agreement shall renew for additional 12-month
terms, subject to earlier termination as hereinafter provided, on the same
terms and conditions (subject to mutually agreeable modifications, if any)
unless at least written notice 30 days prior to the end of the initial or any
renewal term is given by either party in which case this Agreement shall
terminate as of the end of its then current term.
<PAGE> 2

3. Compensation and Benefits.

(a) Base Compensation: The Company shall pay the
Employee an annual salary of One Hundred Twenty Five Thousand Dollars
($125,000) (the "Base Compensation"), payable according to the pay periods of
the Company as may be in effect from time to time. Such payments shall be
prorated for periods less than a full pay period. The Base Compensation shall
be subject to withholding for federal, state and local payroll and all other
taxes or withholdings applicable to the Employee.

(b) Benefits: During the term of this Agreement, the
Employee shall also be entitled to participate in the insurance and other
fringe benefits made available generally to similar employees of the Company,
as such benefits may be determined from time to time by the Company, provided
that Employee shall have at least 3 weeks of paid vacation time. The Company
shall provide for use by the Employee a car (of similar make and model to the
vehicle which was provided to Employee by Medical Enterprises, Ltd. immediately
prior to the commencement of this Agreement) and shall replace such car with a
similar make and model not less frequently than every 36 months, and shall pay
for insurance, maintenance and gas for such vehicle. In addition, the Company
shall provide Employee with a car phone and shall pay the expenses thereof to
the extent incurred in the furtherance of her duties hereunder.

(c) Bonuses: In addition to the Base Compensation
payable to Employee pursuant to Section 3(a) above, from time to time the
Employee may be entitled to an annual bonus as determined in the sole
discretion of the Company.

(d) Expenses: The Company shall reimburse Employee for
any and all expenses reasonably incurred by the Employee incident to the
performance of the duties imposed upon Employee hereunder.

4. Duties, Extent of Services.

The Employee is engaged as a Regional Chief Operating Officer
of the Company for the region encompassing the Company's operations in
Mississippi and shall perform such duties and responsibilities as are typically
incident thereto, and shall perform in a faithful and competent manner such
additional duties as may be reasonably assigned from time to time by the
Company. Such duties shall be performed on a full-time basis for the Company
at the Company's offices in Jackson, Mississippi (the "Center"). Employee may
be required from time to time, to perform her duties temporarily hereunder at
such place or places as the Company shall reasonably designate or as the
interests of the Company may reasonably require, provided such period does not
exceed a two-week period without Employee's consent and during any such period
Employee is able to return to Jackson, Mississippi at Company's expense for
weekends. The Employee may serve as a member of the board of directors of
nonprofit charitable organizations from time to time,

-2-
<PAGE> 3

including Kidney Care, Inc., to the extent such activities do not interfere
with the Employees Duties hereunder

5. Termination.

This Agreement may be terminated by the parties in the manners
specified below:

(a) Termination Without Cause.

Either the Company or the Employee may terminate the
Employee's employment under this Agreement at any time for any reason upon
thirty (30) days' prior written notice to the other party.

(i) In the event that the Company terminates the
employment of the Employee under this Section 5(a) or gives notice of any
non-renewal at the end of any term pursuant to Section 2, the Employee shall,
after the effective date of such termination or non-renewal, as Employee's sole
and exclusive remedy, receive the greater of the Base Compensation as then in
effect as set forth in Section 3(a) for a period of twelve (12) months after
the termination date or the Base Salary applicable to any remaining time in the
Initial Period. Any wages earned from any employment obtained by the Employee
during such period of severance (which the Employee is under no obligation to
obtain) shall reduce the payments due under this subsection (5)(a)(i).

(ii) In the event the Employee terminates her
employment with Company under this Section 5(a), the Company's obligation to
pay Employee's Base Compensation shall terminate as of the date of the
termination.

(b) Termination for Cause.

The Company may terminate this Agreement on written
notice at any time for "cause." For purposes of this Agreement, "cause" shall
mean: (i) the Employee is convicted of, pleads guilty to, or confesses to a
felony or any crime involving any act of dishonesty, fraud, misappropriation,
embezzlement or moral turpitude, in which event the Company may terminate this
Agreement immediately, or (ii) the misconduct or gross negligence by Employee
in connection with the performance of her duties hereunder, or (iii) the
engaging by Employee in any fraudulent, disloyal or unprofessional conduct
which results in an injury to the Company, its affiliates or any of its or
their centers, monetarily or any otherwise, (iv) the Employee breaches any
provisions of Section 6 of this Agreement, or (v) the failure by Employee to
otherwise substantially perform her

-3-
<PAGE> 4

duties with the Company (other than any such failure resulting from the
disability of Employee under Section 5(c)(i)) or the breach of any provision of
this Agreement other than Section 6. In the event of any termination for cause
pursuant to the provisions of (ii), (iii), (iv) or (v) of this subsection, the
Company shall give the Employee written notice prior to such termination
detailing the specific acts, actions, failures, or events upon which the
forecast termination is based, and the Employee shall have fifteen (15) days
after such written notice to cease such actions or otherwise correct any such
failure or breach. If the Employee does not cease such action or otherwise
correct such failure or breach within such fifteen day time period, or having
once received such written notice and cease such actions or corrected such
failure or breach, the Employee at any time thereafter again so acts, fails or
breaches, the Company may terminate this Agreement immediately. In the event
the Company terminates Employee's employment with the Company under this
Section 5(b), the Company's obligation to pay the Base Compensation to Employee
shall terminate as of the date of the termination.

The employment of the Employee hereunder shall be
automatically terminated by the death or disability of the Employee as outlined
below.

(i) Disability. Employer may terminate this
Agreement at the time the Employee shall have been Disabled for a continuous
period of four (4) months during any continuous twelve month period. For
purposes of this Paragraph 5(c)(i), the term "Disabled" shall mean Employee's
inability to perform the essential functions of her duties, with or without
reasonable accommodation. During Employee's four month-period of Disability or
such longer wait period as defined in any policy of disability maintained by
the Company for the benefit of the Employee, Employer agrees to continue to pay
her Base Compensation (less regular withholdings for payroll or other taxes and
other required or proper items, and less any payments from all disability plans
provided by the Company). In the event of a termination of Employee on account
of her Disability, however, the Company shall be obligated to pay only
Employee's Base Compensation that has been earned through the effective date of
termination (less regular withholdings for payroll or other taxes and other
required or proper items, and less any payments from all disability plans
provided by the Company).

(ii) Termination of Agreement Upon Death of the
Employee. In the event the Employee shall die during the term of this
Agreement, this Agreement shall terminate and Employee's estate shall receive
the remainder of the Base Compensation set forth in Section 3(a) hereof accrued
to the last day of the month in which death occurs.

-4-
<PAGE> 5

6. Nondisclosure, Confidentiality; Competition.

(a) The Employee agrees that, during the term of this
Agreement and of her employment by the Company, and for a period of one (1)
year after the termination of Employee's employment by the Company, the
Employee will not in any manner, directly or indirectly, by herself or in
conjunction with any other person, (i) conduct any of the activities or perform
any of the responsibilities or duties that she provided the Company during her
employment by the Company for any business entity that is competitive with the
business of the Company or its affiliates or (ii) establish or own any
financial, beneficial or other interest in (other than an interest consisting
of less than one percent (1%) of a class of publicly traded security), make any
loan to or for the benefit of, or render any managerial, marketing or other
business advice, to any entity that is then conducting activities that are
competitive with those of the business of the Company or its affiliates, in
either case within a geographic territory defined as the greater of (I) a
seventy-five (75) mile radius of any renal dialysis center, unit or facility
owned or operated by the Company or an affiliate of the Company (an "RCG
Center"), or (II) the geographic area, as narrowly construed as is practicable,
from which the Company received patients at all of the RCG Centers. For
purposes of this Section, the "business of the Company or its affiliates" shall
mean owning or operating a renal dialysis center, unit or facility.

(b) The Employee further agrees that, for a period of
three (3) years after the termination of Employee's employment by the Company,
the Employee will keep confidential and not directly divulge, or allow through
reasonable care to be divulged to anyone, or use or otherwise appropriate for
the Employee's own benefit or for the benefit of others, any knowledge or
information of a confidential nature with respect to the Company's and its
affiliates' current business, Company itself, or any of its affiliates,
including all trade secrets, pricing information, marketing information or
technical information (hereinafter referred to as the "Confidential Data"),
except for (i) a disclosure that is required by law; or (ii) information that
has been made generally available to the public by the act of one who has the
right to disclose such information. The Employee hereby acknowledges and
agrees that the prohibitions against disclosure of Confidential Data recited
herein are in addition to, and not in lieu of, any rights or remedies which the
Company may have available pursuant to the laws of any jurisdiction or at
common law to prevent the disclosure of confidential information, and the
enforcement by the Company of its rights and remedies pursuant hereto shall not
be construed as a waiver of any other rights or available remedies which the
Company may possess in law or equity. The Employee acknowledges that the
Company has taken reasonable and appropriate steps to ensure the
confidentiality and non-disclosure of all such Confidential Data. For purposes
of this Section, the Company's and its affiliates' "current business" shall
mean owning or opening a renal dialysis center, unit or facility.

(c) The Employee also agrees that, for a period of three
(3) years after the termination of Employee's employment by the Company, the
Employee will not, for her own benefit or the benefit of others, solicit any
person or entity that has or has had, or disrupt or attempt to disrupt, any
relationship, contractual or otherwise, with the

-5-
<PAGE> 6

Company or an affiliate of the Company (including any patient, payor,
physician, provider, managed care organization or supplier) at any time during
the Employee's employment with the Company, for the purpose of assisting, or
creating such a relationship for, any business entity that is competitive with
the Company or an affiliate of the Company. For purposes of this Section, a
business entity is competitive with the Company or an affiliate of the Company
if it provides or offers any renal dialysis service that is provided by the
Company or an affiliate of the Company.

(d) The Employee further agrees that, for a period of
three (3) years after the termination of Employee's employment by the Company,
the Employee shall not induce, nor attempt to induce, any employee of the
Company, or any of its affiliates, to terminate her association with the
Company or any of its affiliates.

(f) Employee agrees to indemnity and hold harmless
Company from and against any and all claims, causes of action, damages and/or
any other losses suffered or incurred by the Company as a result of any breach
or purported breach by Employee of any agreement applicable to Employee which
existed prior to the time of the entering into of this Agreement. Such
obligations of Employee to indemnify and hold harmless Company shall include
any and all costs of defense of any such claim or threatened claim, including
reasonable attorneys' fees.

7. Severability.

The parties hereto hereby expressly agree and contract that it
is not the intention of either party to violate any public policy, or any
statutory or common law, and that if any paragraph, sentence, clause or
combination of the same of this Agreement shall be in violation of the laws of
any state where applicable, such paragraph, sentence, clause or the combination
of the same shall be void in the jurisdictions where it is unlawful, and the
remainder thereof shall remain binding on the parties hereto. It is the
intention of the parties to make the covenants of this Agreement binding only
to the extent that they may be lawfully done under existing applicable laws.
In the event that any part of any term or covenant of this Agreement is
determine by a court of law or equity to be overly broad or otherwise
unenforceable, the parties hereto agree that such court shall be empowered to
substitute, and it is the intent of the parties hereto that such court
substitute, a reasonably judicially enforceable term or limitation in the place
of such unenforceable term or covenant, and that as so modified this Agreement
shall be fully enforceable.

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<PAGE> 7

8. Entire Agreement; Modification.

9. Assignment.

(a) The rights and benefits of Employee under this
Agreement, other than accrued and unpaid amounts due under Section 3(a) hereof,
are personal to her and shall not be assignable.

(b) This Agreement may not be assigned by the Company
except to an affiliate of the Company, provided, however, that if the Company
shall merge or effect a consolidation or share exchange with or into, or sell
or otherwise transfer substantially all its assets to, another corporation, the
Company may assign its rights hereunder to that corporation without the consent
of the Employee provided that it causes such corporation to assume the
Company's obligations under this Agreement.

10. Notice.

11. Waiver.

The waiver by any party to this Agreement of a breach of any of the
provisions contained herein shall not operate or be construed as a waiver of
any subsequent breach.

12. Disputes and Governing Law.

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<PAGE> 8

be appointed through the American Arbitration Association's procedures to
resolve the dispute.

The parties agree that in the event arbitration is necessary, the laws
of the State of Mississippi and any applicable federal law shall apply. The
place of the arbitration shall be Jackson, Mississippi.

IN WITNESS WHEREOF, Company and Employee have executed this Agreement
on the day and year first above written.

COMPANY:

RENAL CARE GROUP, INC.

By: /s/ Sam A. Brooks
-------------------------------------------
Title: President and Chief Executive Officer

[Corporate Seal]

EMPLOYEE:

/s/ Anne N. Bower (Seal)
-------------------------------------------
Anne N. Bower

-8-

<PAGE> 1

EXHIBIT 10.6

KANSAS NEPHROLOGY PHYSICIANS, P.A.

AND

RENAL CARE GROUP, INC.

MEDICAL DIRECTOR SERVICES AGREEMENT
(GROUP PRACTICE)

KANSAS

<PAGE> 2

CONTENTS
<TABLE>
<S> <C>
ARTICLE I SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Patient Care Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Medical Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Termination By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Termination Without Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Effect of Termination or Expiration . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Additional Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Additional Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV STATUS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 No Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Minimum Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Continuing Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Evidence of Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII POST-EMPLOYMENT, CONFIDENTIALITY, NONCOMPETITION AND NONSOLICITATION COVENANT . . 8
7.1 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4 Severability and Termination Provisions . . . . . . . . . . . . . . . . . . . . 10
8.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.7 Construction of the Agreement and Binding Effect . . . . . . . . . . . . . . . . 10

</TABLE>
<PAGE> 3

<TABLE>
<S> <C> <C>
8.8 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.9 Disputes and Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>

<PAGE> 4

MEDICAL DIRECTOR SERVICES AGREEMENT
(GROUP PRACTICE/FREESTANDING FACILITY)

THIS MEDICAL DIRECTOR SERVICES AGREEMENT (the
"Agreement") is made and entered into this day of 12th day of February, 1996, to
be effective as provided for hereinbelow, by and between RENAL CARE GROUP, INC.,
a Delaware corporation (the "COMPANY"), and KANSAS NEPHROLOGY PHYSICIANS, P.A.,
a Kansas professional association (the "GROUP").

W I T N E S S E T H:

WHEREAS, the COMPANY owns and operates eight (8) renal
dialysis facilities located at Chanute, Dodge City, Great Bend, Hays, Lakin,
Liberal, Hutchison, and Wichita, Kansas (such facilities collectively referred
to as "Facility") which provides outpatient, acute and home dialysis services;

WHEREAS, the COMPANY desires to engage a single group
of nephrologists skilled in dialysis center administration to
provide medical director services at the Facility;

WHEREAS, the GROUP desires to provide medical director
services to the COMPANY at the Facility, and is willing to engage for this
purpose a physician or physicians licensed to practice medicine and prescribe
drugs without restriction in the State of Kansas, who specialize in nephrology
and dialysis services, and are experienced in dialysis center administration.

NOW, THEREFORE, in consideration of the mutual
covenants and agreements of the parties as herein set forth, the receipt and
sufficiency of such consideration being hereby acknowledged, the parties agree
as follows:

ARTICLE I
SERVICES

1.1 Engagement. The COMPANY shall engage the services
of the GROUP and the GROUP shall provide services for the COMPANY as medical
director of the Facility. In such capacity, the GROUP shall perform the
services customarily performed by medical directors of dialysis facilities and
such additional or other tasks related to the oversight of dialysis treatments
being administered at the Facility as designated by the COMPANY. The GROUP shall
devote its ability and effort to provide for the proper medical quality and
conduct of the Facility and its operations; provided, however, operational
decisions regarding the Facility shall be made solely by the COMPANY.

1.2 Responsibilities. Without limiting the generality
of the foregoing, the GROUP shall provide the following services:

(a) Ensure proper administration and execution of
the Facility's patient care policies through the Facility's Head Nurse;

(b) Provide medical expertise to the Facility's
nursing staff through the Facility's Head Nurse;

(c) Oversee the Facility's physical facilities
and assets and the daily operation and maintenance of dialysis equipment;
<PAGE> 5

(d) Monitor the selection of the appropriate
dialysis treatment modality and treatment setting for Facility patients in
conjunction with patients' attending physician(s), if necessary;

(e) Ensure policies are in place for assuring the
availability of personnel capable of handling emergency situations should they
arise;

(f) Develop needs analyses, and implement and
monitor Facility training programs, including in- service training to patients;

(g) Review and approve water analysis results and
monthly culture reports, and direct and monitor appropriate remedial steps as
needed;

(h) Participate in on-site governmental and
managed care organization surveys upon request of the COMPANY, and review
federal, state and local survey reports and, as needed, participate in the
development and implementation of appropriate plans of correction;

(i) Require a physician to review all Facility
incident reports, patient complaints and quality management reviews and
implement corresponding actions, if necessary;

(j) Make available to the members of the
Facility's physicians an appropriate physician to serve in a counseling capacity
and serve as the Facility's governing body representative to such physicians;

(k) Make available an appropriate physician to
attend periodic conferences upon request of the COMPANY's Medical Advisory
Board;

(l) Provide those other functions required of the
Facility's medical director as generally required of medical directors in
similar facilities;

(m) Make recommendations to the COMPANY in
keeping controllable costs of the Facility to a minimum;

(n) Present recommendations to the Regional Chief
Executive Officer, Regional Chief Operating Officer or the Executive Vice
President, Chief Operating Officer of the COMPANY, Head Nurse of the Facility,
or other persons designated by the COMPANY respectively, concerning policies and
procedures for the Facility to be submitted for the COMPANY's Medical Advisory
Board approval, which polices and procedures shall be in accordance with the
requirements of Medicare and Medicaid and as well as with applicable state and
federal laws, rules and regulations;

(o) Make available an appropriate physician to
act as liaison with the Facility's affiliated medical institutions and renal
transplant centers;

(p) Oversee the Facility's overall quality
management program, procedures to promote the consistency and quality of all
dialysis services provided at the Facility by physician and non-physician
personnel and at all times operate the Facility so it is in compliance with all
applicable governmental requirements;

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<PAGE> 6

(q) Cooperate with the COMPANY's insurance
carriers and/or its designees regarding any claims, investigations or lawsuits
involving the services provided hereunder and immediately notify the COMPANY
upon receipt of notification of any such claim, investigation or lawsuit; and

(r) Require its physicians to obtain and maintain
from the Facility privileges sufficient to perform the obligations hereunder and
meet COMPANY's quality standards as set by the Medical Advisory Board.

1.3 Patient Care Manual. The GROUP shall advise the
COMPANY on the Facility's compliance with governmental regulations including,
but not limited to, those which require renal care facilities to maintain and
implement a patient care policy and procedures manual describing:

(a) The types of dialysis used in the Facility
and the procedures followed in performance of each type of dialysis;

(b) Procedures for implementing universal
precautions for the prevention of disease transmission;

(d) A disaster readiness plan.

1.4 Records. The GROUP shall assure the current
status of all medical and business records relating to the care and treatment of
patients in the Facility in accordance with COMPANY policies and applicable
regulations of governmental agencies. While the Head Nurse has day-to-day
responsibility in this regard and the attending physician has the medical
responsibility for the content of the medical record, the GROUP is ultimately
responsible for the integrity and completeness of such records, including:

(a) Patient long-term care plans, patient
short-term care plans and medical histories;

(b) Results of physical examinations and
laboratory tests; and

1.5 Medical Staff. The GROUP shall review the
applications of physicians requesting to attend to patients at the Facility and
forward a recommendation concerning such applications to the COMPANY's Medical
Advisory Board. The GROUP shall maintain oversight of all disciplinary actions
with regard to any matter of such physicians or patient care personnel as needed
to assure the quality of services and conformity to COMPANY and Facility rules
and policies.

1.6 Coverage. The GROUP shall make available one or
more physicians, at a minimum, to provide service for Facility at each site for
their respective hours of operation. Should the Facility's patient case load
increase, the COMPANY may increase the GROUP's on-site obligation coverage
accordingly and the GROUP shall provide such coverage.

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<PAGE> 7

ARTICLE II
TERM AND TERMINATION

2.1 Term. This Agreement shall become effective as of
12:01 a.m. on February 12, 1996 (the "Effective Date") and shall remain in full
force and effect until 12:00 p.m. midnight on the seventh (7th) anniversary of
the Effective Date, unless otherwise earlier terminated as provided in this
Article II (the "Initial Term"). Following the Initial Term, this Agreement may
be renewed by the COMPANY by written notice to the GROUP for successive terms of
three (3) year(s) duration each (the "Renewal Terms"), unless otherwise earlier
terminated as provided in this Article II.

2.2 Termination By Agreement. If the COMPANY and the
GROUP shall mutually agree in writing, this Agreement shall be terminated on the
time and date stipulated therein.

2.3 Termination Without Cause. The COMPANY may
terminate this Agreement at the end of the Initial Term or any Renewal Term by
giving ninety (90) days prior written notice to the GROUP of such intention to
terminate.

2.4 Termination for Cause. The COMPANY may terminate
this Agreement and all rights and liabilities created by this Agreement
immediately, except for those relating to Article VII, at any time for cause
including, but not limited to the GROUP's (or any one of its physician's(s'))
dishonesty, misconduct, misappropriation of funds, disparagement of the COMPANY,
the Facility or any of their representatives or employees, refusal to perform
properly designated tasks, negligence in the performance of medical or other
functions, suspension or revocation of the GROUP's license(s) to conduct
business or any licenses or authorizations of its physician(s), including
medical license(s), board certifications or board eligibility, medical staff
membership(s), clinical privilege(s) or authorization(s) or ability to prescribe
drugs, commission or conviction, including a plea of nolo contendere, of any
felony or of any crime involving moral turpitude, act or omission that could be
detrimental to the reputation of the Facility or the COMPANY, failure to perform
or observe any of the terms or provisions of this Agreement, breach of any terms
or provisions of this Agreement, reprimand by a federal or state regulatory or
professional oversight board, any expulsion or other discipline by the medical
staff or management of any health care facility where one of the physicians of
the GROUP enjoys membership or clinical privileges, or failure of any of the
GROUP's representations in this Agreement. The GROUP shall notify the COMPANY
immediately upon learning of any event described in the foregoing sentence. Upon
the occurrence of any event described herein this Section 2.4, the COMPANY
agrees not to terminate this Agreement if, within ten (10) days of the COMPANY's
request: (i) the GROUP agrees that any GROUP physician who is the subject of
such cause will not provide services under this Agreement, and (ii) such GROUP
physician agrees to tender immediately in writing a voluntary resignation of
such physician's privileges to attend patients at the Facility.

2.5 Effect of Termination or Expiration.

(a) Following the expiration of this Agreement or
its termination for any reason, the GROUP shall not interfere with any intent by
the COMPANY to contract with any other individual or entity for the provision of
medical director services. Following the expiration of this Agreement or its
termination for cause, the GROUP shall not permit any of its physicians to enjoy
any clinical privileges or Facility physician staff membership at the Facility.
If any physician's employment or contractual relationship with the GROUP is
terminated for cause, the GROUP shall deliver to the COMPANY each such
physician's resignation of his or her privileges at the Facility effective
immediately. In the event the GROUP's termination is due to either a reprimand
or disciplinary action, the GROUP shall have the right to appeal to the Medical
Advisory Board of the COMPANY. The ruling of the Medical Advisory Board shall
be deemed final and the GROUP shall

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<PAGE> 8

waive any additional right of procedural due process or other right to any
challenge or review of any such change in status as an attending physician or a
medical director as may be granted pursuant to the COMPANY's or the Facility's
policies or other authorizations. The GROUP in its sole discretion may use its
right of appeal to appeal a request of the COMPANY made of the GROUP pursuant to
Paragraph 2.4 above.

(b) The GROUP shall maintain for itself and each
of the physicians provided hereunder, with an insurer licensed to transact
insurance in the State of Kansas, prior acts coverage with policy limits and
with a retroactive date sufficient to cover any claims arising out of acts which
occurred from the Effective Date of this Agreement through and including the
date of such termination or obtain an extended reporting endorsement for two (2)
years, all as acceptable to the COMPANY. The GROUP shall provide evidence of
such coverage to COMPANY upon request.

ARTICLE III
COMPENSATION

3.1 Compensation. In consideration of the services,
covenants, and agreements agreed to be performed by the GROUP during the Initial
or any Renewal Term of this Agreement, the COMPANY shall pay the GROUP an amount
equal to the sum of Two Hundred Forty-Five Thousand Dollars ($245,000) per
calendar year 1996, Two Hundred Ninety-Eight Thousand Dollars ($298,000) per
calendar year 1997, and Three Hundred Fifty Thousand Dollars ($350,000) per
calendar year 1998 and every year thereafter during the term of this Agreement.
Such amount shall be payable monthly. The GROUP agrees to accept this payment
by the COMPANY as the total compensation for all services, covenants and
agreements pursuant to this Agreement; provided however, ninety (90) days prior
to each annual anniversary of the Effective Date of the Initial Term and any
Renewal Term, the parties shall discuss in good faith whether any adjustment to
the compensation described in Article III herein would be appropriate to reflect
the value of the services provided hereunder by the GROUP and the medical
director services required by the Facility for each year of this Agreement and
to reflect any changes in reimbursement levels for services provided by the
Facilities or the economics of owning and operating the facilities in each case
with a view to determining the fair market value of the services provided
herein. No change to the compensation shall be made unless both the parties
agree in writing and any such change shall be effective for at least twelve (12)
months from the effective date of such change.

3.2 Additional Compensation. In consideration for the
covenant not to compete and other agreements in Article VII, the COMPANY has of
even date herewith granted the GROUP an option to purchase 37,500 shares of the
common stock of the COMPANY as set forth in that certain Renal Care Group, Inc.
Non-Qualified Stock Option Agreement of even date herewith between the COMPANY
and the GROUP.

3.3 Additional Effect of Termination. If either the
COMPANY or the GROUP terminates this Agreement or it expires before the end of a
Facility pay period, the compensation shall be pro-rated on a daily basis for
purposes of calculating the amount of compensation due GROUP through the date of
termination or expiration. The COMPANY may offset any sums owing it due from
GROUP from such owed sums.

-5-
<PAGE> 9

ARTICLE IV
STATUS OF PARTIES

4.1 Tax Status. It is mutually understood that the
physician(s) to be engaged to perform the services required hereunder are to be
engaged by the GROUP, and shall under no circumstances be considered the
employee(s) of the COMPANY or the Facility. The GROUP shall be responsible for
any payroll and similar taxes related to its engagement of the physician(s), and
neither the GROUP nor its physician(s) shall be entitled to any benefits
afforded to the employees of the COMPANY. The GROUP agrees to indemnify and
hold the COMPANY harmless from any and all loss or liability arising with
respect to such payments, withholdings and benefits, if any. In the event the
United States Internal Revenue Service ("IRS") should question or challenge the
worker status of the GROUP or its physicians, the parties hereto mutually agree
that both the GROUP and the COMPANY shall have the right to participate in any
discussion or negotiation occurring with the IRS, irrespective of or by whom
such discussions or negotiations are initiated; and, each party shall notify the
other in advance of any planned meeting or discussion.

4.2 No Agency. The GROUP shall not have the right or
authority and hereby expressly covenants not to enter into a contract in the
name of the COMPANY or otherwise bind the COMPANY, in any way, without the
express written consent of the COMPANY. The GROUP shall hold the COMPANY
harmless from any loss attributable to a violation of this covenant. However,
GROUP shall advise and assist the COMPANY in securing and retaining contracts in
the name and for the account of the COMPANY with such individuals or entities
necessary for the proper and efficient functioning of the COMPANY.

4.3 Access to Records. If it is ultimately determined
that Section 952 of the Omnibus Reconciliation Act of 1980 applies to this
Agreement, then until the expiration of four (4) years after the furnishing of
services provided under this Agreement, the GROUP will make available to the
Secretary of the United States Department of Health and Human Services, the
United States Comptroller General, and their representatives, this Agreement
and all books, documents and records necessary to certify the nature and
extent of the costs of those services. If the GROUP carries out the duties of
this Agreement through a subcontract worth $10,000 or more over a twelve-month
period with a related organization, the subcontract will also contain an
access clause to permit access by the Secretary, Comptroller General, and
their representatives to the related organization's books, documents and
records.

ARTICLE V
INSURANCE

5.1 Minimum Insurance Coverage. The GROUP shall
purchase and maintain at its expense for itself and each of the physicians
professional and general liability insurance coverage from a commercial
insurance company licensed to transact insurance in the State of Kansas and
acceptable to the COMPANY in an amount equal to the higher of Two Million
Dollars ($2,000,000) per claim and Four Million Dollars ($4,000,000) in the
aggregate per year, such other greater amount as required by the COMPANY (the
"Minimum Coverage") or greater amount required by a governmental entity.

5.2 Continuing Coverage. If the GROUP either changes
insurance carriers for any reason or switches from "claims made" to "occurrence"
coverage, or has the Minimum Coverage terminated for any reason, then the GROUP
shall obtain the requisite Minimum Coverage with prior acts coverage containing
a retroactive date sufficient to cover any claims arising out of acts which
occurred from the Effective Date of this Agreement through and including the
expiration date of the current coverage.

-6-
<PAGE> 10

5.3 Evidence of Coverage. On execution of this
Agreement and annually thereafter or on reasonable request, the GROUP shall
provide the COMPANY with certificates of insurance or other written instruments
acceptable to the COMPANY evidencing purchase of the requisite Minimum Coverage
for itself and each of the GROUP's physicians. The GROUP shall notify the
COMPANY at least sixty (60) days prior to the voluntary cancellation or
termination of any Minimum Coverages and immediately upon receipt of any notice
of involuntary cancellation or termination of any Minimum Coverages.

ARTICLE VI
REPRESENTATIONS

6.1 Representations and Warranties. In performing
services under this Agreement, the GROUP covenants and warrants that it:

(a) Is licensed to conduct its business in the
State of Kansas, and shall engage only physician(s) who are licensed without
restriction to practice medicine in such state and who never have had any such
license in this or any other state limited, withdrawn, suspended, subject to
reprimand, curtailed, placed on probation or revoked;

(b) Shall engage only physician(s) who is(are)
board eligible or board certified in the specialty of nephrology as recognized
by the American Board of Medical Specialists;

(c) Shall engage only physician(s) who is(are) a
member(s) of the active medical staff of a local hospital and has(have) at least
one (1) year experience or training in the care of patients at an end stage
renal disease treatment facility;

(d) Shall engage only physician(s) who has(have)
never been denied membership or reappointment to membership on the medical staff
of any health care facility, and no health care facility medical staff
membership or clinical privileges of a physician have ever been limited,
suspended, curtailed, revoked, placed on probation or withdrawn, subject to
reprimand whether voluntarily or as a result of action (either formal or
informal) initiated by any health care facility or its medical staff;

(e) Shall require its physician(s) to use their
best and most diligent efforts and professional skills and judgment in rendering
services under this Agreement;

(f) Shall require its physician(s) to perform
professional services and shall render care to patients in accordance with and
in a manner consistent with appropriate standards and the ethics of the medical
profession and as necessary for the Facility to maintain compliance with
applicable governmental laws and regulations;

(g) Shall require its physician(s) to immediately
notify the COMPANY of any denial, suspension, revocation or curtailment of
licensure or certification status, medical staff membership or clinical
privileges held by such physician(s) with any state, company, payor or health
care facility;

(h) Has notified the COMPANY of each action or
claim alleging professional negligence filed or asserted against any engaged
physician within the previous five (5) years and a current status and/or
ultimate resolution of such claim and will immediately notify the COMPANY in
writing of its receipt of any action, claim or lawsuit alleging professional
negligence lodged against any engaged physician individually or against any
partnership, professional corporation or association with which any engaged
physician is affiliated;

-7-
<PAGE> 11

(i) Shall, for itself, and for each physician
provided hereunder, immediately notify the COMPANY of any sanction, threatened
sanction, investigation or proceeding by any governmental agency or any entity
regarding its or such physician's(s') participation in the Medicare, Medicaid
program or any third party payor program in which the CENTER participates; and

(j) Shall cause each physician within the GROUP
to execute this Agreement (i) demonstrating each physician's understanding of
this Agreement and its provisions, including the understanding that he or she
will not retain privileges at the Facility if this Agreement is terminated for
cause or if their employment or contractual relationship with the GROUP is
terminated for cause and (ii) agreeing to be bound by Article VII as provided
therein.

ARTICLE VII
CONFIDENTIALITY, NONCOMPETITION
AND NONSOLICITATION COVENANT

7.1 Additional Covenants.

(a) The GROUP agrees that, during the term of
this Agreement and of Agreement with the COMPANY, and for a period of two (2)
years after the termination of this Agreement, the GROUP will not in any manner,
directly or indirectly, by itself or in conjunction with any other person, (i)
conduct any of the activities or perform any of the responsibilities delineated
in Article I ("Services") of this Agreement for any business entity that is
competitive with the business of the COMPANY or (ii) establish or own any
financial, beneficial or other interest in (other than an interest consisting of
less than one percent (1%) of a class of publicly traded security), make any
loan to or for the benefit of, or render any managerial, marketing or other
business advice, to any entity that is then conducting activities that are
competitive with those of the business of the COMPANY, in either case within a
geographic territory defined as the greater of (I) a seventy-five (75) mile
radius of the Facility, or (II) the geographic area, as narrowly construed as is
practicable, from which the GROUP received patients at the Facility in the
performance of the GROUP's duties as medical director of the Facility. For
purposes of this Article, the "business of the COMPANY" shall mean owning or
operating a renal dialysis center, unit or facility.

The terms and provisions of this Article VII shall also
apply to each physician of the GROUP, any member or shareholder of any
professional corporation or association of which a GROUP is a shareholder or any
person with whom the GROUP is associated in partnership and in or with respect
to which by virtue of said professional corporation or partnership the GROUP
receives an indirect financial benefit. The time periods applicable to this
Article VII are the earlier of (i) the termination or expiration of this
Agreement or (ii) a physician's departure from the GROUP.

-8-
<PAGE> 12

the laws of any jurisdiction or at common law to prevent the disclosure of
confidential information, and the enforcement by the COMPANY of its rights and
remedies pursuant hereto shall not be construed as a waiver of any other rights
or available remedies which the COMPANY may possess in law or equity. The GROUP
acknowledges that the COMPANY has taken reasonable and appropriate steps to
ensure the confidentiality and non-disclosure of all such Confidential Data. For
purposes of this Section, the COMPANY's "current business" shall mean owning or
opening a renal dialysis center, unit or facility.

(c) The GROUP also agrees that, for a period of
three (3) years after the termination of GROUP's agreement with the COMPANY, the
GROUP will not, for its own benefit or the benefit of others, solicit any person
or entity that has or has had, or disrupt or attempt to disrupt, any
relationship, contractual or otherwise, with the COMPANY (including any patient,
payor, physician, provider, managed care organization or supplier) at any time
during the GROUP's Agreement with the COMPANY, for the purpose of assisting, or
creating such a relationship for, any business entity that is competitive with
the COMPANY. For purposes of this Section, a business entity is competitive
with the COMPANY if it provides or offers any renal dialysis service that is
provided by the COMPANY.

(e) These covenants are considered by the parties
hereto to be fair, reasonable and integral for the protection of the COMPANY.
The parties mutually agree that if a violation of any of these covenants occurs,
such violation or any threatened violation will cause irreparable injury to the
COMPANY and the remedy at law for any such violation or threatened violation
will be inadequate. The parties acknowledge that these covenants will survive,
and remain in effect and enforceable after, termination of this Agreement.

(f) Nothing in these covenants shall be deemed to
prohibit the physicians of the GROUP from exercising their medical judgment
concerning the medical treatment of a patient in any manner whatsoever in any
location whatsoever, and shall not be deemed to require the referral of any such
patient to any facility of the COMPANY or any of its affiliates. The GROUP
acknowledges that enforcement of this covenant will not prevent a physician of
the GROUP from earning a living by practicing medicine or nephrology.

(g) The GROUP hereby further agrees that prior to
the engagement of any physician as an independent contractor or the employment
of a physician to perform services for the patients or medical practice of the
GROUP, the GROUP will require as a condition of said physician's engagement or
employment that the physician enter into a supplemental non-compete agreement
with the COMPANY like the one contained within. It is expressly understood and
agreed by the GROUP that its promises in this subparagraph (g) have served as a
material inducement to the COMPANY to enter into this Agreement.

-9-
<PAGE> 13

ARTICLE VIII
MISCELLANEOUS

8.1 Notices. Any notices to be given under this
Agreement shall be deemed given if sent U.S. certified mail, return receipt
requested, to the parties at the following addresses:

GROUP: Kansas Nephrology Physicians, P.A.
1035 North Emporia Avenue
Wichita, Kansas 67214
Attn: Dennis L. Ross, M.D.

COMPANY: Renal Care Group, Inc.
1801 West End, Suite 1100
Nashville, Tennessee 37202
Attn: Executive Vice President
& Chief Operating Officer

If either party desires to change either the address or
the person to whom notice is to be given, such change must be done in writing
delivered to the parties.

8.2 Amendments. This Agreement may be amended at any
time by mutual agreement of the parties hereto, but any such amendment shall not
be operative or valid unless the same is reduced to writing and approved by the
parties hereto.

8.3 Assignability. This Agreement shall not be
assignable by the GROUP and the GROUP shall not assign any of its rights or
obligations under this Agreement without consent of the COMPANY.

8.4 Severability and Termination Provisions. If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws in effect during the term of this Agreement, the
legality, validity or enforceability of the remaining provisions of this
Agreement shall not be affected thereby, and in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be legal, valid and enforceable.

8.5 Headings. The headings of this Agreement are
inserted for convenience only and are not to be considered in construction of
the provisions hereof.

8.6 Entire Agreement. This Agreement constitutes the
full contract and agreement of the parties, superseding all prior or
contemporaneous agreements, either oral or written.

8.7 Construction of the Agreement and Binding Effect.
This Agreement shall be construed and interpreted according to the laws of the
State of Tennessee.

8.8 Non-Waiver. The failure of either party to
exercise any of its rights under this Agreement for a breach thereof shall not
be deemed to be a waiver of such rights or a waiver of any subsequent breach.

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<PAGE> 14

law, shall be subject to resolution through informal methods and, failing such
efforts, through arbitration. Either party may notify the other party of the
existence of a dispute by written notice to the address indicated hereinabove.
The parties shall thereafter attempt in good faith to resolve their differences
within thirty (30) days after the receipt of such notice. If the dispute cannot
be resolved within such 30-day period, either party may file a written demand
for arbitration with the other party. The arbitration shall proceed in
accordance with the terms of the Federal Arbitration Act and the rules and
procedures of the American Arbitration Association. A single arbitrator shall
be appointed through the American Arbitration Association's procedures to
resolve the dispute.

The parties agree that in the event arbitration is
necessary, the laws of the State of Tennessee and any applicable federal law
shall apply. The place of the arbitration shall be Nashville, Tennessee.

The award of the arbitrator shall be binding and
conclusive upon the parties. Either party shall have the right
to have the award made the judgment of a court of competent jurisdiction in the
State of Tennessee.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written to be effective as provided hereinabove.

COMPANY: RENAL CARE GROUP, INC.

By: /s/ Sam A. Brooks
------------------------------------------
Title: President and Chief Executive Officer
-------------------------------------

GROUP: KANSAS NEPHROLOGY PHYSICIANS, P.A.

By: /s/ W. Tom Meredith, M.D.
------------------------------

Title: President
-------------------------

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<PAGE> 15

The physicians executing below make the acknowledgment set forth in Section 6(j)
and agree to be bound by Article VII as provided therein.

PHYSICIANS: /s/ W. Tom Meredith, M.D.
-------------------------
W. Tom Meredith, M.D.

/s/ Hugo T. Weber, M.D.
-------------------------
Hugo T. Weber, M.D.

/s/ Dennis L. Ross, M.D.
-------------------------
Dennis L. Ross, M.D.

/s/ Kenneth Kovach
-------------------------
Kenneth Kovach, M.D.

-12-

<PAGE> 1

EXHIBIT 10.7

RENAL CARE GROUP, INC.

and

INDIANA DIALYSIS MANAGEMENT, P.C.

MEDICAL DIRECTOR SERVICES AGREEMENT

INDIANA/OHIO

<PAGE> 2

CONTENTS
<TABLE>
<S> <C>
ARTICLE I SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Policies and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Medical Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Termination By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Termination Without Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Effect of Termination or Expiration . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Additional Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Additional Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV STATUS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 No Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Minimum Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Continuing Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Evidence of Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII POST-EMPLOYMENT, CONFIDENTIALITY, NONCOMPETITION AND NONSOLICITATION COVENANT . . 8
7.1 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4 Severability and Termination Provisions . . . . . . . . . . . . . . . . . . . . 10
8.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.7 Construction of the Agreement and Binding Effect . . . . . . . . . . . . . . . . 11
</TABLE>

-i-

<PAGE> 3

<TABLE>
<S> <C> <C>
8.8 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.9 Disputes and Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

-ii-

<PAGE> 4

MEDICAL DIRECTOR SERVICES AGREEMENT
(GROUP PRACTICE/FREESTANDING FACILITY)

THIS MEDICAL DIRECTOR SERVICES AGREEMENT (the "Agreement") is made
and entered into this day of 12th day of February, 1996, to be effective as
provided for hereinbelow, by and between RENAL CARE GROUP, INC., a Delaware
corporation (the "COMPANY"), and INDIANA DIALYSIS MANAGEMENT, P.C., an Indiana
professional corporation (the "GROUP").

W I T N E S S E T H:

WHEREAS, the COMPANY owns and operates five (5) renal dialysis
facilities located at Ft. Wayne, Marion, New Haven, Warsaw, Indiana and Bryan,
Ohio (such facilities collectively referred to as "Facility") which provides
outpatient, acute and home dialysis services;

WHEREAS, the COMPANY desires to engage a single group of nephrologists
skilled in dialysis center administration to provide medical director services
at the Facility;

WHEREAS, the GROUP desires to provide medical director services to the
COMPANY at the Facility, and is willing to engage for this purpose a physician
or physicians licensed to practice medicine and prescribe drugs without
restriction in the States of Indiana and Ohio, who specialize in nephrology and
dialysis services, and are experienced in dialysis center administration.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties as herein set forth, the receipt and sufficiency of such
consideration being hereby acknowledged, the parties agree as follows:

ARTICLE I
SERVICES

1.1 Engagement. The COMPANY shall engage the services of the GROUP
and the GROUP shall provide services for the COMPANY as medical director of the
Facility. In such capacity, the GROUP shall perform the services customarily
performed by medical directors of dialysis facilities and such additional or
other tasks related to the oversight of dialysis treatments being administered
at the Facility as designated by the COMPANY. The GROUP shall devote its
ability and effort to provide for the proper medical quality and conduct of the
Facility and its operations; provided, however, operational decisions regarding
the Facility shall be made solely by the COMPANY.

1.2 Responsibilities. Without limiting the generality of the
foregoing, the GROUP shall provide the following services:

(a) Ensure proper administration and execution of the Facility's
patient care policies through the Facility's Head Nurse;

-1-
<PAGE> 5

(b) Provide medical expertise to the Facility's nursing staff
through the Facility's Head Nurse;

(d) Ensure policies are in place for assuring the availability of
personnel capable of handling emergency situations should they arise;

(e) Develop needs analyses, and implement and monitor Facility
training programs, including in-service training to patients;

(f) Review and approve water analysis results and monthly
culture reports;

(g) Participate in on-site governmental and managed care
organization surveys upon request of the COMPANY; review federal, state and
local survey reports and, as needed, participate in the development and
implementation of appropriate plans of correction;

(h) Require a physician to review all Facility incident reports,
patient complaints and quality management reviews and implement corresponding
actions, if necessary;

(i) Make available to the members of the medical staff of the
Facility an appropriate physician to serve in a counseling capacity and serve as
the Facility's governing body representative to such physicians;

(j) Make available an appropriate physician to attend periodic
conferences upon request of the COMPANY's Medical Advisory Board;

(k) Provide those other functions required of the Facility's
medical director as generally required of medical directors in similar
facilities;

(l) Present recommendations to the Regional Chief Executive
Officer, Regional Chief Operating Officer or the Executive Vice President, Chief
Operating Officer of the COMPANY, Head Nurse of the Facility, or other persons
designated by the COMPANY respectively, concerning policies and procedures for
the Facility to be submitted for the COMPANY's Medical Advisory Board approval,
which polices and procedures shall be in accordance with the requirements of
Medicare and Medicaid and as well as with applicable state and federal laws,
rules and regulations;

(m) Make available an appropriate physician to act as liaison
with the Facility's affiliated medical institutions and renal transplant
centers;

(n) Oversee the Facility's overall quality management program,
procedures to promote the consistency and quality of all dialysis services
provided at the Facility by physician and non-physician personnel and at all
times operate the Facility so it is in compliance with all applicable
governmental requirements;

(o) Cooperate with the COMPANY's insurance carriers and/or its
designees regarding any claims, investigations or lawsuits involving the
services provided hereunder and

-2-
<PAGE> 6

immediately notify the COMPANY upon receipt of notification of any such claim,
investigation or lawsuit; and

(p) Require its physicians to obtain and maintain from the
Facility privileges sufficient to perform the obligations hereunder and meet
COMPANY's quality standards as set by the Medical Advisory Board.

1.3 Policies and Procedures. The GROUP shall advise the COMPANY on
the Facility's compliance with governmental regulations including, but not
limited to, those which require renal care facilities to maintain and implement
a policy and procedures manual describing:

(a) The types of dialysis used in the Facility and the procedures
followed in performance of each type of dialysis;

(b) Procedures for implementing universal precautions for the
prevention of disease transmission;

(d) A disaster readiness plan.

1.4 Records. The GROUP shall assure the current status of all medical
and business records relating to the care and treatment of patients in the
Facility in accordance with COMPANY policies and applicable regulations of
governmental agencies and report any deficiencies to the COMPANY's Medical
Advisory Board to address.

1.5 Medical Staff. The GROUP shall review the applications of
physicians requesting to attend to patients at the Facility and forward a
recommendation concerning such applications to the COMPANY's Medical Advisory
Board. The GROUP, in concert with the appropriate medical staff committee(s),
shall maintain oversight of all disciplinary actions with regard to any matter
of such physicians or patient care personnel as needed to assure the quality of
services and conformity to COMPANY and Facility rules and policies.

1.6 Coverage. The GROUP shall make available one or more physicians,
at a minimum, to provide services for Facility at each site. Should the
Facility's patient case load increase, the COMPANY may increase the GROUP's
on-site obligation coverage accordingly and the GROUP shall provide such
coverage.

ARTICLE II
TERM AND TERMINATION

2.1 Term. This Agreement shall become effective as of 12:01 a.m. on
February 12, 1996 (the "Effective Date") and shall remain in full force and
effect until 12:00 p.m. midnight on the seventh (7th) anniversary of the
Effective Date, unless otherwise earlier terminated as provided in this Article
II (the "Initial Term"). Following the Initial Term, this Agreement may be
renewed by the COMPANY by written notice to the GROUP for successive terms of
three (3) year(s) duration each (the "Renewal Terms"), unless otherwise earlier
terminated as provided in this Article II.

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<PAGE> 7

2.2 Termination By Agreement. If the COMPANY and the GROUP shall
mutually agree in writing, this Agreement shall be terminated on the time and
date stipulated therein.

2.3 Termination Without Cause. The COMPANY may terminate this
Agreement at the end of the Initial Term or any Renewal Term by giving ninety
(90) days prior written notice to the GROUP of such intention to terminate.

2.4 Termination for Cause. The COMPANY may terminate this Agreement
and all rights and liabilities created by this Agreement immediately, except for
those relating to Article VII, at any time for cause including, but not limited
to the GROUP's (or any one of its physician's(s')) dishonesty, misconduct,
misappropriation of funds, disparagement of the COMPANY, the Facility or any of
their representatives or employees, refusal to perform properly designated
tasks, negligence in the performance of medical or other functions, suspension
or revocation of the GROUP's license(s) to conduct business or any licenses or
authorizations of its physician(s), including medical license(s), board
certifications or board eligibility, medical staff membership(s), clinical
privilege(s) or authorization(s) or ability to prescribe drugs, commission or
conviction, including a plea of nolo contendere, of any felony or of any crime
involving moral turpitude, act or omission that could be detrimental to the
reputation of the Facility or the COMPANY, failure to perform or observe any of
the terms or provisions of this Agreement, breach of any terms or provisions of
this Agreement, reprimand by a federal or state regulatory or professional
oversight board, any expulsion or other discipline by the medical staff or
management of any health care facility where one of the physicians of the GROUP
enjoys membership or clinical privileges, or failure of any of the GROUP's
representations in this Agreement. The GROUP shall notify the COMPANY
immediately upon learning of any event described in the foregoing sentence. Upon
the occurrence of any event described herein this Section 2.4, the COMPANY
agrees not to terminate this Agreement if, within ten (10) days of the COMPANY's
request: (i) the GROUP agrees that any GROUP physician who is the subject of
such cause will not provide services under this Agreement, and (ii) such GROUP
physician agrees to tender immediately in writing a voluntary resignation of
such physician's privileges to attend patients at the Facility.

2.5 Effect of Termination or Expiration.

(a) Following the expiration of this Agreement or its termination
for any reason, the GROUP shall not interfere with any intent by the COMPANY to
contract with any other individual or entity for the provision of medical
director services. Following termination of this Agreement for cause, the GROUP
shall not permit any of its physicians to enjoy any clinical privileges or
Facility physician staff membership at the Facility. If any physician's
employment or contractual relationship with the GROUP is terminated for cause,
the GROUP shall deliver to COMPANY such physician's resignation of his or her
privileges at the Facility effective immediately. In the event the GROUP's
termination is due to either a reprimand or disciplinary action, the GROUP shall
have the right to appeal to the Medical Advisory Board of the COMPANY. The
ruling of the Medical Advisory Board shall be deemed final and the GROUP shall
waive any additional right of procedural due process or other right to any
challenge or review of any such change in status as an attending physician (s)
or medical director as may be granted pursuant to the COMPANY's or the
Facility's policies or other authorizations. The GROUP, in it sole discretion,
may use its right of appeal to appeal a request of the COMPANY made of the GROUP
pursuant to Paragraph 2.4 above.

-4-
<PAGE> 8

(b) Following the expiration or termination of this Agreement and
the termination or resignation of a physician from the GROUP, the GROUP shall
maintain for itself and each of the physicians provided hereunder, with
insurer(s) licensed to transact insurance in the States of Indiana and Ohio,
prior acts coverage with policy limits and with a retroactive date sufficient to
cover any claims arising out of acts which occurred from the Effective Date of
this Agreement through and including the date of such termination or obtain an
extended reporting endorsement for two (2) years, all as acceptable to the
COMPANY. The GROUP shall provide evidence of such coverage to COMPANY upon
request.

ARTICLE III
COMPENSATION

3.1 Compensation. In consideration of the services, covenants, and
agreements agreed to be performed by the GROUP during the Initial or any Renewal
Term of this Agreement, the COMPANY shall pay the GROUP an amount equal to the
sum of Two Hundred Twenty-Eight Thousand Dollars ($228,000) per calendar year
1996, Two Hundred Seventy-Seven Thousand Dollars ($277,000) per calendar year
1997, and Three Hundred Twenty-Six Thousand Dollars ($326,000) per calendar year
1998 and every year thereafter during the term of this Agreement. Such amount
shall be payable monthly. The GROUP agrees to accept this payment by the
COMPANY as the total compensation for all services, covenants and agreements
pursuant to this Agreement; provided however, ninety (90) days prior to each
annual anniversary of the Effective Date of the Initial Term and any Renewal
Term, the parties shall discuss in good faith whether any adjustment to the
compensation described in Article III herein would be appropriate to reflect the
value of the services provided hereunder by the GROUP and the medical director
services required by the Facility for each year of this Agreement. No change to
the compensation shall be made unless both the parties agree in writing and any
such change shall be effective for at least twelve (12) months from the
effective date of such change.

3.2 Additional Compensation. In consideration for the covenant not to
compete and other agreements in Article VII, the COMPANY has of even date
herewith granted the GROUP an option to purchase 37,500 shares of the common
stock of the COMPANY as set forth in that certain Renal Care Group, Inc.
Non-Qualified Stock Option Agreement of even date herewith between the COMPANY
and the GROUP.

3.3 Additional Effect of Termination. If either the COMPANY or the
GROUP terminates this Agreement or it expires before the end of a Facility pay
period, the compensation shall be pro-rated on a daily basis for purposes of
calculating the amount of compensation due GROUP through the date of termination
or expiration. The COMPANY may offset any sums owing it due from GROUP from
such owed sums.

-5-
<PAGE> 9

ARTICLE IV
STATUS OF PARTIES

4.1 Tax Status. It is mutually understood that the physician(s) to be
engaged to perform the services required hereunder are to be engaged by the
GROUP, and shall under no circumstances be considered the employee(s) of the
COMPANY or the Facility. The GROUP shall be responsible for any payroll and
similar taxes related to its engagement of the physician(s), and neither the
GROUP nor its physician(s) shall be entitled to any benefits afforded to the
employees of the COMPANY. The GROUP agrees to indemnify and hold the COMPANY
harmless from any and all loss or liability arising with respect to such
payments, withholdings and benefits, if any. In the event the United States
Internal Revenue Service ("IRS") should question or challenge the worker status
of the GROUP or its physicians, the parties hereto mutually agree that both the
GROUP and the COMPANY shall have the right to participate in any discussion or
negotiation occurring with the IRS, irrespective of or by whom such discussions
or negotiations are initiated; and, each party shall notify the other in advance
of any planned meeting or discussion.

4.2 No Agency. The GROUP shall not have the right or authority and
hereby expressly covenants not to enter into a contract in the name of the
COMPANY or otherwise bind the COMPANY, in any way, without the express written
consent of the COMPANY. The GROUP shall hold the COMPANY harmless from any loss
attributable to a violation of this covenant. However, GROUP shall advise and
assist the COMPANY in securing and retaining contracts in the name and for the
account of the COMPANY with such individuals or entities necessary for the
proper and efficient functioning of the COMPANY.

4.3 Access to Records. If it is ultimately determined that Section
952 of the Omnibus Reconciliation Act of 1980 applies to this Agreement, then
until the expiration of four (4) years after the furnishing of services
provided under this Agreement, the GROUP will make available to the Secretary
of the United States Department of Health and Human Services, the United States
Comptroller General, and their representatives, this Agreement and all books,
documents and records necessary to certify the nature and extent of the costs
of those services. If the GROUP carries out the duties of this Agreement
through a subcontract worth $10,000 or more over a twelve-month period with a
related organization, the subcontract will also contain an access clause to
permit access by the Secretary, Comptroller General, and their representatives
to the related organization's books, documents and records.

ARTICLE V
INSURANCE

5.1 Minimum Insurance Coverage. The GROUP shall purchase and maintain
at its expense for itself and physicians providing services to the GROUP
professional and general liability insurance coverage from a commercial
insurance company licensed to transact insurance in the State of Indiana in such
an amount to qualify the GROUP under IC Section 27-12-1-1 et seq. as a "health
care provider." The GROUP shall purchase and maintain at its expense for itself
and physicians providing services to the GROUP professional and general
liability insurance coverage from a commercial insurance company licensed to
transact insurance in the State of Ohio in an amount equal to $200,000 per
occurrence, $600,000 aggregate and an umbrella policy in the amount of
$10,000,000.

-6-
<PAGE> 10

5.2 Continuing Coverage. If the GROUP either changes insurance
carriers for any reason or switches from "claims made" to "occurrence" coverage,
or has the Minimum Coverage terminated for any reason, then the GROUP shall
obtain the requisite Minimum Coverage with prior acts coverage containing a
retroactive date sufficient to cover any claims arising out of acts which
occurred from the Effective Date of this Agreement through and including the
expiration date of the current coverage.

5.3 Evidence of Coverage. On execution of this Agreement and annually
thereafter or on reasonable request, the GROUP shall provide the COMPANY with
certificates of insurance or other written instruments acceptable to the COMPANY
evidencing purchase of the requisite Minimum Coverage for itself and each of the
GROUP's physicians. The GROUP shall notify the COMPANY at least sixty (60) days
prior to the voluntary cancellation or termination of any Minimum Coverages and
immediately upon receipt of any notice of involuntary cancellation or
termination of any Minimum Coverages.

ARTICLE VI
REPRESENTATIONS

6.1 Representations and Warranties. In performing services under this
Agreement, the GROUP covenants and warrants that it:

(a) Is licensed to conduct its business in the States of Indiana
or Ohio, and shall engage only physician(s) who are licensed without restriction
to practice medicine in Indiana or Ohio and who never have had any such license
in this or any other state limited, withdrawn, suspended, subject to reprimand,
curtailed, placed on probation or revoked;

(b) Shall engage only physician(s) who is(are) board eligible or
board certified in the specialty of nephrology as recognized by the American
Board of Medical Specialists;

(c) Shall engage only physician(s) who is(are) a member(s) of the
active medical staff of a local hospital and has(have) at least one (1) year
experience or training in the care of patients at an end stage renal disease
treatment facility;

(d) Shall engage only physician(s) who has(have) never been
denied membership or reappointment to membership on the medical staff of any
health care facility, and no health care facility medical staff membership or
clinical privileges of a physician have ever been limited, suspended, curtailed,
revoked, placed on probation or withdrawn, subject to reprimand whether
voluntarily or as a result of action (either formal or informal) initiated by
any health care facility or its medical staff;

(e) Shall require its physician(s) to use their best and most
diligent efforts and professional skills and judgment in rendering services
under this Agreement;

(f) Shall require its physician(s) to immediately notify the
COMPANY of any denial, suspension, revocation or curtailment of licensure or
certification status, medical staff membership or clinical privileges held by
such physician(s) with any state, company, payor or health care facility;

-7-
<PAGE> 11

(g) Has notified the COMPANY of each action or claim alleging
professional negligence filed or asserted against any engaged physician within
the previous five (5) years and a current status and/or ultimate resolution of
such claim and will immediately notify the COMPANY in writing of its receipt of
any action, claim or lawsuit alleging professional negligence lodged against any
engaged physician individually or against any partnership, professional
corporation or association with which any engaged physician is affiliated;

(h) Shall, for itself, and for each physician provided hereunder,
immediately notify the COMPANY of any sanction, threatened sanction,
investigation or proceeding by any governmental agency or any entity regarding
its or such physician's(s') participation in the Medicare, Medicaid program or
any third party payor program in which the GROUP participates; and

(i) Shall cause each physician within the GROUP or other
physicians performing services on behalf of the GROUP hereunder (as may be
approved by the COMPANY), to execute this Agreement (i) demonstrating each
physician's understanding of this Agreement and its provisions, including the
understanding that he or she will not retain privileges at the Facility if this
Agreement is terminated for cause or if their employment or contractual
relationship with the GROUP is terminated for any cause and (ii) agreeing to be
bound by Article VII as provided therein.

ARTICLE VII
CONFIDENTIALITY, NONCOMPETITION
AND NONSOLICITATION COVENANT

7.1 Additional Covenants.

(a) The GROUP agrees that, during the term of this Agreement with
the COMPANY, and for a period of two (2) years after the termination of this
Agreement, the GROUP will not in any manner, directly or indirectly, by itself
or in conjunction with any other person, (i) conduct any of the activities or
perform any of the responsibilities delineated in Article I ("Services") of this
Agreement for any business entity that is competitive with the business of the
COMPANY or (ii) establish or own any financial, beneficial or other interest in
(other than an interest consisting of less than one percent (1%) of a class of
publicly traded security), make any loan to or for the benefit of, or render any
managerial, marketing or other business advice, to any entity that is then
conducting activities that are competitive with those of the business of the
COMPANY, in either case within a geographic territory defined as the greater of
(I) a seventy-five (75) mile radius of the Facility, or (II) the geographic
area, as narrowly construed as is practicable, from which the GROUP received
patients at the Facility in the performance of the GROUP's duties as medical
director of the Facility. For purposes of this Article, the "business of the
COMPANY" shall mean owning or operating a renal dialysis center, unit or
facility.

The terms and provisions of this Article VII shall also apply to each
physician of the GROUP or other physician performing services on behalf of the
GROUP hereunder (as may be approved by the COMPANY), any member or shareholder
of any professional corporation or association of which a GROUP is a shareholder
or any person with whom the GROUP is associated in partnership and in or with
respect to which by virtue of said professional corporation or partnership the
GROUP receives an indirect financial benefit. The time periods applicable to
this Article VII are the earlier of (i) the termination or expiration of this
Agreement or (ii) a

-8-
<PAGE> 12

physician's departure from the GROUP or a physician's cessation of services
hereunder on behalf of the GROUP.

(b) The GROUP further agrees that, for a period of five (5) years
after the termination of GROUP's employment with the COMPANY, the GROUP will
keep confidential and not directly divulge, or allow through reasonable care to
be divulged to anyone, or use or otherwise appropriate for the GROUP's own
benefit or for the benefit of others, any knowledge or information of a
confidential nature with respect to the COMPANY's current business, COMPANY
itself, or any of its affiliates, including all trade secrets, pricing
information, marketing information or technical information (hereinafter
referred to as the "Confidential Data"), except for (i) a disclosure that is
required by law; or (ii) information that has been made generally available to
the public by the act of one who has the right to disclose such information. The
GROUP hereby acknowledges and agrees that the prohibitions against disclosure of
Confidential Data recited herein are in addition to, and not in lieu of, any
rights or remedies which the COMPANY may have available pursuant to the laws of
any jurisdiction or at common law to prevent the disclosure of confidential
information, and the enforcement by the COMPANY of its rights and remedies
pursuant hereto shall not be construed as a waiver of any other rights or
available remedies which the COMPANY may possess in law or equity. The GROUP
acknowledges that the COMPANY has taken reasonable and appropriate steps to
ensure the confidentiality and non-disclosure of all such Confidential Data. For
purposes of this Section, the COMPANY's "current business" shall mean owning or
opening a renal dialysis center, unit or facility.

(c) The GROUP also agrees that, for a period of three (3) years
after the termination of GROUP's agreement with the COMPANY, the GROUP will not,
for its own benefit or the benefit of others, solicit any person or entity that
has or has had, or disrupt or attempt to disrupt, any relationship, contractual
or otherwise, with the COMPANY (including any patient, payor, physician,
provider, managed care organization or supplier) at any time during the GROUP's
Agreement with the COMPANY, for the purpose of assisting, or creating such a
relationship for, any business entity that is competitive with the COMPANY. For
purposes of this Section, a business entity is competitive with the COMPANY if
it provides or offers any renal dialysis service that is provided by the
COMPANY.

(e) These covenants are considered by the parties hereto to be
fair, reasonable and integral for the protection of the COMPANY. The parties
mutually agree that if a violation of any of these covenants occurs, such
violation or any threatened violation will cause irreparable injury to the
COMPANY and the remedy at law for any such violation or threatened violation
will be inadequate. The parties acknowledge that these covenants will survive,
and remain in effect and enforceable after, termination of this Agreement.

(f) Nothing in these covenants shall be deemed to prohibit the
physicians of the GROUP from exercising their medical judgment concerning the
medical treatment of a patient in any manner whatsoever in any location
whatsoever, and shall not be deemed to require the referral of any such patient
to any facility of the COMPANY or any of its affiliates. The GROUP

-9-
<PAGE> 13

acknowledges that enforcement of this covenant will not prevent a physician of
the GROUP from earning a living by practicing medicine or nephrology.

(g) The GROUP hereby further agrees that prior to the engagement
of any physician as an independent contractor or the employment of a physician
to perform services for the patients or medical practice of the GROUP, the GROUP
will require as a condition of said physician's engagement or employment that
the physician enter into a supplemental non-compete agreement with the COMPANY
like the one contained within. It is expressly understood and agreed by the
GROUP that its promises in this subparagraph (g) have served as a material
inducement to the COMPANY to enter into this Agreement.

ARTICLE VIII
MISCELLANEOUS

8.1 Notices. Any notices to be given under this Agreement shall be
deemed given if sent U.S. certified mail, return receipt requested, to the
parties at the following addresses:

GROUP: Indiana Dialysis Management, P.C.
7900 West Jefferson Boulevard, Suite 201
Fort Wayne, Indiana 46802
Attn: Stephen D. McMurray, M.D.

COMPANY: Renal Care Group, Inc.
1801 West End, Suite 1100
Nashville, Tennessee 37202
Attn: Executive Vice-President
& Chief Operating Officer

If either party desires to change either the address or the person to
whom notice is to be given, such change must be done in writing delivered to the
parties.

8.2 Amendments. This Agreement may be amended at any time by mutual
agreement of the parties hereto, but any such amendment shall not be operative
or valid unless the same is reduced to writing and approved by the parties
hereto.

8.3 Assignability. This Agreement shall not be assignable by the
GROUP and the GROUP shall not assign any of its rights or obligations under this
Agreement without consent of the COMPANY.

8.4 Severability and Termination Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws in effect during the term of this Agreement, the legality, validity
or enforceability of the remaining provisions of this Agreement shall not be
affected thereby, and in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be legal, valid and enforceable.

-10-
<PAGE> 14

8.5 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of the provisions
hereof.

8.6 Entire Agreement. This Agreement constitutes the full contract
and agreement of the parties, superseding all prior or contemporaneous
agreements, either oral or written.

8.7 Construction of the Agreement and Binding Effect. This Agreement
shall be construed and interpreted according to the laws of the State of
Tennessee.

8.8 Non-Waiver. The failure of either party to exercise any of its
rights under this Agreement for a breach thereof shall not be deemed to be a
waiver of such rights or a waiver of any subsequent breach.

8.9 Disputes and Governing Law. The parties agree that any dispute
arising in connection with, or relating to, this Agreement or the termination of
this Agreement, to the maximum extent allowed by applicable law, shall be
subject to resolution through informal methods and, failing such efforts,
through arbitration. Either party may notify the other party of the existence of
a dispute by written notice to the address indicated hereinabove. The parties
shall thereafter attempt in good faith to resolve their differences within
thirty (30) days after the receipt of such notice. If the dispute cannot be
resolved within such 30-day period, either party may file a written demand for
arbitration with the other party. The arbitration shall proceed in accordance
with the terms of the Federal Arbitration Act and the rules and procedures of
the American Arbitration Association. A single arbitrator shall be appointed
through the American Arbitration Association's procedures to resolve the
dispute.

The parties agree that in the event arbitration is necessary, the laws
of the State of Tennessee and any applicable federal law shall apply. The place
of the arbitration shall be Nashville, Tennessee.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written to be effective as provided hereinabove.

COMPANY: RENAL CARE GROUP, INC.

By: /s/ Sam A. Brooks
-----------------

Title: President
-----------------

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<PAGE> 15

GROUP: INDIANA DIALYSIS MANAGEMENT, P.C.

By: /s/ Stephen D. McMurray, M.D.
-----------------------------
Stephen D. McMurray, M.D.

Title: President
-----------------------------

The physicians executing below make the acknowledgment set forth in Section
6(i) and agree to be bound by Article VII as provided therein.

PHYSICIANS: /s/ Stephen McMurray, M.D.
---------------------------
Stephen McMurray, M.D.

/s/ Robert L. Dettmer, M.D.
---------------------------
Robert L. Dettmer, M.D.

/s/ Richard Nielsen, M.D.
---------------------------
Richard Nielsen, M.D.

/s/ John Dyer, M.D.
---------------------------
John Dyer, M.D.

-12-

<PAGE> 1

EXHIBIT 10.8

RENAL CARE GROUP, INC.

and

TYLER DIALYSIS & TRANSPLANT ASSOCIATES, P.A.

MEDICAL DIRECTOR SERVICES AGREEMENT

TEXAS

<PAGE> 2

CONTENTS
<TABLE>
<S> <C>
ARTICLE I SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Patient Care Manual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Medical Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 The COMPANY's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Termination By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Termination Without Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Termination for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Effect of Termination or Expiration . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Additional Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Additional Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV STATUS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 No Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Minimum Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2 Continuing Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Evidence of Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII POST-EMPLOYMENT, CONFIDENTIALITY, NONCOMPETITION AND NONSOLICITATION COVENANT . . 8
7.1 Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.4 Severability and Termination Provisions . . . . . . . . . . . . . . . . . . . . 11
8.5 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

<PAGE> 3

<TABLE>
<S> <C> <C>
8.7 Construction of the Agreement and Binding Effect . . . . . . . . . . . . . . . . 11
8.8 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

<PAGE> 4

MEDICAL DIRECTOR SERVICES AGREEMENT
(GROUP PRACTICE/FREESTANDING FACILITY)

THIS MEDICAL DIRECTOR SERVICES AGREEMENT (the "Agreement") is made and
entered into this day of 12th day of February, 1996, to be effective as provided
for herein below, by and between RENAL CARE GROUP, INC., a Delaware corporation
(the "COMPANY"), and TYLER DIALYSIS & TRANSPLANT ASSOCIATES, P.A., a Texas
professional association (the "GROUP").

W I T N E S S E T H:

WHEREAS, the COMPANY, through its subsidiary Renal Care Group Texas,
Inc., owns and operates four (4) renal dialysis facilities located at Tyler,
Palestine, Carthage and Mt. Pleasant, Texas (such facilities collectively
referred to as "Facility") which provides outpatient, acute and home dialysis
services;

WHEREAS, the COMPANY desires to engage a single group of nephrologists
skilled in dialysis center administration to provide medical director services
at the Facility;

WHEREAS, the GROUP desires to provide medical director services to the
COMPANY at the Facility, and is willing to engage for this purpose a physician
or physicians licensed to practice medicine and prescribe drugs without
restriction in the State of Texas, who specialize in nephrology and dialysis
services, and are experienced in dialysis center administration; and

WHEREAS, the COMPANY and the GROUP are dedicated to providing optimal
care to Facility patients.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties as herein set forth, the receipt and sufficiency of such
consideration being hereby acknowledged, the parties agree as follows:

ARTICLE I
SERVICES

1.1 Engagement. The COMPANY shall engage the services of the GROUP
and the GROUP shall provide services for the COMPANY as medical director of the
Facility. In such capacity, the GROUP shall perform the services customarily
performed by medical directors of dialysis facilities and such additional or
other tasks related to the oversight of dialysis treatments being administered
at the Facility as designated by the COMPANY. The GROUP shall devote its ability
and effort to provide for the proper medical quality and conduct of the Facility
and its operations.

1.2 Responsibilities. Without limiting the generality of the
foregoing, the GROUP shall provide the following services:

(a) Ensure proper administration and execution of the Facility's
patient care policies through the Facility's Head Nurse;

(b) Provide medical expertise to the Facility's nursing staff
through the Facility's Head Nurse;

<PAGE> 5

(d) Monitor the selection of the appropriate dialysis treatment
modality and treatment setting for Facility patients in conjunction with
patients' attending physician(s), if necessary;

(e) Ensure policies are in place for assuring the availability of
personnel capable of handling emergency situations should they arise;

(f) Develop needs analyses, and implement and monitor Facility
training programs, including in-service training to patients;

(g) Review and approve water analysis results and monthly culture
reports, and direct and monitor appropriate remedial steps as needed;

(h) Participate in on-site governmental and managed care
organization surveys upon request of the COMPANY and review federal, state and
local survey reports and, as needed, participate in the development and
implementation of appropriate plans of correction;

(i) Require a physician to review all Facility incident reports,
patient complaints and quality management reviews and implement corresponding
actions, if necessary;

(j) Make available to the members of the Facility's physicians an
appropriate physician to serve in a counseling capacity and serve as the
Facility's governing body representative to such physicians;

(k) Make available an appropriate physician to attend periodic
conferences upon request of the COMPANY's Medical Advisory Board;

(l) Provide those other functions required of the Facility's
medical director as generally required of medical directors in similar
facilities;

(m) Make recommendations to the COMPANY in keeping controllable
costs of the Facility to a minimum;

(n) Present recommendations to the Regional Chief Executive
Officer, Regional Chief Operating Officer or the Executive Vice President, Chief
Operating Officer of the COMPANY, Head Nurse of the Facility, or other persons
designated by the COMPANY respectively, concerning policies and procedures for
the Facility to be submitted for the COMPANY's Medical Advisory Board approval,
which polices and procedures shall be in accordance with the requirements of
Medicare and Medicaid and as well as with applicable state and federal laws,
rules and regulations;

(o) Make available an appropriate physician to act as liaison
with the Facility's affiliated medical institutions and renal transplant
centers;

(p) Oversee the Facility's overall quality management program,
procedures to promote the consistency and quality of all dialysis services
provided at the Facility by physician and non-physician personnel and at all
times operate the Facility so it is in compliance with all applicable
governmental requirements;

- 2 -
<PAGE> 6

(q) Cooperate with the COMPANY's insurance carriers and/or its
designees regarding any claims, investigations or lawsuits involving the
services provided hereunder and immediately notify the COMPANY upon receipt of
notification of any such claim, investigation or lawsuit; and

(r) Require its physicians to obtain and maintain from the
Facility privileges sufficient to perform the obligations hereunder and meet
COMPANY's quality standards as set by the Medical Advisory Board.

1.3 Patient Care Manual. The GROUP shall advise the COMPANY on the
Facility's compliance with governmental regulations including, but not limited
to, those which require renal care facilities to maintain and implement a
patient care policy and procedures manual describing:

(a) The types of dialysis used in the Facility and the procedures
followed in performance of each type of dialysis;

(b) Procedures for implementing universal precautions for the
prevention of disease transmission;

(d) A disaster readiness plan.

1.4 Records. The GROUP shall assure the current status of all medical
and business records relating to the care and treatment of patients in the
Facility in accordance with COMPANY policies and applicable regulations of
governmental agencies. While the Head Nurse has day-to-day responsibility in
this regard and the attending physician has the medical responsibility for the
content of the medical record, the GROUP is ultimately responsible for the
integrity and completeness of such records, including:

(a) Patient long-term care plans, patient short-term care plans
and medical histories;

(b) Results of physical examinations and laboratory tests; and

1.5 Medical Staff. The GROUP shall review the applications of
physicians requesting to attend to patients at the Facility and forward a
recommendation concerning such applications to the COMPANY's Medical Advisory
Board. The GROUP shall maintain oversight of all disciplinary actions with
regard to any matter of such physicians or patient care personnel as needed to
assure the quality of services and conformity to COMPANY and Facility rules and
policies.

1.6 Coverage. The GROUP shall make available one or more physicians,
at a minimum, to provide service to Facility at each site for their respective
hours of operations. Should the Facility's patient case load increase, the
COMPANY may increase the GROUP's coverage obligation accordingly and the GROUP
shall provide such coverage.

1.7 The COMPANY's Obligations. The GROUP's obligations to provide
services hereunder is conditioned upon the COMPANY's providing the following
services for the Facility:

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<PAGE> 7

(a) financial services including bookkeeping, billing, general
ledger and collection services;

(b) periodic updates on changes in federal and state regulations
affecting the operations of the Facility;

(d) adequate staffing at the Facility, as specified by the
COMPANY's Medical Advisory Board.

ARTICLE II
TERM AND TERMINATION

2.1 Term. This Agreement shall become effective as of 12:01 a.m. on
February 12, 1996 (the "Effective Date") and shall remain in full force and
effect until 12:00 p.m. midnight on the seventh (7th) anniversary of the
Effective Date, unless otherwise earlier terminated as provided in this Article
II (the "Initial Term"). Following the Initial Term, this Agreement may be
renewed upon the mutual agreement of the parties for successive terms of three
(3) years duration each (the "Renewal Terms"), unless this Agreement is
otherwise earlier terminated as provided in this Article II.

2.2 Termination By Agreement. If the COMPANY and the GROUP shall
mutually agree in writing, this Agreement shall be terminated on the time and
date stipulated therein.

2.3 Termination Without Cause. Either party may terminate this
Agreement at the end of the Initial Term or any Renewal Term by giving one
hundred eighty (180) days prior written notice to the other party of such
intention to terminate. In the event the COMPANY terminates this Agreement
pursuant to this Section 2.3, the provisions of paragraph (a) of Section 7.1
shall not apply.

2.4 Termination for Cause. The COMPANY may terminate this Agreement
and all rights and liabilities created by this Agreement immediately, except for
those relating to Article VII, at any time for cause including, but not limited
to the GROUP's (or any one of its physician's(s')) dishonesty, misconduct,
misappropriation of funds, disparagement of the COMPANY, the Facility or any of
their representatives or employees, refusal to perform properly designated
tasks, negligence in the performance of medical or other functions, suspension
or revocation of the GROUP's license(s) to conduct business or any licenses or
authorizations of its physician(s), including medical license(s), board
certifications or board eligibility, medical staff membership(s), clinical
privilege(s) or authorization(s) or ability to prescribe drugs, commission or
conviction, including a plea of nolo contendere, of any felony or of any crime
involving moral turpitude, act or omission that could be detrimental to the
reputation of the Facility or the COMPANY, failure to perform or observe any of
the terms or provisions of this Agreement, breach of any terms or provisions of
this Agreement, reprimand by a federal or state regulatory or professional
oversight board, any expulsion or other discipline by the medical staff or
management of any health care facility where one of the physicians of the GROUP
enjoys membership or clinical privileges, or failure of any of the GROUP's
representations in this Agreement. The GROUP shall notify the COMPANY
immediately upon learning of any event described in the foregoing sentence. Upon
the occurrence of any event described herein this Section 2.4, the COMPANY
agrees not to terminate this Agreement if, within ten (10) days of the COMPANY's
request: the GROUP agrees that any GROUP physician who is the subject of such
cause will not provide services under this Agreement, provided, however, such
termination shall not become effective until after completion of an appeal by
the GROUP, if any, regarding such termination.

- 4 -
<PAGE> 8

2.5 Effect of Termination or Expiration.

(a) Following the expiration of this Agreement or its termination
for any reason, the GROUP shall not intentionally interfere with any intent by
the COMPANY to contract with any other individual or entity for the provision of
medical director services. In the event the GROUP's termination is due to
either a reprimand or disciplinary action, the GROUP shall have the right to
appeal to the Medical Advisory Board of the COMPANY. The ruling of the Medical
Advisory Board shall be deemed final. The GROUP, in its sole discretion, may
use its right of appeal to appeal a request of the COMPANY made of the GROUP
pursuant to Section 2.4 above. Any physician who resigns his or her Facility
staff membership or clinical privileges at the Facility under this Section 2.5
shall be permitted to reapply for such membership and privileges at the
Facility. Nothing in this Section 2.5 shall limit a physician's ability to
initiate a civil proceeding in a court of competent jurisdiction.

(b) Following the expiration or termination of this Agreement and
the termination or resignation of a physician from the GROUP, the GROUP shall
maintain for itself and each of the physicians provided hereunder, with an
insurer licensed to transact insurance in the State of Texas, prior acts
coverage with policy limits and with a retroactive date to cover claims arising
out of acts which occurred from the Effective Date of this Agreement through and
including the date of such termination or obtain an extended reporting
endorsement for two (2) years, all as acceptable to the COMPANY; provided,
however, such limits shall not be greater than those specified in Section 5.1 of
this Agreement. The GROUP shall provide evidence of such coverage to the
COMPANY upon request.

ARTICLE III
COMPENSATION

3.1 Compensation. In consideration of the services, covenants, and
agreements agreed to be performed by the GROUP during the Initial or any Renewal
Term of this Agreement, the COMPANY shall pay the GROUP an amount equal to the
sum of Two Hundred Seventy-Four Thousand Dollars ($274,000) per calendar year
1996, Three Hundred Thirty-Three Thousand Dollars ($333,000) per calendar year
1997, and Three Hundred Ninety-Two Thousand Dollars ($392,000) per calendar year
1998 and every year thereafter during the term of this Agreement. Such amount
shall be payable monthly. The GROUP agrees to accept this payment by the
COMPANY as the total compensation for all services, covenants and agreements
pursuant to this Agreement; provided however, ninety (90) days prior to each
annual anniversary of the Effective Date of the Initial Term and any Renewal
Term, the parties shall discuss in good faith whether any adjustment to the
compensation described in Article III herein would be appropriate to reflect the
value of the services provided hereunder by the GROUP and the medical director
services required by the Facility for each year of this Agreement and to reflect
any changes in reimbursement levels for services provided by the Facilities or
the economics of owning and operating the facilities in each case with a view to
determining the fair market value of the services provided herein. No change to
the compensation shall be made unless both the parties agree in writing and any
such change shall be effective for at least twelve (12) months from the
effective date of such change.

3.2 Additional Compensation. In consideration for the covenant not to
compete and other agreements in Article VII, the COMPANY has of even date
herewith granted the GROUP an option to purchase 37,500 shares of the common
stock of the COMPANY as set forth in that certain Renal Care Group, Inc.
Non-Qualified Stock Option Agreement of even date herewith between the GROUP and
the COMPANY.

- 5 -
<PAGE> 9

basis for purposes of calculating the amount of compensation due GROUP through
the date of termination or expiration. The COMPANY may offset any sums owing it
due from GROUP from such owed sums.

ARTICLE IV
STATUS OF PARTIES

4.1 Tax Status. It is mutually understood that the physician(s) to be
engaged to perform the services required hereunder are to be engaged by the
GROUP, and shall under no circumstances be considered the employee(s) of the
COMPANY or the Facility. The GROUP shall be responsible for any payroll and
similar taxes related to its engagement of the physician(s), and neither the
GROUP nor its physician(s) shall be entitled to any benefits afforded to the
employees of the COMPANY. The GROUP agrees to indemnify and hold the COMPANY
harmless from any and all loss or liability arising with respect to such
payments, withholdings and benefits, if any. In the event the United States
Internal Revenue Service ("IRS") should question or challenge the worker status
of the GROUP or its physicians, the parties hereto mutually agree that both the
GROUP and the COMPANY shall have the right to participate in any discussion or
negotiation occurring with the IRS, irrespective of or by whom such discussions
or negotiations are initiated; and, each party shall notify the other in advance
of any planned meeting or discussion.

4.2 No Agency. The GROUP shall not have the right or authority and
hereby expressly covenants not to enter into a contract in the name of the
COMPANY or otherwise bind the COMPANY, in any way, without the express written
consent of the COMPANY. The GROUP shall hold the COMPANY harmless from any loss
attributable to a violation of this covenant. However, GROUP shall advise and
assist the COMPANY in securing and retaining contracts in the name and for the
account of the COMPANY with such individuals or entities necessary for the
proper and efficient functioning of the COMPANY.

4.3 Access to Records. If it is ultimately determined that Section
952 of the Omnibus Reconciliation Act of 1980 applies to this Agreement, then
until the expiration of four (4) years after the furnishing of services
provided under this Agreement, the GROUP will make available to the Secretary
of the United States Department of Health and Human Services, the United States
Comptroller General, and their representatives, this Agreement and all books,
documents and records necessary to certify the nature and extent of the costs
of those services. If the GROUP carries out the duties of this Agreement
through a subcontract worth $10,000 or more over a twelve-month period with a
related organization, the subcontract will also contain an access clause to
permit access by the Secretary, Comptroller General, and their representatives
to the related organization's books, documents and records.

ARTICLE V
INSURANCE

5.1 Minimum Insurance Coverage. The GROUP shall purchase and maintain
at its expense for itself and each of the physicians professional and general
liability insurance coverage from a commercial insurance company licensed to
transact insurance in the State of Texas and acceptable to the COMPANY in an
amount equal to the higher of One Million Dollars ($1,000,000) per claim and Two
Million Dollars ($2,000,000) in the aggregate per year (the "Minimum Coverage")
or greater amount required by a governmental entity.

- 6 -
<PAGE> 10

retroactive date sufficient to cover any claims arising out of acts which
occurred from the Effective Date of this Agreement through and including the
expiration date of the current coverage.

5.3 Evidence of Coverage. On execution of this Agreement and annually
thereafter or on reasonable request, the GROUP shall provide the COMPANY with
certificates of insurance or other written instruments acceptable to the COMPANY
evidencing purchase of the requisite Minimum Coverage for itself and each of the
GROUP's physicians. The GROUP shall notify the COMPANY at least sixty (60) days
prior to the voluntary cancellation or termination of any Minimum Coverages and
immediately upon receipt of any notice of involuntary cancellation or
termination of any Minimum Coverages.

ARTICLE VI
REPRESENTATIONS

6.1 Representations and Warranties. In performing services under this
Agreement, the GROUP covenants and warrants that it:

(a) Is licensed to conduct its business in the State of Texas,
and shall engage only physician(s) who are licensed without restriction to
practice medicine in such state and who never have had any such license in this
or any other state limited, withdrawn, suspended, subject to reprimand,
curtailed, placed on probation or revoked; provided, however, that the COMPANY
may, at its option, waive such requirements in this Section 6.1(a) for specific
physicians at the request of the GROUP;

(b) Shall engage only physician(s) who is (are):

(i) Board eligible or board certified as recognized by the
American Board of Medical Specialists in internal medicine or
pediatrics by a professional board, and has had at least 12
months of experience or training the care of patients at end
stage renal disease facilities; or

(ii) During the 5-year period prior to September 1,
1976, served for at least 12 months as director of a dialysis or
transplantation program;

(iii) In those areas where a physician who meets the
definition in paragraph (i) or (ii) of this definition is not
available to direct a participating dialysis facility, another
physician may direct the facility, subject to the approval of the
Secretary of the U.S. Department of Health and Human Services;

(c) Shall engage only physician(s) who is(are) a member(s) of
the active medical staff of a local hospital and has(have) at least one (1)
year experience or training in the care of patients at an end stage renal
disease treatment facility;

(d) Shall engage only physician(s) who has(have) never been
denied membership or reappointment to membership on the medical staff of any
health care facility, and no health care facility medical staff membership or
clinical privileges of a physician have ever been limited, suspended,
curtailed, revoked, placed on probation or withdrawn, subject to reprimand
whether voluntarily or as a result of action (either formal or informal)
initiated by any health care facility or its medical staff; provided, however,
that the COMPANY may, at its option, waive such requirements in this Section
6.1(d) for specific physicians at the request of the GROUP.

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<PAGE> 11

(e) Shall require its physician(s) to use their best and most
diligent efforts and professional skills and judgment in rendering services
under this Agreement;

(f) Shall require its physician(s) to perform professional
services and shall render care to patients in accordance with and in a manner
consistent with appropriate standards and the ethics of the medical profession
and as necessary for the Facility to maintain compliance with applicable
governmental laws and regulations;

(g) Shall require its physician(s) to immediately notify the
COMPANY of any denial, suspension, revocation or curtailment of licensure or
certification status, medical staff membership or clinical privileges held by
such physician(s) with any state, company, payor or health care facility;

(h) Has notified the COMPANY of each action or claim alleging
professional negligence filed or asserted against any engaged physician within
the previous five (5) years and a current status and/or ultimate resolution of
such claim and will immediately notify the COMPANY in writing of its receipt of
any action, claim or lawsuit alleging professional negligence lodged against any
engaged physician individually or against any partnership, professional
corporation or association with which any engaged physician is affiliated;

(i) Shall, for itself, and for each physician provided hereunder,
immediately notify the COMPANY of any sanction, threatened sanction,
investigation or proceeding by any governmental agency or any entity regarding
its or such physician's(s') participation in the Medicare, Medicaid program or
any third party payor program in which the GROUP participates; and

(j) Shall cause each physician within the GROUP, to execute this
Agreement (i) demonstrating each physician's understanding of this Agreement and
its provisions, including the understanding that he or she will not retain
privileges at the Facility if this Agreement is terminated for cause or if their
employment or contractual relationship with the GROUP is terminated for cause
and (ii) agreeing to be bound by Article VII as provided therein.

ARTICLE VII
CONFIDENTIALITY, NONCOMPETITION
AND NONSOLICITATION COVENANT

7.1 Additional Covenants.

(a) The GROUP agrees that, during the term of this Agreement and
of Agreement with the COMPANY, and for a period of two (2) years after the
termination of this Agreement, the GROUP will not in any manner, directly or
indirectly, by itself or in conjunction with any other person, (i) conduct any
of the activities or perform any of the responsibilities delineated in Article I
("Services") of this Agreement for any business entity that is competitive with
the business of the COMPANY or (ii) establish or own any financial, beneficial
or other interest in (other than an interest consisting of less than one percent
(1%) of a class of publicly traded security), make any loan to or for the
benefit of, or render any managerial, marketing or other business advice, to any
entity that is then conducting activities that are competitive with those of the
business of the COMPANY, in either case within a geographic territory defined as
the greater of (I) a seventy-five (75) mile radius of the Facility.. For
purposes of this Article, the "business of the COMPANY" shall mean owning or
operating a renal dialysis center, unit or facility.

- 8 -
<PAGE> 12

The terms and provisions of this Article VII shall also apply to
each physician of the GROUP, any member or shareholder of any professional
corporation or association of which a GROUP is a shareholder or any person with
whom the GROUP is associated in partnership and in or with respect to which by
virtue of said professional corporation or partnership the GROUP receives an
indirect financial benefit. The time periods applicable to this Article VII are
the earlier of (i) the termination or expiration of this Agreement or (ii) a
physician's departure from the GROUP.

(c) The GROUP also agrees that, for a period of three (3) years
after the termination of GROUP's agreement with the COMPANY, the GROUP will not,
for its own benefit or the benefit of others, disrupt or attempt to disrupt, any
relationship, contractual or otherwise, that the COMPANY has or has had with any
person or entity (including any patient, payor, physician, provider, managed
care organization or supplier) at any time during the GROUP's Agreement with the
COMPANY as a direct. For purposes of this Section, a business entity is
competitive with the COMPANY if it provides or offers any renal dialysis service
that is provided by the COMPANY. Nothing herein shall be construed to prevent
the GROUP from (i) soliciting or accepting the business of customers of the
COMPANY with whom the GROUP had no direct or indirect contact while affiliated
with the COMPANY, and of whom the GROUP did not learn during or as a result of
its affiliation with the COMPANY, or (ii) doing business with suppliers with
whom the COMPANY also does business.

(d) The GROUP further agrees that, for a period of three (3)
years after the termination of GROUP's Agreement with the COMPANY, the GROUP
shall not induce, nor attempt to induce, any employee of the COMPANY, or any of
its affiliates, to terminate his or her association with the COMPANY or any of
its affiliates. Nothing herein shall be construed to prohibit the GROUP from
accepting applications from, or ultimately hiring, employees of the COMPANY if
the application or subsequent employment did not result from direct or indirect
solicitations initiated by the GROUP.

(e) These covenants are considered by the parties hereto to be
fair, reasonable and integral for the protection of the COMPANY. The parties
mutually agree that if a violation of any of these covenants occurs, such
violation or any threatened violation will cause irreparable injury to the
COMPANY and the remedy at law for any such violation or threatened violation
will be inadequate. The parties acknowledge that these covenants will survive,
and remain in effect and enforceable after, termination of this Agreement.

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<PAGE> 13

(f) Nothing in these covenants shall be deemed to prohibit the
physicians of the GROUP from exercising their medical judgment concerning the
medical treatment of a patient in any manner whatsoever in any location
whatsoever, and shall not be deemed to require the referral of any such patient
to any facility of the COMPANY or any of its affiliates. The GROUP acknowledges
that enforcement of this covenant will not prevent a physician of the GROUP from
earning a living by practicing medicine or nephrology.

(g) The GROUP hereby further agrees that prior to the engagement
of any physician as an independent contractor or the employment of a physician
to perform services for the patients or medical practice of the GROUP, the GROUP
will require as a condition of said physician's engagement or employment that
the physician enter into a supplemental non-compete agreement with the COMPANY
like the one contained within. It is expressly understood and agreed by the
GROUP that its promises in this subparagraph (g) have served as a material
inducement to the COMPANY to enter into this Agreement.

(h) The undersigned parties understand and agree that the GROUP
is in the process of developing dialysis facilities in Longview, Marshall and
Crockett, Texas. Any and all involvement of the GROUP, any of its physicians
and David Gilfert in said facilities, whether during the term of this Agreement
or after the termination of this Agreement, shall not be deemed a violation or
breach of this Agreement.

ARTICLE VIII
MISCELLANEOUS

8.1 Notices. Any notices to be given under this Agreement shall be
deemed given if sent U.S. certified mail, return receipt requested, to the
parties at the following addresses:

GROUP: Tyler Dialysis & Transplant Associates, P.A.
807 East First Street
Tyler, Texas 75701
Attn: Thomas A. Lowery, M.D.

COMPANY: Renal Care Group, Inc.
1801 West End, Suite 1100
Nashville, Tennessee 37202
Attn: Executive Vice-President
and Chief Operating Officer

If either party desires to change either the address or the person to
whom notice is to be given, such change must be done in writing delivered to the
parties.

8.2 Amendments. This Agreement may be amended at any time by mutual
agreement of the parties hereto, but any such amendment shall not be operative
or valid unless the same is reduced to writing and approved by the parties
hereto.

8.3 Assignability. This Agreement shall not be assignable by the
GROUP and the GROUP shall not assign any of its rights or obligations under this
Agreement without consent of the COMPANY.

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<PAGE> 14

and in lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be legal, valid and
enforceable.

8.5 Headings. The headings of this Agreement are inserted for
convenience only and are not to be considered in construction of the provisions
hereof.

8.6 Entire Agreement. This Agreement constitutes the full contract
and agreement of the parties, superseding all prior or contemporaneous
agreements, either oral or written.

8.7 Construction of the Agreement and Binding Effect. This Agreement
shall be construed and interpreted according to the laws of the State of Texas.

8.8 Non-Waiver. The failure of either party to exercise any of its
rights under this Agreement for a breach thereof shall not be deemed to be a
waiver of such rights or a waiver of any subsequent breach.

8.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Texas.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written to be effective as provided herein above.

COMPANY: RENAL CARE GROUP, INC.

By: /s/ Sam A. Brooks
----------------------------
Title: President
----------------------------

GROUP: TYLER DIALYSIS & TRANSPLANT ASSOCIATES, P.A.

By: /s/ Roy D. Gerard, Jr.
----------------------------

Title: President
----------------------------

By my signature below, I acknowledge that I have read this Agreement and agree
to (i) the acknowledgment set forth in Section 6(j) and to be bound by its terms
either by submitting my resignation of Medical Staff

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<PAGE> 15

privileges to the Facility or having the Facility deem such event to be a
voluntary resignation of such privileges and (ii) to be bound by Article VII all
as herein provided.

PHYSICIANS: /s/ Thomas A. Lowery, M.D.
----------------------------
Thomas A. Lowery, M.D.

/s/ James R. Cotton, M.D.
----------------------------
James R. Cotton, M.D.

/s/ Roy D. Gerard, Jr., M.D.
----------------------------
Roy D. Gerard, Jr., M.D.

/s/ Kevin A. Curran, M.D.
----------------------------
Kevin A. Curran, M.D.

/s/ Terry D. Woodard, M.D.
----------------------------
Terry D. Woodard, M.D.

- 12 -

<PAGE> 1

EXHIBIT 10.9

AGREEMENT OF LEASE

THIS AGREEMENT OF LEASE is made this 5th day of February, 1996 by and
between MEL, INC., a Mississippi corporation ("Landlord"), and RENAL CARE
GROUP, INC., a Delaware corporation ("Tenant").

WITNESSETH:

ARTICLE 1
PREMISES

In consideration of the rent hereinafter reserved and of the covenants
hereinafter contained, Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord certain warehouse and office space located on the
real property located at 3925 W. Northside Drive, Jackson, Mississippi 39209
more particularly described on Exhibit A attached hereto and made a part hereof
("Real Property"). The leased premises shall consist of: (i) the 8,855 square
feet of office space ("Office Space") shown on the floor plan attached as
Exhibit B of the office building ("Building") located on the Real Property;
(ii) the 2772 square feet of space located in Warehouse #1 and the 1,920 square
feet of space located in Warehouse #2 (collectively referred to as the
"Warehouse Space") as shown on the plat attached hereto as Exhibit C (such
Warehouse Space for Warehouse #1 described more particularly on the Warehouse #
1 floor plan attached hereto as Exhibit D); and (iii) the 8,000 square feet of
the concentrate plant ("Concentrate Plant Space") as shown on the plat attached
hereto as Exhibit C. The Office Space, Warehouse Space and the Concentrate
Plant Space are collectively referred to herein as the "Premises".
<PAGE> 2

ARTICLE 2
TERM

The term of this Lease (the Term) shall commence on February ____,
1996 (the "Commencement Date") and shall continue till 12:00 o'clock midnight
local time on the last day of the calendar month which completes ten (10) full
years of tenancy hereunder (the "Termination Date") unless either Landlord or
Tenant provided notice in writing to the other of such party's intention to
terminate at least sixty (60) days prior to the expiration date of the initial
term or the then existing term this lease shall automatically renew for two (2)
additional five (5) year terms.

ARTICLE 3
RENT

3.1 Rent. Tenant hereby covenants and agrees to pay to Landlord
as rent for the Premises (all of which is collectively referred to as "Rent")
all of the following:

(a) an annual basic rent ("Basic Rent") in the sum of One
Hundred Twenty Eight Thousand Two Hundred and Eighty Dollars
($128,280.00) calculated as follows: (i) $10 per square foot for
8,855 square feet of Office Space; (ii) $3.50 per square foot for
8,000 square feet of Concentrate Plant Space; and (iii) $2.50 per
square feet for the 4,692 square feet of Warehouse Space. The basic
rent will be payable in twelve (12) equal monthly installments, in
advance on the first day of each month during each calendar year or
portion thereof (with appropriate adjustment for any calendar year
which does not fall totally within the Term) during the Term;
provided, however, that the installment of Basic Rent payable for the
first full calendar month of the Term (and if the Term commences on a
day other than the first day of a calendar month that portion of Basic
Rent which is payable for such month) shall be due and payable on the
execution of this Lease; and

(b) additional rent ("Additional Rent") in the amount of
any payment referred to as such in any portion of this Lease which
accrues while this Lease is in effect (which shall include any and all
charges or other amounts which Tenant is obligated to pay Landlord
under this Lease other than Basic Rent).

2
<PAGE> 3

3.2 Cost of Living Adjustment. Basic Rent shall be adjusted each
fifth calendar year following the initial calendar year of the Term or portion
thereof as provided in Article 5 hereof.

3.3 Payment of Rent. Basic Rent and all Additional Rent as
provided for under this Lease shall be paid promptly when due, in cash or by
check, in lawful money of the United States of America, without notice or
demand and without deduction, diminution, abatement, counterclaim or set off of
any amount or for any reason whatsoever, payable to MEL, INC., and delivered to
John M. Bower, President, at its offices at the address as stated in Article 26
or to such other person and place as may be designated by notice in writing
from Landlord to Tenant from time to time. If Tenant shall present to Landlord
more than twice during the Term checks or drafts not honored by the institution
upon which they are issued, then Landlord may require that future payments of
Rent and other sums thereafter payable be made by certified or cashier's check.

3.4 Non-Payment of Rent. Other remedies for non-payment of Rent
notwithstanding, any installment of Rent which is not paid within ten (10) days
after the due date shall be subject, at Landlord's option each month, to a late
charge equal to five percent (5%) of the amount due, which shall be payable as
Additional Rent. Any installment of Basic Rent or Additional Rent not paid
within thirty (30) days from the date due shall accrue interest at the rate of
four percent (4%) higher than the prime rate published from time to time in the
"Money Rates" section of The Wall Street Journal (the "Prime Rate") (but in no
event higher than the maximum rate allowed by law) until paid in full, which
interest shall be deemed Additional Rent.

3.5 No Accord and Satisfaction. No payment by Tenant or receipt
by Landlord of a lesser amount than the monthly installments of Rent herein
stipulated shall be deemed to be other than on account of the earliest
stipulated Rent nor shall any endorsement or statement on any check or any
letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check for payment without prejudice
to Landlord's right to recover the balance of such Rent or to pursue any other
remedy provided in this Lease.

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<PAGE> 4

3.6 Pro Rata Share of Expenses. Tenant's pro rata share of
Operating Expenses (defined in Article 6) and Real Estate Taxes (defined in
Article 7) which are attributable to the Office Space, Warehouse Space or
Concentrate Plant Space are as follows:

<TABLE>
<CAPTION>
Premises Tenant's Percentage
-------- -------------------
<S> C> <C>
(a) Office Space 54.79%
-------
(b) Warehouse Space

- Warehouse #1 25.82%
-------
- Warehouse #2 50.00%
------
(c) Concentrate Plant Space 100.00%
------
</TABLE>

Tenant's pro rata share of Operating Expenses and Real Estate Taxes
not attributable specifically to Office Space, Warehouse Space or Concentrate
Plant Space but attributable to the Premises as a whole, is 43.43 %.

ARTICLE 4
USE OF PREMISES

4.1 Use. Tenant covenants to use the Premises to conduct its
business and for no other purpose, subject to and in accordance with all
applicable zoning and other governmental regulations. Tenant, at its own
expense, shall comply with and promptly carry out all orders, requirements or
conditions imposed by the ordinances, laws and regulations of all of the
governmental authorities having jurisdiction over the Premises, which are
occasioned by or required in the conduct of Tenant's business within the
Premises and to obtain all licenses, permits and the like required to permit
Tenant to occupy the Premises.

4.2 As-Is Condition. Tenant accepts the Premises from Landlord in
an "AS-IS" condition, except to the extent specifically provided elsewhere in
this Lease.

4.3 Unlawful Uses Prohibited. Tenant shall not permit the
Premises, or any part thereof, to be used for any disorderly, unlawful or
hazardous purpose, nor as a source of annoyance or

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<PAGE> 5

embarrassment to Landlord or other tenants, nor for any purpose other than
herein before specified, nor for the manufacture of any commodity therein,
without the prior written consent of Landlord.

ARTICLE 5
COST OF LIVING ADJUSTMENT

5.1 Increase of Basic Rent. Effective on the 1st day of January,
2001 and January 1 of each fifth year thereafter, so long as this Lease remains
in effect, the Basic Rent set forth in Article 3 shall be increased; and Tenant
thereafter covenants to pay Landlord, during each ensuing year, such new
adjusted Basic Rent in an amount which, in each instance, shall be the greater
of, but in no event less than the Basic Rent payable at the end of the
preceding five (5) years, the following: (a) one hundred twenty-five percent
(125.00%) of the Basic Rent payable at the end of the preceding five (5) years;
or (b) that amount determined by multiplying the Basic Rent payable at the end
of the preceding five (5) years, by a multiplier equal to the number one (1)
plus a fraction, the numerator of which shall be the difference in the Consumer
Price Index ("CPI"), now known as the "United States Department of Labor,
Bureau of Labor Statistics, Consumer Price Index, U.S. City Average for all
Urban Consumers, Seasonally Adjusted," all items, (1982- 84=100), between the
month of November of the preceding calendar year and the month of November of
the year five years prior to the preceding calendar year ("Base CPI"), and the
denominator of which shall be such Base CPI.

5.2 Payment of COLA. The resulting adjusted Basic Rent, whether
computed on the basis of paragraph 5.1 or paragraphs 5.1 and 5.2, shall be
payable in equal monthly installments, each in advance, on the first day of
each month of the applicable calendar year.

5.3 Changes in the Consumer Price Index. In the event the CPI is
discontinued, ceases to incorporate a significant number of the items now
incorporated therein, or if a substantial change is made in such CPI, the
parties hereto shall attempt to agree on an alternative formula and, if
agreement cannot be reached, the matter shall be submitted to arbitration under
the rules of the American Arbitration Association then in effect.

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<PAGE> 6

ARTICLE 6
OPERATING EXPENSES

6.1 Payment of Operating Expenses. Tenant shall pay to Landlord,
as Additional Rent, Tenant's pro rata share, as specified in paragraph 3.7, of
the Operating Expenses. The term "Operating Expenses" shall mean any and all
expenses incurred by Landlord in connection with the operation, maintenance and
repair of the Real Property including, but not limited to, the following:
charges or fees for, and taxes on, the furnishing of electricity, fuel, water,
sewer, gas, oil and other utilities; (at Landlord's sole discretion) security;
pest control; cleaning of windows and exterior curtain walls; janitorial
services; trash removal; landscaping and repair and maintenance of grounds;
salaries, wages, and benefits for employees of Landlord engaged in the
operation, maintenance or repair of the Premises; license fees and governmental
permits; all insurance applicable to the Premises; cleaning supplies; supplies,
repairs, replacements and other expenses for maintaining and operating the Real
Property; the cost, including interest, amortized over its useful life or
payback period of any capital improvement made to the Real Property which is
required under governmental law or regulation that was not applicable to the
Real Property at the time it was constructed or the installation of any device
or other equipment which improves the operating efficiency of any system within
the Real Property and thereby reduces Operating Expenses; Landlord's accounting
fees and costs for the preparation of statements of operating expenses or
incurred in order to reduce Operating Expenses; legal fees and costs relating
to the operation, repair or maintenance of the Premises or incurred in order to
reduce Operating Expenses; service or management contracts with independent
contractors and general overhead; administrative expenses; telephone, telegraph
and stationery; and the costs of any other items which, under generally
accepted accounting principles consistently applied from year to year with
respect to the Real Property, constitute operating and maintenance costs
attributable to any or all of the Real Property. Operating Expenses shall not
include any of the following: cost of capital improvements, except as mentioned
above; expenses for painting, redecorating, or other work which Landlord
performs for any tenant leasing property on the Real Property, the expense of
which is paid by such tenant; interest, amortization, or other payments on
loans to Landlord, whether secured or unsecured; depreciation of the Real
Property or other said improvements; ground rent; leasing commissions;
salaries, wages or other compensation paid to

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<PAGE> 7

officers or executives of Landlord; and income, excess profits, or franchise
taxes or other such taxes imposed on or measured by the income of Landlord from
the operation of the Real Property.

6.2 Advance Payment of Operating Expenses. Landlord reserves the
right, throughout the term of this Lease, to require that Tenant pay each month
in advance, as Additional Rent, one-twelfth (1/12) of Landlord's estimate of
Tenant's annual obligation under this Article 6. Such payments shall in no way
limit Tenant's annual obligation. If the total of such monthly installments
paid is less than Tenant's total obligation, Tenant shall promptly pay the
difference upon receipt of Landlord's statement. Any overpayment shall be
credited to Tenant's obligation for the next succeeding period or refunded
promptly if this Lease has expired or been terminated.

6.3 Audit Rights. Landlord's books and records pertaining to the
calculation of Operating Expenses for any calendar year within the Term may be
audited by Tenant at Tenant's expense, at any reasonable time after Tenant's
receipt of Landlord's statement for Operating Expenses. If Landlord's
calculation of Tenant's share of Operating Expenses for the audited calendar
year was incorrect, then Tenant shall be entitled to a credit against future
Base Rent for said overpayment (or a refund of any overpayment if the Term has
expired) or Tenant shall pay to Landlord the amount of any underpayment, as the
case may be.

ARTICLE 7
REAL ESTATE TAXES

7.1 Payment of Taxes. Tenant shall pay to Landlord, as Additional
Rent, Tenant's pro rata share, as specified in paragraph 3.7, of the Real
Estate Taxes on the Real Property. If the system of real estate taxation shall
be altered or varied and any new tax or levy shall be levied or imposed on the
Real Property and improvements, and/or Landlord, in substitution for Real
Estate Taxes presently levied or imposed on immovables in the jurisdiction
where the Real Property is located, then any such new tax or levy shall be
included within the term "Real Estate Taxes." Tenant shall pay each month, in
advance, as Additional Rent, one-twelfth of Landlord's estimate of Tenant's
annual obligation under this Article 7. Such payments shall in no way limit
Tenant's annual obligation. If the total of such monthly installments paid is
less than Tenant's total obligation, Tenant shall

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<PAGE> 8

promptly pay the difference upon receipt of Landlord's statement. Any
overpayment shall be credited to Tenants obligation for the next succeeding
period or refunded promptly if this Lease has expired or been terminated.

7.2 Real Estate Taxes Defined. The term Real Estate Taxes means
all taxes, rates and assessments, general or special, levied or imposed with
respect to the Real Property and improvements constructed thereon (including
all taxes, rates and assessments, general or special, levied or imposed for
school, public betterment and/or general or local improvements).

7.3 Other Expenses. Reasonable expenses incurred by Landlord in
obtaining or attempting to obtain a reduction of any Real Estate Taxes shall be
added to and included in the amount of any such Real Estate Taxes. Real Estate
Taxes which are being contested by Landlord shall nevertheless be included for
purposes of the computation of the liability of Tenant under paragraph 7.1
hereof; provided, however, that in the event that Tenant shall have paid any
amount of Additional Rent pursuant to this Article 7 and Landlord shall
thereafter receive a refund of any portion of any Real Estate Taxes on which
such payment shall have been based, Landlord shall pay to Tenant the
appropriate portion of such refund. Landlord shall have no obligation to
contest, object or litigate the levying or imposition of any Real Estate Taxes
and may settle, compromise, consent to, waive or otherwise determine in its
discretion any Real Estate Taxes without consent or approval of Tenant. Tenant
shall not be liable for any addition to the Real Estate Taxes solely by reason
of Landlord's failure to pay Real Estate Taxes when due.

ARTICLE 8
REPAIRS AND MAINTENANCE

8.1 Maintenance. Subject to the provisions hereinafter contained
with regard to damage by fire or other casualty and paragraph 8.2, Landlord
agrees to maintain the Premises in good order and repair during the Term,
unless damage thereto shall have been caused by the act or neglect of Tenant,
its agents, employees, contractor, or invitees, in which case, the same shall
be repaired by and at the expense of Tenant. If Tenant fails to make such
repairs promptly, Landlord, at its option and after 30-days written notice to
Tenant may make such repairs and Tenant shall pay Landlord on demand

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<PAGE> 9

Landlord's actual costs in making such repairs. Landlord's cost of maintenance
is subject to the Operating Expense provisions of Article 6. Landlord shall
not be liable to Tenant for any damage or inconvenience and Tenant shall not be
entitled to any abatement or reduction of Rent by reason of any repairs,
alterations or additions made by Landlord under this Lease.

8.2 Maintenance by Tenant. Tenant shall maintain the
non-structural portions of the interior of the Premises in good repair and
condition, damages by causes reasonably beyond Tenant's control and ordinary
wear and tear excepted.

ARTICLE 9
LANDLORD'S SERVICES

9.1 Services. Landlord covenants and agrees that it shall
furnish, subject to the provisions of Article 6: (a) heat and air-conditioning
to maintain the Office Space, Warehouse Space and Concentrate Plant Space at a
reasonably comfortable temperature and as appropriate for their current usage;
(b) electricity for lighting purposes and operation of ordinary office
equipment, excluding computers, supplemental HVAC, and other equipment
requiring heavier than normal office use of electricity, as provided for in
paragraph 9.2; and (c) cleaning or janitorial services.

9.2 Certain Utility Costs. Tenant shall pay all utility costs
occasioned by electro-data processing machines, telephone equipment, computers
and other equipment of high electrical consumption, including, without
limitation, the cost of installing, servicing and maintaining any special or
additional inside or outside wiring or lines, meters or sub-meters,
transformers, poles, air-conditioning costs, or the cost of any other equipment
necessary to increase or determine the amount or type of electricity or power
available to the Premises.

9.3 Landlord Right to Repair. Landlord reserves the right to
erect, use, connect to, maintain and repair pipes, ducts, conduits, cables,
plumbing, vents and wires in, to and through the Premises as and to the extent
that Landlord deems necessary or appropriate for the proper operation and
maintenance of the Real Property (including the servicing of other tenants in
the Real Property) and

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<PAGE> 10

the right at all times to transmit water, heat, air-conditioning and electric
current through such pipes, ducts, conduits, cables, plumbing, vents and wires.

ARTICLE 10
TENANT'S AGREEMENT

Tenant covenants and agrees: (a) not to obstruct or interfere with the
rights of other tenants, or injure or annoy them or those having business with
them or conflict with them, or conflict with the fire laws or regulations, or
with any insurance policy upon the Real Property or any part thereof, or with
any statutes, rules or regulations now existing or subsequently enacted or
established by the local, state or federal governments, and Tenant shall be
answerable for all nuisances caused or suffered on the Premises, or caused by
Tenant upon the Real Property, or on the approaches thereto; (b) not to place a
load on any floor exceeding the floor load which such floor was designed to
carry in accordance with the plans and specifications of the Building,
Warehouse Space or Concentrate Plant Space, and not to install, operate or
maintain in the Premises any unsafe or heavy item of equipment except in such
manner and in such location as Landlord shall prescribe so as to achieve a
proper distribution of weight; (c) not to strip, overload, damage or deface the
Premises, hallways, stairways, elevators, parking facilities or other public
areas of the Real Property, or the fixtures therein or used therewith, nor to
permit any hole to be made in any of the same; (d) not to suffer or permit any
trade or occupation to be carried on or use made of the Premises which shall be
unlawful, noisy, offensive, or injurious to any person or property, or such as
to increase the danger of fire or affect or make void or voidable any insurance
on the Real Property, or which may render any increased or extra premium
payable for such insurance, or which shall be contrary to any law or ordinance,
rule or regulation from time to time established by any public authority; (e)
not to move any furniture or equipment into or out of the Premises except at
such times and in such manner as Landlord may from time to time designate; (f)
not to place upon the interior or exterior of the Building, Warehouse Space or
Concentrate Plant Space, or any window or any part thereof or door of the
Premises, any placard, sign, lettering, window covering or drapes, except such
and in such place and manner as shall have been first approved in writing by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed which shall be installed at Tenant's cost; (g) to park vehicles only in
the area from time to time designated by Landlord; (h) to conform to all rules

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<PAGE> 11

and regulations from time to time established by the appropriate insurance
rating organization and to all reasonable rules and regulations from time to
time established by Landlord; (i) to be responsible for the cost of removal of
Tenant's bulk trash at time of move-in, during occupancy and move-out; (j)
except as expressly permitted herein, not to conduct nor permit in the Premises
either the generation, treatment, storage or disposal of any hazardous
substances and materials or toxic substances of any kind as described in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601 et seq.), the Resource Conservation and
Recovery Act as amended (42 U.S.C. 6901 et seq.), any regulations adopted under
these acts, or any other present or future federal, state, county or local laws
or regulations concerning environmental protection, and Tenant shall prohibit
its assignees sublessees, employees, agents and contractors (collectively,
"Permitees") from doing so and Tenant shall indemnify, defend and hold Landlord
and its agents harmless from all loss, costs, foreseeable and unforeseeable,
direct (but not consequential); damages; liability; fines; prosecutions;
judgments; litigation, and expenses, including but not limited to, clean-up
costs, court costs and reasonable attorneys fees arising out of any violation
of the provisions of this Article by Tenant or its Permitees. Notwithstanding
anything to the contrary contained herein, Landlord acknowledges that Tenant
shall use the property for office and warehouse purposes and in the normal
course of operating such business, Tenant may generate, treat, store or dispose
of certain hazardous substances and materials as defined under laws or
regulations concerning environmental protection, including, without limitation,
bio-medical waste. Landlord hereby consents to such generation, treatment,
storage and disposal of those hazardous substances and materials as may occur
in the ordinary course of operating Tenant's business. Tenant will indemnify
and hold Landlord harmless for any costs, damages or expenses due to Tenant's
generation, treatment, storage or disposal of hazardous substances or materials
on the Real Property. Landlord will indemnify and hold Tenant harmless for any
costs, damages or expenses due to the Landlord's generation, treatment, storage
or disposition of hazardous substances or materials on the Real Property.

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<PAGE> 12

ARTICLE 11
ALTERATIONS

Tenant shall not paint the Premises or make any alterations,
additions, or other improvements in or to the Premises or install any equipment
of any kind that shall require any alterations or additions or affect the use
of the Real Property's water system, heating system, plumbing system,
air-conditioning system, electrical system or other mechanical system, or
install any telephone antennae on the roof, in the windows, or upon the
exterior of the Building, Warehouse Space or the Concentrate Plant Space
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed. If any such alterations or
additions are made by Tenant without Landlord's consent, Landlord (after ten
(10) days written notice to Tenant) may correct or remove them and Tenant shall
be liable for any and all costs and expenses incurred by Landlord in the
correction or removal of such work. All plans and specifications for any such
work shall be prepared by Tenant at Tenant's expense and shall thereafter be
submitted to Landlord for its review. Tenant or Tenant's contractor must
furnish evidence of insurance coverage to include: (a) Worker's Compensation
Coverage and (b) Comprehensive General Liability and Property Damage insurance
in the amount of not less than Two Million Dollars ($2,000,000.00) in the
aggregate. All work with respect to such alterations and additions shall be
done in a good and workmanlike manner and diligently prosecuted to completion
to the end that the Premises shall at all times be a complete unit except
during the period necessarily required for such work. Tenant shall not permit
a mechanic's lien(s) to be placed upon the Premises or the Real Property as a
result of any alterations or improvements made by it and agrees, if any such
lien be filed on account of the acts of Tenant, promptly to pay and discharge
the same, bond over such lien or post reasonable security with Landlord. If
Tenant fails to discharge such lien, bond over such lien or post reasonable
security with Landlord within thirty (30) days of its filing, then in addition
to any other right or remedy of Landlord, Landlord may, at its election,
discharge the lien. Tenant shall pay on demand any amount paid by Landlord for
the discharge or satisfaction of any such lien, and all attorneys' fees and
other costs and expenses of Landlord incurred in defending any such action or
in obtaining the discharge of such action or in obtaining the discharge of such
lien, together with all necessary disbursements in connection therewith.
Tenant hereby expressly recognizes that in no event shall it be deemed the
agent of Landlord and no contractor of Tenant shall by virtue of its contract
be entitled to assert any

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lien against the Premises, Building or Real Property. All alterations or
additions shall become a part of the realty and surrendered to Landlord upon
the expiration or termination of this Lease, unless Landlord shall at the time
of its approval of such work require removal or restoration on the part of
Tenant as a condition of such approval.

ARTICLE 12
HOLD HARMLESS

12.1 Liability of Landlord. Landlord shall not be liable for any
damage to, or loss of, property in the Premises belonging to Tenant, its
employees, agents, visitors, licensees or other persons in or about the
Premises, or for damage or loss suffered by the business of Tenant, from any
cause whatsoever, including, without limiting the generality thereof, such
damage or loss resulting from fire, steam, smoke, electricity, gas, water,
rain, ice or snow, which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other defects of the
pipes, wires, appliances, plumbing, air-conditioning or lighting fixtures of
the same, whether the said damage or injury results from conditions arising
upon the Premises or upon other portions of the Real Property of which the
Premises are a part, or from other sources (excluding any damage or loss caused
by the negligence or willful act of Landlord, its agents, employees or
contractors). Landlord shall not be liable in any manner to Tenant, its
agents, employees, invitees or visitors for any injury or damage to Tenant,
Tenant's agents, employees, invitees or visitors, or their property, caused by
the criminal or intentional misconduct, or by any act or neglect of third
parties (except for Landlord's agents, employees or contractors) or of Tenant,
Tenant's agents, employees, invitees or visitors, or of any other tenant of the
Real Property. Tenant covenants that no claim shall be made against Landlord
by Tenant, or by any agent or servant of Tenant, or by others claiming the
right to be in the Premises or on the Real Property through or under Tenant,
for any injury, loss or damage to the Premises or to any person or property
occurring upon the Premises from any cause other than the negligence or willful
act of Landlord. In no event shall Landlord be liable to Tenant for any
consequential damages sustained by Tenant arising out of the loss or damage to
any property of Tenant.

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12.2 Indemnification. Tenant covenants and agrees to save Landlord
harmless and indemnified, and to defend Landlord from all loss, damage,
liability or expense of any kind, including without limitation reasonable
attorneys' fees and court costs actually incurred, suffered or claimed by any
person whomsoever, or for any damage or injury to any persons or property from
any cause whatsoever, by reason of the use or occupancy by Tenant, its agents,
employees, invitees or visitors of the Premises, or of the Real Property unless
caused by the negligence or willful act of Landlord.

12.3 Survival of Article 12. The provisions of this Article 12
shall survive the expiration or sooner termination of the Term.

ARTICLE 13
INSURANCE

13.1 General Liability Insurance. Tenant shall, at its cost and
expense, obtain and maintain at all times during the Term, for the protection
of Landlord and Tenant, Public Liability Insurance (Comprehensive General
Liability or Commercial General Liability) including Contractual Liability
Insurance, with a combined personal injury and property damage limit of not
less than One Million Dollars ($1,000,000.00) for each occurrence and not less
than Two Million Dollars ($2,000,000.00) in the aggregate, insuring against all
liability of Tenant and its representatives arising out of and in connection
with Tenant's use or occupancy of the Premises. Landlord shall be named as an
additional insured.

13.2 Fire and Casualty Insurance. Tenant shall, at its cost and
expense, obtain and maintain at all times during the Term, fire and extended
coverage insurance on Tenant's personal property and fixtures located in the
Premises, including any leasehold improvements made by Tenant in an amount
sufficient so that no co-insurance penalty shall be invoked in case of loss.

13.3 Increase of Insurance. Tenant shall increase its insurance
coverage, as required, but not more frequently than each calendar year if, in
the reasonable opinion of Landlord or any mortgagee

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<PAGE> 15

of Landlord, the amount of public liability and/or property damage insurance
coverage at that time is not adequate.

13.4 Insurance Companies. All insurance required under this Lease
shall be issued by insurance companies licensed to do business in the
jurisdiction where the building is located. Such companies shall have a rating
and be a financial size category reasonably acceptable to Landlord. Each
policy shall contain an endorsement requiring thirty (30) days' written notice
from the insurance company to Landlord before cancellation or any change in the
coverage, scope or amount of any policy. Each policy, or a certificate showing
it is in effect, together with evidence of payment of premiums, shall be
deposited with Landlord on or before the Commencement Date, and renewal
certificates or copies of renewal policies shall be delivered to Landlord at
least thirty (30) days prior to the expiration date of any policy.

13.5 Cancellation of Insurance. If any of Landlord's insurance
policies shall be canceled or cancellation shall be threatened or the coverage
thereunder reduced or threatened to be reduced in any way because of the use of
the Premises or any part thereof by Tenant or any assignee or subtenant of
Tenant or by anyone Tenant permits on the Premises, and if Tenant fails to
remedy the condition within forty-eight (48) hours after written notice
thereof, Landlord may at its option, either terminate this Lease or enter upon
the Premises and attempt to remedy such condition, and Tenant shall promptly
pay the cost thereof to Landlord. Landlord shall not be liable for any damage
or injury caused to any property of Tenant or of others located on the Premises
from such entry.

13.6 Subrogation. Landlord and Tenant hereby waive any rights each
may have against the other on account of any loss or damage occasioned to
Landlord or Tenant, as the case may be, their respective property, the
Premises, its contents or to the other portions of the Real Property, arising
from any risk covered by all risks fire and extended coverage insurance of the
type and amount required to be carried hereunder, provided that such waiver
does not invalidate such policies or prohibit recovery thereunder. The parties
hereto each agree to use reasonable efforts to cause their respective insurance
companies insuring the property of either Landlord or Tenant against any such

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loss, to waive any right of subrogation that such insurers may have against
Landlord or Tenant, as the case may be.

ARTICLE 14
ASSIGNMENT & SUBLETTING

Tenant shall not assign, transfer, mortgage or encumber this Lease or
sublet the Premises without obtaining the prior written consent of Landlord,
nor shall any assignment or transfer of this Lease be effectuated by operation
of law or otherwise without the prior written consent of Landlord, and in any
such case, such consent may not be unreasonably withheld, conditioned or
delayed. In the event that Tenant desires to assign this Lease, sublet the
Premises, or permit occupancy or use of the Premises or any part thereof by
another party or parties, Tenant shall provide Landlord with thirty (30) days'
advance written notice of Tenant's bona fide proposed assignment or subletting
of all or any part of the Premises. Landlord shall have the right, at its
option during said thirty (30) day period, to (a) release Tenant from this
Lease for such space, (b) sublet all or any part of the Premises from Tenant at
the same rental Tenant is paying Landlord, with the right to further sublease
such space or (c) refuse to consent to Tenant's assignment or subletting of
such space and to continue this Lease in full force and effect as to the entire
Premises. The consent by Landlord to any assignment, transfer, or subletting
to any party other than Landlord shall not be construed as a waiver or release
of Tenant from the terms of any covenant or obligation under this Lease nor
shall the collection or acceptance of Rent from any such assignee, transferee,
subtenant or occupant constitute a waiver or release of Tenant from any
covenant or obligation contained in this Lease, nor shall such assignment or
subletting be construed to relieve Tenant from giving Landlord's said thirty
(30) days' notice, nor from obtaining the consent in writing of Landlord to any
further assignment or subletting (which consent may not be unreasonably
withheld, conditioned or delayed). In the event that Tenant defaults
hereunder, Tenant hereby assigns to Landlord any and all rent due from any
subtenant of Tenant and hereby authorizes each such subtenant to pay said rent
directly to Landlord. Without limiting the generality of the foregoing, if
Landlord consents to an assignment or sublease pursuant to this Article 15,
Landlord may condition its consent upon the entry by such transferee into an
agreement (in form and substances reasonably satisfactory to Landlord) with
Landlord, by which such transferee assumes all of Tenant's obligations
hereunder.

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ARTICLE 15
LANDLORD'S RIGHT OF ACCESS

15.1 Access. Landlord may, at any time during Tenant's occupancy,
during reasonable business hours and upon two business days prior written
notice (except in the event of emergency), enter either to view the Premises or
to show the same to others, or to facilitate repairs to the Building, or to
introduce, replace, repair, alter or make new or change existing connections
from any fixtures, pipes, wires, ducts, conduits or other construction therein,
or remove, without being held responsible therefor, placards, signs, lettering,
window or door coverings and the like not expressly consented to by Landlord.

15.2 Landlords Right to Show. Landlord may, during the last sixty
(60) days of the Term, enter the Premises free from hindrance or control of
Tenant to show the Premises to prospective tenants at times which shall not
unreasonably interfere with Tenant's business. If Tenant shall vacate the
Premises during the last month(s) of the Term, Landlord shall have the
unrestricted right to enter the same after Tenant's moving to commence
preparations for the succeeding tenant or for any other purpose whatsoever,
without affecting Tenant's obligation to pay Rent for the full Term.

ARTICLE 16
FIRE CLAUSE

16.1 Abatement of Rent. In the event the Premises or any part
thereof, the elevators, hallways, stairways or other approaches thereto,
becomes damaged or destroyed by fire or other casualty from any cause so as to
render said Premises and/or approaches unfit for use and occupancy, a just and
proportionate part of the Rent according to the nature and extent of the damage
or injury to said Premises and/or approaches, shall be suspended or abated
until said Premises and/or approaches have been put in as good condition for
use and occupancy as at the time immediately prior to such damage or
destruction. Landlord shall proceed, at its expense and as expeditiously as
may be practicable, to repair the damage, unless, because of the substantial
extent of the damage or destruction, Landlord should decide not to repair or
restore the Premises or the Real Property, in which event and at Landlord's
sole option, Landlord may terminate this Lease forthwith by giving Tenant a
written notice of its intention to terminate within ninety (90) days after the
date of the fire

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<PAGE> 18

or other casualty. Landlord shall not be obligated to repair, restore or
replace any fixture, improvement, alteration, furniture or other property
owned, installed or made by Tenant, all of which may be repaired, restored or
replaced by Tenant at Tenant's sole discretion.

16.2 Notification. Tenant shall immediately notify Landlord of any
damage to the Premises caused by fire or any other casualty. No damages,
compensation, or claim shall be payable by Landlord for inconvenience, loss of
business, or annoyance arising from any repair or restoration of any portion of
the Premises or the Property. Subject to the provisions of paragraph 17.1,
Landlord shall diligently proceed to have such repairs made promptly.

ARTICLE 17
CONDEMNATION

17.1 Termination of Lease. This Lease shall be terminated and the
Rent shall be abated to the date of such termination in either of the following
events: (a) condemnation of all or a material part of the Premises by any
competent authority under right of eminent domain for any public or
quasi-public use or purpose; or (b) condemnation by competent authority under
right of eminent domain for any public or quasi-public use or purpose of
twenty-five percent (25%) or more of the Real Property on which the Premises
are located. The forcible leasing by any competent authority of any portion of
the Real Property other than the Premises shall have no effect upon this Lease.
In case of any taking or condemnation, whether or not the Term shall cease and
terminate, the entire award shall be the property of Landlord, and Tenant
hereby assigns to Landlord all its right, title and interest in and to any such
award. Tenant however, shall be entitled to claim, prove and receive in the
condemnation proceeding such awards as may be allowed for fixtures and other
equipment installed by it, but only if such awards shall be made by the court
in addition to (and shall in no manner whatsoever reduce) the award made by it
to Landlord for the land and improvements or part thereof so taken.

17.2 Temporary Condemnation. In the event of a temporary taking
or condemnation of all or any part of the Premises for any public or
quasi-public use or purpose, this Lease shall be unaffected and Tenant shall
continue to pay in full Basic Rent and all Additional Rent payable for

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<PAGE> 19

any such period. In the event of any such temporary taking, notwithstanding
the provisions of paragraph 18.1, Tenant shall be entitled to claim, prove and
receive the portion of the award for such taking that represents compensation
for use or occupancy of the Premises during the Term, and Landlord shall be
entitled to appear, claim, prove and receive the portions of the award that
represent the cost of restoration of the Premises and the use or occupancy of
the Premises after the end of the Term.

ARTICLE 18
DEFAULTS AND REMEDIES

18.1 Remedies on Default. It is hereby mutually agreed that: (a)
if Tenant shall fail (i) to pay Rent or other sums which Tenant is obligated to
pay by any provision of this Lease, when and as it is due and payable hereunder
and without demand therefor, or (ii) to keep and perform each and every
covenant, condition and agreement herein contained on the part of Tenant to be
kept and performed; or (b) if the estate hereby created shall be taken by
execution or other process of law; or (c) if Tenant shall (i) generally not pay
Tenant's debts as such debts become due, (ii) become insolvent, (iii) make an
assignment for the benefit of creditors, (iv) file, be the entity subject to,
or acquiesce in a petition in any court (whether or not filed by or against
Tenant pursuant to any statute of the United States or any state and whether or
not for a trustee, custodian, receiver, agent, or other officer for Tenant or
for all or any portion of Tenant's property) in any proceeding whether
bankruptcy, reorganization, composition, extension, arrangement, insolvency
proceedings, or otherwise then, and in each and every such case, from
thenceforth and at all times thereafter, at the sole option of Landlord,
Landlord may after giving ten (10) days written notice and opportunity to cure
for monetary default and thirty (30) days written notice and opportunity to
cure for nonmonetary default:

(a) Terminate this Lease, in which event Tenant shall
immediately surrender the Premises to Landlord. If Tenant fails to do
so, Landlord may without notice and without prejudice to any other
remedy Landlord may have, enter upon and take possession of the
Premises and expel or remove Tenant and its effects, without being
liable to prosecution or any claim for damages therefor; and Tenant
shall indemnify Landlord for all loss and damage

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<PAGE> 20

which Landlord may suffer by reason of such termination, whether
through the inability to relet the Premises or otherwise including any
loss of Rent for the remainder of the Term.

(b) Terminate this Lease, in which event Tenant's event
of default should be considered a total breach of Tenant's obligations
under this Lease and Tenant immediately shall become liable for such
damages for such breach, in an amount equal to the total of (1) the
costs of recovering the Premises; (2) the unpaid Rent earned as of the
date of termination, plus interest thereon at a rate per annum from
the due date equal to four percent (4%) over the Prime Rate, provided,
however, that such interest shall never exceed the highest lawful
rate; and (3) all other sums of money and damages owing by Tenant to
Landlord. Tenant's right of possession shall cease and terminate and
Landlord shall be entitled to the possession of the Premises and shall
remove all persons and property therefrom and reenter the same without
further demand of Rent or demand of possession of the Premises, either
with or without process of law and without becoming liable to
prosecution therefor, any notice to quit or intention to reenter being
hereby expressly waived by Tenant.

(c) Declare the present worth (as of the date of such
default) of the entire balance of Rent for the remainder of the Term
to be due and payable, and collect such balances in any manner not
inconsistent with applicable law. For the purpose of this paragraph
19.1, present worth shall be computed by discounting the entire
balance to present worth at a discount rate equal to one (1)
percentage point above the discount rate then in effect at the Federal
Reserve Bank nearest the location of the Building.

(d) Pursue any combination of such remedies and/or other
remedy available to Landlord on account of such default under
applicable law.

In the event of any reentry or retaking of the Premises by Landlord and/or any
termination of this Lease by Landlord, Tenant shall nevertheless remain in all
events liable and answerable for the Rent to the date of such retaking, reentry
or termination and Tenant shall also be and remain answerable in damages for
the deficiency or loss of Rent as well as all related expenses which Landlord
may

20
<PAGE> 21

thereby sustain in respect to the balance of the Term, and, in such case,
Landlord reserves full power, which is hereby acceded to by Tenant, to let said
Premises for the benefit of Tenant, in liquidation and discharge, in whole or
in part, as the case may be, of the liability of Tenant under the terms and
provisions of this Lease, and such damages and related expenses, at the option
of Landlord, may be recovered by it at the time of the retaking and reentry, or
in separate actions, from time to time, as Tenants obligation to pay Rent would
have accrued if the Term had continued, or from time to time as said damages
and related expenses shall have been made more easily ascertainable by
reletting of the Premises, or such action by Landlord may, at the option of
Landlord, be deferred until the expiration of the Term, in which latter event
the cause of action shall not be deemed to have accrued until the date of the
termination of the Term.

18.2 Bankruptcy Limitations. The provisions of this Article 19 are
subject to the Bankruptcy Laws of the United States of America which may, in
certain cases, limit the rights of Landlord to enforce some of the provisions
of this Article in proceedings thereunder. To the extent that limitations
exist by virtue thereof, the remaining provisions hereof shall not be affected
thereby but shall remain in full force and effect. The provisions of this
Article 19 shall be interpreted in a manner which results in a termination of
this Lease in each and every instance, and to the fullest extent and at the
earliest moment that such termination is permitted under bankruptcy laws, it
being of prime importance to Landlord to deal only with tenants who have, and
continue to have, a strong degree of financial strength and financial
stability.

18.3 Application of Amounts Received from Reletting. All rents
received by Landlord in any reletting after Tenant's default shall be applied,
first to the payment of such expenses as Landlord may have incurred in
recovering possession of the Premises and in reletting the same (including
brokerage fees), second to the payment of any costs and expenses incurred by
Landlord, either for making the necessary repairs (including fitting up the
space for such reletting) to the Premises or in curing any default on the part
of Tenant of any covenant or condition herein made binding upon Tenant. Any
remaining rent shall then be applied toward the payment of Rent due from
Tenant, together with interest and penalties as defined in Paragraph 3.4, and
Tenant expressly agrees to pay

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<PAGE> 22

any deficiency then remaining. Landlord must be obligated to use reasonable
efforts to mitigate its damages.

18.4 Cost of Collection. In the event Tenant defaults in the
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and Landlord places in the hands of an attorney or collection
agency the enforcement of all or any part of this Lease, the collection of any
Rent due or to become due or recovery of the possession of the Premises, Tenant
agrees to pay Landlord's actual costs of collection and enforcement, including
reasonable attorneys' fees, whether suit is actually filed or not.

ARTICLE 19
SUBORDINATION CLAUSE

This Lease shall be subject and subordinate at all times to the lien
of any mortgage or deed of trust or other encumbrance(s) which may now or which
may at any time hereafter be made upon the Real Property of which the Premises
is a part or any portion thereof, or upon Landlord's interest therein;
provided, however, that the holder of such mortgage or deed of trust shall
agree not to disturb Tenant's occupancy of the Premises so long as Tenant is
not in default hereunder. This clause shall be self-operative, and no further
instrument of subordination shall be required to effect the subordination of
this Lease. Nonetheless, in confirmation of such subordination, Tenant shall
execute and deliver such further instrument(s) (in form and substance
reasonably acceptable to Tenant) subordinating this Lease to the lien of any
such mortgage or deed of trust or any other encumbrance(s) as shall be desired
by any mortgagee or party secured or proposed to be secured thereby. If the
interests of Landlord under this Lease shall be transferred by reason of
foreclosure or other proceedings for enforcement of any mortgage or deed of
trust on the Premises or Real Property, Tenant shall be bound to the transferee
at the option of the transferee, under the terms, covenants and conditions of
this Lease for the remaining Term, including any extensions or renewals, with
the same force and effect as if the transferee were Landlord under this Lease,
and, if requested by such transferee, Tenant agrees to attorn to the transferee
as its landlord. The holder of any mortgage or deed of trust encumbering the
Property shall have the right, unilaterally, at any time to subordinate fully
or partially its mortgage or deed of trust or other security instrument to this

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<PAGE> 23

Lease on such terms and subject to such conditions as such holder may consider
appropriate in its discretion. Upon request Tenant shall execute and deliver
an instrument confirming any such full or partial subordination.

ARTICLE 20
SURRENDER OF POSSESSION

Upon the expiration or earlier termination of the Term, Tenant shall
surrender the Premises and all keys, security cards, and locks connected
therewith to Landlord in good order and repair (ordinary wear and tear
excepted). Subject to the provisions of Article 11, any and all improvements,
repairs, alterations and all other property attached to, used in connection
with or otherwise installed upon the Premises (i) shall, immediately upon the
completion of the installation thereof, be and become Landlord's property
without payment therefor by Landlord, and (ii) shall be surrendered to Landlord
upon the expiration or earlier termination of the Term, except that any
machinery, equipment or fixtures installed by Tenant and used in the conduct of
the Tenant's trade or business (rather than to service the Premises or the Real
Property generally) and all other personalty of Tenant shall remain Tenant's
property and shall be removed by Tenant upon the expiration or earlier
termination of the Term, and Tenant shall promptly thereafter fully restore any
of the Premises damaged by such installation or removal thereof.

ARTICLE 21
TENANT HOLDING OVER

If Tenant or any person claiming through Tenant shall not immediately
surrender possession of the Premises at the expiration or earlier termination
of the Term, Landlord shall be entitled to recover compensation for such use
and occupancy at one hundred twenty-five percent (125%) of the Basic Rent and
Additional Rent payable hereunder just prior to the expiration or earlier
termination of the Term. Landlord shall also continue to be entitled to retake
or recover possession of the Premises as hereinbefore provided in case of
default on the part of Tenant, and Tenant shall be liable to Landlord for any
loss or damage it may sustain by reason of Tenant's failure to surrender
possession of the Premises immediately upon the expiration or earlier
termination of the Term.

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<PAGE> 24

Tenant hereby agrees that all the obligations of Tenant and all rights of
Landlord applicable during the Term shall be equally applicable during such
period of subsequent occupancy.

ARTICLE 22
ESTOPPELS

Tenant shall, without charge therefor, at any time and from time to
time, within fifteen (15) days after request by Landlord, execute, acknowledge
and deliver to Landlord a written estoppel certificate certifying to Landlord,
any mortgagee, assignee of a mortgagee, or any purchaser of the Real Property,
or any other person reasonably designated by Landlord, as of the date of such
estoppel certificate: (a) that Tenant is in possession of the Premises; (b)
that this Lease is unmodified and in full force and effect (or if there have
been modifications, that this Lease is in full force and effect as modified and
setting forth such modifications); (c) whether or not there are then existing
any setoffs or defenses against the enforcement of any right or remedy of
Landlord, or any duty or obligation of Tenant hereunder (and, if so, specifying
the same in detail); (d) the amount of the Basic Rent and the dates through
which Basic Rent and Additional Rent have been paid; (e) that Tenant has no
knowledge of any then uncured defaults on the part of Landlord under this Lease
(or if Tenant has knowledge of any such uncured defaults, specifying the same
in detail); (f) that Tenant has no knowledge of any event having occurred that
authorizes the termination of this Lease by Tenant (or if Tenant has such
knowledge, specifying the same in detail); (g) the amount of any Security
Deposit held by Landlord; and (h) such reasonable other information requested
by Landlord, such mortgagee, assignee of such mortgagee, such purchaser or such
other person.

ARTICLE 23
MISCELLANEOUS

23.1 Tenant. The term "Tenant" shall include legal representatives,
successors and permitted assigns. All covenants herein made binding upon
Tenant shall be construed to be equally applicable to and binding upon its
agents, employees and others claiming the right to be in the Premises or on the
Real Property through or under Tenant.

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<PAGE> 25

23.2 Gender. Feminine or neuter pronouns shall be substituted for
those of the masculine form and the plural shall be substituted for the
singular, wherever the context shall require. It is also agreed that no
specific words, phrases or clauses herein used shall be taken or construed to
control, limit or cut down the scope or meaning of any general words, phrases
or clauses used in connection therewith.

23.3 Waiver. No waiver or breach of any covenant, condition or
agreement herein contained shall operate as a waiver of the covenant, condition
or agreement itself, or of any subsequent breach thereof.

23.4 Warranties. TENANT AND LANDLORD EXPRESSLY AGREE THAT THERE
ARE AND SHALL BE NO IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND ARISING OUT OF THIS LEASE,
AND THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THOSE EXPRESSLY SET FORTH IN
THIS LEASE.

23.5 Assignment and Sublease. This Lease shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns. This provision shall not be
deemed to grant Tenant any right to assign this Lease or sublet the Premises or
any part thereof other than as provided in Article 15 hereof.

23.6 Entire Agreement. It is understood and agreed by and between
the parties hereto that this Lease contains the final and entire agreement
between said parties, and that they shall not be bound by any terms,
statements, conditions or representations, oral or written, express or implied,
not herein contained. This Lease may not be modified orally or in any manner
other than by written agreement signed by the parties hereto.

23.7 Severability. Every agreement contained in this Lease is, and
shall be construed as, a separate and independent agreement. If any term of
this Lease or the application thereof to any person or circumstances shall be
invalid and enforceable, the remaining provisions of this Lease, the

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<PAGE> 26

application of such term to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected.

23.8 Force Majeure. Whenever a period of time is herein prescribed
for action to be taken by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation for any such period of
time, any delays due to strikes, riots, acts of God, shortages of labor or
materials, war, governmental laws, regulations, or restrictions, or any other
cause of any kind whatsoever which is beyond the reasonable control of
Landlord.

23.9 Time of the Essence. All times, whenever stated in this
Lease, are declared to be of the essence of this Lease.

ARTICLE 24
BROKERS

Tenant represents and warrants that it has not entered into any
agreement with, nor otherwise had any dealings with, any broker or agent in
connection with the negotiation or execution of this Lease which could form the
basis of any claim by any such broker or agent for a brokerage fee or
commission, finder's fee, or any other compensation of any kind or nature in
connection herewith, and Tenant shall indemnify, defend and hold Landlord
harmless from and against any costs (including, but not limited to, court costs
and attorneys fees), expenses, or liability for commissions or other
compensation claimed by any broker or agent with respect to this Lease which
arises out of any agreement or dealings, or alleged agreement or dealings,
between Tenant and any such agent or broker.

ARTICLE 25
NOTICES AND DEMANDS

25.1 Notice. All notices required or permitted hereunder shall be
deemed to have been given if (i) mailed in any United States Post Office by
certified or registered mail, postage prepaid, return receipt requested, or
(ii) deposited with a reputable overnight delivery service and addressed to

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<PAGE> 27

Landlord or Tenant respectively, at the following addresses or to such other
addresses as the parties hereto may designate to the other in writing from time
to time:

LANDLORD TENANT

MEL, Inc. Renal Care Group, Inc.
3925 West Northside Drive 1801 West End, Suite 1100
Post Office Box 4607 (39296) Nashville, Tennessee 37203
Jackson, Mississippi 39209

25.2 Domicile. Tenant hereby elects domicile at the Premises for
the purpose of service of all notices, writs of summons, or other legal
documents or process, in any suit, action or proceeding which Landlord may
undertake under this Lease.

ARTICLE 26
QUIET ENJOYMENT

Landlord covenants and agrees that upon Tenant paying the Rent and any
other charges due and payable and observing and performing all the terms,
covenants and conditions, on Tenant's part to be observed and performed, Tenant
may peaceably and quietly enjoy the Premises hereby demised, subject
nevertheless, to the terms and conditions of this Lease and to any mortgages
and deeds of trust hereinbefore mentioned.

ARTICLE 27
GOVERNING LAW

This Lease shall be construed and governed by the laws of the state of
Mississippi. Should any provision of this Lease and/or its conditions be
illegal or not enforceable under the laws of said state, it or they shall be
considered severable, and the Lease and its conditions shall remain in force
and be binding upon the parties hereto as though the said provision had never
been included.

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<PAGE> 28

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed by their duly authorized officers as of the day and year first above
written.

LANDLORD

MEL, INC.

By: /s/ John M. Bower
-----------------
John M. Bower, President

TENANT

RENAL CARE GROUP, INC.,
a Delaware corporation

By: /s/ Ronald Hinds
----------------
Title: Executive Vice President
------------------------

28
<PAGE> 29

EXHIBIT A

REAL PROPERTY

<PAGE> 30

EXHIBIT "A"

A certain parcel of land situated in and being a part
of the Northeast 1/4 of Section 24, T&H-R1W, Hinds
County, Mississippi, and being more particularly
described as follows:

and also:

A certain parcel of land situated in and being a part
of the Northeast 1/4 of Section 24, T&H-R1W, Hinds
County, Mississippi, and being more particularly
described as follows:

Commencing at the Point of Intersection of the East
line of the aforesaid Northeast 1/4 of Section 24,
T&H-R1W with the South right-of-way line of Northside
Drive (as now laid out and improved, January, 1987); run
thence westerly along the South right-of-way line of
said Northside Drive a distance of 503.80 feet to the
POINT OF BEGINNING of the parcel of land herein
described; from said POINT OF BEGINNING, turn thence
left through a deflection angle of 90 degrees 28 minutes
[SEAL] 44 seconds and run in a southerly direction for a
STATE OF MS distance of 346.80 feet; turn thence right through a
COUNTY OF HINDS deflection angle of 90 degrees 31 minutes 19 seconds and
FILED-RECORDED run in a westerly direction a distance of 793.36 feet to
a point on the East right-of-way line of Country Club
MAY 20 4 32 PM '94 Road (as now laid out and improved, January, 1987); turn
thence right through a deflection angle of 96 degrees 33
BOOK 4296 minutes 02 seconds and run in a northeasterly direction
------------ and along said East right-of-way line of Country Club
PAGE 642 Road a distance of 269.60 feet to a concrete marker;
------------ turn thence right through a deflection angle of 34
ALICE JAMES degrees 01 minutes 53 seconds and continue in a
CHANCERY CLERK northeasterly direction along said right-of-way line for
a distance of 58.66 feet to a concrete marker; turn
thence right through a deflection angle of 44 degrees 49
minutes 30 seconds and continue along said right-of-way
line of Country Club Road and the southerly right-of-way
line of the aforesaid Northside Drive for a distance of
258.37 feet to a concrete marker; turn thence right
through a deflection angle of 05 degrees 33 minutes 00
seconds and run in an easterly direction along said
South right-of-way line of Northside Drive a distance of
463.24 feet to the POINT OF THE BEGINNING, containing
6.0457 acres, more or less.

<PAGE> 31

EXHIBIT B

OFFICE BUILDING FLOOR PLAN

<PAGE> 32

OFFICE
FLOOR PLAN

<PAGE> 33
OFFICE
FLOOR PLAN

<PAGE> 34

EXHIBIT C

PLAT OF THE REAL PROPERTY

<PAGE> 35

EXHIBIT "A"

<PAGE> 36

EXHIBIT D

WAREHOUSE #1 FLOOR PLAN

<PAGE> 37

FLOOR PLAN

<PAGE> 38

FLOOR PLAN

<PAGE> 1

EXHIBIT 10.10

LEASE AGREEMENT

(CARTHAGE)

THE STATE OF TEXAS

COUNTY OF PANOLA

This lease is entered into by and between the Landlord and the Tenant
hereinafter named.

ARTICLE 1. DEFINITIONS AND CERTAIN BASIC PROVISIONS.

1.1 (a) "Landlord": JAMES A. COTTON, M.D.
THOMAS A. LOWERY, M.D.
ROY D. GERARD, JR., M.D.
KEVIN A. CURRAN, M.D.

(b) Landlord's Address 807 East First Street
Tyler, Texas 75701

(d) Tenant's Trade Name: CARTHAGE DIALYSIS CENTER

(f) "Demised Premises": The property described on
Exhibit A attached to this
lease, including a building of
approximately 2479.16 square
feet.

(g) "Lease Term": Ten (10) years

(h) "Commencement Date": The Closing of the transaction
contemplated under that certain
Amended and Restated Transfer
Agreement (Stock Transfer) dated
as of November 8, 1995 between
RENAL CARE GROUP, INC. and the
Tenant's predecessor in
interest, TYLER NEPEROLOGY
ASSOCIATES, P.A.

(i) Minimum Guaranteed TWO THOUSAND FOUR HUNDRED
Rental: SEVENTY-NINE AND 16/100
($2,479.16) DOLLARS per month
for the first five (5) years.
Beginning with and including
the sixty-first (61st) month,
the Minimum Guaranteed Rental
shall be increased to reflect
the percentage increase in the
Bureau of Labor Statistics of
the United States Department of
Labor, Consumer Price Index,
"All Urban Consumers, U.S. City
Average, All Items" ("Index").
Such increase shall be
calculated for the period from
and including the month in which
the Commencement Date falls
through and including the
sixtieth (60th) month of this
lease. If the Index is
discontinued, the parties agree
to accept such substitute Index
or formula as may be designated
or promulgated by the United
States Bureau of Labor
Statistics or some other
mutually acceptable replacement
or substitute for the Index.

(j) For no other purpose than the
operation of a dialysis clinic.

1.2 Each of the foregoing definitions and basic provisions shall be
construed in conjunction with and limited by the reference thereto in the other
provisions of this lease.

<PAGE> 2
ARTICLE 2. GRANTING CLAUSE.

In consideration of the obligation of Tenant to pay rent as herein
provided and in consideration of the other terms, covenants and conditions
hereof, landlord hereby demises and leases to Tenant, and Tenant hereby takes
from Landlord, the Demised Premises, to HAVE AND TO HOLD said premises for the
Lease Term, and upon the terms and conditions set forth in this lease.

ARTICLE 3. OCCUPANCY AND ACCEPTANCE OF PREMISES

3.1 By occupying the Demised Premises, Tenant shall be deemed to
have accepted the same and to have acknowledged that the same comply fully with
Landlord's covenants and obligations hereunder.

ARTICLE 4. RENT.

4.1 Rental shall accrue hereunder from the Commencement Date, and
shall be payable to Landlord at Landlord's address.

4.2 Tenant shall pay Minimum Guaranteed Rental in monthly
installments in the amounts specified in Article 1.1(i) above. The first such
monthly installment shall be prepaid, and subsequent installments shall be due
on the first day of each succeeding calendar month during the Lease Term.

4.3 It is understood that the Minimum Guaranteed Rental is payable
on or before the first day of the month without offset or deduction of any
nature. In the event any rental payment is received more than five (5) days
after its due date for any reason whatsoever it is agreed that the Minimum
Guaranteed Rental for that month shall be increased by an amount equal to ten
percent (10%) of the Minimum Guaranteed Rental due as a service and processing
fee. If any rental shall remain unpaid for thirty (30) days after the rental
payment is due the Minimum Guaranteed Rental for that month shall be further
increased by an additional ten percent (10%) service and processing fee (for a
total of twenty percent (20%)) of the Minimum Guaranteed Rental due. Any such
increase shall be payable as additional rent hereunder and shall be payable
immediately upon demand. If any such increased rental is payable more than
twice during one calendar year of the Lease Term, or if twice during one
calendar year of the Lease Term a check of Tenants shall not be paid by
Tenant's bank immediately upon presentation, Landlord may require, by giving
written notice to Tenant, (and in addition to any penalty arising out of the
above) that all future rental payments are to be made by cash, cashier's check,
or money order, and that the delivery of Tenant's personal or corporate check
will no longer constitute a payment of rental as provided in this lease. Any
acceptance of personal or corporate checks thereafter by Landlord shall not be
construed as a subsequent waiver of said rights.

ARTICLE 5. USE AND CARE OF PREMISES, COVENANT TO CONTINUOUSLY OPERATE

5.1. The Demised Premises may be used only for the purposes specified
in Article 1.1(j) above and for no other purpose without the prior
written consent of Landlord. Tenant shall not at any time leave the Demised
Premises vacant, but shall in good faith continuously throughout the Lease Term
conduct and carry on in the entire Demised Premises the type of business for
which the Demised Premises are leased. Tenant shall operate its business in a
reputable manner.

5.2 All property kept, stored, or maintained within the Demised
Premises by Tenant shall be at Tenant's sole risk.

5.3 Tenant shall not permit any objectionable or unpleasant odors
nor any sounds to emanate from the Demised Premises, nor place or permit any
radio, television, loud-speaker, or amplifier on the roof or outside the Demised
Premises or where the same can be seen or heard from outside the building; nor
place any antenna, awning, or other projection on the exterior of the Demised
Premises; nor take any other action which would constitute a nuisance.

5.4 Tenant shall take good care of the Demised Premises and keep the
same free from waste at all times. Tenant shall keep the Demised Premises and
sidewalks, serviceways and loading areas adjacent to the Demised Premises neat,
clean and free from dirt and rubbish at all times, and shall store all trash and
garbage within the Demised Premises, arranging for the regular pick-up of such
trash and garbage at Tenant's expense. Receiving and delivery of goods and
merchandise and removal of garbage and trash shall be made only in the manner
and areas prescribed by Landlord. Tenant shall not operate in incinerator or
burn trash or garbage on the Demised Premises. Tenant shall be responsible for
removal and disposition of all hazardous wastes.

5.5 Tenant shall procure at its sole expense any permits and
licenses required for the transaction of business in the Demised Premises and
otherwise comply with applicable laws, ordinances and governmental regulations.
Tenant shall, and will be responsible for causing its employees, subtenants,
licensees and concessionaires to comply with all reasonable rules and
regulations which Landlord, in its discretion, may prescribe for the Demised
Premises.

<PAGE> 3

ARTICLE 6. MAINTENANCE AND REPAIRS

6.1 Tenant shall bear all expenses incurred in maintaining the
Demised Premises. Such expenses shall include, but shall not be limited to
maintenance of the roof, foundation, parking lot and the structural soundness of
the exterior walls.

6.2 Tenant shall keep the Demised Premises in good clean condition
and shall at its sole cost and expense keep the Demised Premises free of
insects, rodents and other pests and make all needed repairs and replacements,
including replacement of cracked or broken glass, fire protection, sprinkler
systems, electrical, heating, air conditioning and plumbing, fixtures, systems,
ducts, conduits, pipes and wiring in, under and above the Demised Premises. If
any repairs required to be made by Tenant hereunder are not made within ten
(10) days after written notice delivered to Tenant by Landlord, Landlord may at
its option make such repairs without liability to Tenant for any loss or damage
which may result to Tenant's business by reason of such repairs, and Tenant
shall pay the Landlord upon demand as additional rental hereunder the cost of
such repairs plus interest at the rate of ten percent (10%) per annum from the
date of payment by Landlord until repaid by Tenant. At the expiration of this
lease Tenant shall surrender the Demised Premises in good condition,
reasonable wear and tear, and loss by fire or other casualty excepted.

6.3 Tenant, at its sole cost, shall maintain the heating,
ventilating and air conditioning system for the Demised Premises in good
condition and repair throughout the Lease Term. As a part of this maintenance
obligation, Tenant shall enter into an annual contract with an air conditioning
repair firm, fully licensed by the state of Texas to repair air conditioning
units, which firm shall:

(a) regularly service the air conditioning unit(s) on the
Demised Premises on a semi-annual basis, changing belts, filters and other
parts as required;

(b) perform emergency and extraordinary repairs on the air
conditioning unit(s), and

(c) keep a detailed record of all services performed on the
Demised Premises and prepare a yearly service report to be furnished to the
Tenant at the end of each calendar year.

Not later than thirty (30) days prior to the Commencement Date and annually
thereafter, Tenant shall furnish to Landlord a copy of the air conditioning
maintenance contract described above and proof that the annual premium for the
maintenance contract has been paid. Nothing stated hereinabove shall limit
Tenant's obligation to maintain the air conditioning unit(s) in good condition
and repair throughout the Lease Term. Tenant agrees to change the filters on
such unit(s) monthly.

ARTICLE 7. ALTERATIONS.

7.1 Tenant shall not make any alterations, additions or
improvements to the Demised Premises without the prior written consent of
Landlord, expect for the installation of unattached, movable trade fixtures
which may be installed without drilling, cutting, or otherwise defacing the
Demised Premise. All alterations, additions, improvements and fixtures (other
than unattached, movable trade fixtures) which may be made or installed by
either party upon the Demised Premises, including any floor covering cemented
or adhesively attached, shall remain upon and be surrendered with the Demised
Premises and become the property of Landlord at the termination of this lease,
unless Landlord requests their removal in which event Tenant shall remove the
same and restore the Demised Premises to their original condition at Tenant's
expense.

7.2 All construction work done by Tenant within the Demised Premises
shall be performed in a good workmanlike manner, in compliance with all
governmental requirements, and in such manner as to cause a minimum of
interference with other construction in progress and with the transaction of
business in the Demised Premises. Tenant agrees to indemnify Landlord and hold
him harmless against any loss, liability, or damage resulting from such work,
and Tenant shall, if requested by Landlord, furnish bond or other security
satisfactory to Landlord against any such loss, liability, or damage.

ARTICLE 8. LANDLORD'S RIGHT OF ACCESS; USE OF ROOF.

Landlord shall have the right to enter upon the Demised Premises at any
time upon reasonable prior notice to Tenant (except in the event of an
emergency) for the purpose of inspecting the same, or of making repairs to the
Demised Premises, or removing hazardous materials, if any; or of making repairs,
alterations, or additions to adjacent Demised Premises, or of showing the
Demised Premises to prospective purchasers, lessees, or lenders. Use of the
roof above the Demised Premises is reserved to Landlord.

ARTICLE 9. UTILITIES.

9.1 Landlord agrees to provide at the Commencement Date the utility
service connections necessary to supply water, electricity, telephone service
and service the sewerage service to the Demised Premises. Any changes to
existing service due to Tenant's occupancy is Tenant's expense.

<PAGE> 4
9.2 Tenant shall promptly pay all charges for electricity, water,
gas, telephone service, sewerage service and other utilities furnished to the
Demised Premises including initial connection charges and shall furnish all
electric light bulbs and tubes.

9.3 Landlord shall not be liable for any interruption whatsoever in
utility services.

ARTICLE 10. INDEMNITY AND PUBLIC LIABILITY INSURANCE.

10.1 Landlord shall not be liable to Tenant or to Tenant's employees,
agents, or visitors, or to any other person whomsoever, for any injury to
person or damage to property on or above the Demised Premises caused by the
negligence or misconduct of Tenant, its employees, subtenants, licenses, or
concessionaires, or of any other person entering the Demised Premises under
express or implied invitation of Tenant, or arising out of the use of the
Demised Premises by Tenant and the conduct of its business therein, or
arising out of any breach or default by Tenant in the performance of its
obligations hereunder; and Tenant hereby agrees to indemnify Landlord and hold
it harmless from any loss, expense, or claims arising out of such damage or
injury.

10.2 Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost and expense, insuring
both Landlord and Tenant against all claims, demands, or actions arising out
of or in connection with Tenant's use or occupancy of the Demised Premises, or
by the condition of the Demised Premises, the limits of such policy or policies
to be in an amount of not less than ONE MILLION AND NO/100 ($1,000,000.00)
DOLLARS in respect of injuries or death to any one accident or disaster, and in
an amount of not less than ONE MILLION AND NO/100 ($41,000,000.00) DOLLARS in
respect to property damage, and to be written by insurance companies reasonably
satisfactory to Landlord. The limit of said insurance shall not, however,
limit the liability of the Tenant hereunder. Tenant may carry said insurance
under a blanket policy providing an endorsement naming Landlord as an
additional insured is attached thereto. Tenant shall obtain a written
obligation of the part of each insurance company to notify Landlord at least
ten (10) days prior to cancellation of such insurance. Such policies or duly
executed certificates of insurance shall be promptly delivered to Landlord and
renewals thereof as required shall be delivered to Landlord at least forty-five
(45) days prior to the expiration of the respective policy terms. If Tenant
should fail to comply with the foregoing requirements relating to insurance,
upon 30 days prior written notice and opportunity to cure, Landlord may obtain
such insurance and Tenant shall pay to Landlord on demand as additional rent
hereunder the premium cost thereof plus interest at a rate of ten percent (10%)
per annum from date of payment by Landlord until repaid by Tenant.

ARTICLE 11. NON-LIABILITY FOR CERTAIN DAMAGES.

Landlord and Landlord's agents and employees shall not be liable to
Tenant for any injury to person or damage to property caused by the Demised
Premises or other portions of the Demised Premises being or becoming out of
repair or by defect in or failure of equipment, sprinkler systems, pipes or
wiring, or broken glass, or by the backing up of drains, or by gas, water,
steam, electricity, or oil leaking, escaping, or flowing into the Demised
Premises, nor shall Landlord be liable to Tenant for any loss or damage that
may be occasioned by or through the acts or omissions of third parties or other
tenants of the Demised Premises.

ARTICLE 12. DAMAGE BY CASUALTY.

12.1 Tenant shall give immediate written notice to Landlord of any
damage caused to the Demised Premises by fire or other casualty.

12.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises, and this
lease shall continue in force and effect. If the Demised Premises or any part
of the Demised Premises is damaged by fire or other casualty to such an extent
that rebuilding thereof cannot reasonably be completed within ninety (90) days
after such casualty, then Landlord may elect either to terminate this lease or
to proceed to rebuild and repair the Demised Premises, or other part of the
Demised Premises. Landlord shall give written notice to Tenant of such
election within sixty (60) days after the occurence of such casualty.

12.3 Landlord's obligation to rebuild and repair under this Article 12
shall in any event be limited to restoring the Demised Premises to
substantially the condition in which the same existed prior to such casualty,
exclusive of any work performed by and improvements, fixtures and equipment
installed by Tenant. Tenant agrees that promptly after completion of such work
by Landlord, Tenant will proceed with reasonable diligence and at Tenant's sole
cost and expense to restore, repair and replace all alterations, additions,
improvements, fixtures, signs and equipment installed by Tenant. Tenant agrees
at all times to keep its merchandise, fixtures and other property situated
within the Demised Premises insured against fire and other casualties.

12.4 Tenant agrees that during any period of reconstruction or repair
of the Demised Premises it will continue the operation of its business within
the Demised Premises to the extent practicable. During the period from the
occurrence of the casualty until Landlord's repairs are completed, the Minimum
Guaranteed Rental shall be reduced to such extent as may be fair and reasonable
under the circumstances.

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<PAGE> 5
ARTICLE 13. EMINENT DOMAIN.

13.1 If more than twenty percent (20%) of the floor area of the Demised
Premises should be taken for any public or quani-public use under any
governmental law, ordinance, or regulation or by right of aminent domain or by
private purchase in lieu thereof, this lease shall terminate. Upon any such
termination the rent sh
<PAGE> 6
ARTICLE 13. EMINENT DOMAIN.

13.1 If more than twenty percent (20%) of the floor area of the
Demised Premises should be taken for any public or quasi-public use under any
governmental law, ordinance, or requisition or by right of eminent domain or by
any private purchase in lieu thereof, this lease shall terminate. Upon any
such termination the rent shall be abated during the unexpired portion of this
lease, effective on the date physical possession is taken by the condemning
authority.

13.2 If twenty percent (20%) or less of the Demised Premises should
be taken as aforesaid, this lease shall not be terminated (except as provided
above); however, the Minimum Guaranteed Rental payable hereunder during the
unexpired portion of this lease shall be reduced in proportion to the area
taken, effective on the date physical possession is taken by the condemning
authority. Following such partial taking, Landlord shall make all necessary
repairs or alterations to the remaining Demised Premises required to make the
remaining portions of the Demised Premises an architectural whole, exclusive of
any work performed by Tenant and improvements, fixtures and equipment installed
by Tenant.

13.3 All compensation awarded for any taking (or proceeds of private
sale in lieu thereof) of the Demised Premises or Common Area shall be the
property of Landlord, and Tenant hereby assigns its interest in any such award
to Landlord; provided, however, Landlord shall have no interest in any award
made to Tenant for loss of business or for the taking of Tenant's fixtures and
other property if a separate award for such items is made to Tenant.

ARTICLE 14. ASSIGNMENT AND SUBLETTING.

14.1 Tenant shall not assign, mortgage, encumber, or in any manner
transfer this lease or any estate or interest therein, or sublet the Demised
Premises or any part thereof, or grant any license, concession, or
other right of occupancy of any portion of the Demised Premises without the
prior written consent of Landlord. Consent by Landlord to one or more
assignments or sublettings shall not operate as a waiver of Landlord's
rights as to any subsequent assignments and sublettings. Notwithstanding any
assignment or subletting, Tenant and any guarantor of Tenant's obligations
under this lease shall at all times remain fully and primarily responsible and
liable for the payment of the rent herein specified and for compliance with all
of its other obligations under this lease.

14.2 In the event of the transfer and assignment by Landlord of its
interest in this lease and in the Demised Premises to a person expressly
assuming Landlord's obligations under this lease, Landlord shall thereby by
released from any further obligations hereunder, and Tenant agrees to attorn
to and look solely to such successor in interest of the Landlord for
performance of such obligations. Any security given by Tenant to secure
performance of Tenant's obligations hereunder may be assigned and transferred
by Landlord to such successor in interest, and Landlord shall thereby be
discharged of any further obligation relating thereto. Tenant agrees promptly
to execute such documents as shall evidence recognizing of such succession to
Landlord and attornment by Tenant.

ARTICLE 15. PROPERTY TAXES AND INSURANCE.

15.1 Tenant shall be liable for all taxes levied against personal
property and fixtures placed by Tenant in the Demised Premises. If any such
taxes are levied against Landlord or Landlord's property and if Landlord elects
to pay the same or if the assessed value of Landlord's property is increased by
inclusion of personal property and fixtures placed by Tenant in the Demised
Premises or increased due to capital improvements to the Demised Premises, and
Landlord elects to pay the taxes based on such increase, Tenant shall pay to
Landlord upon demand that part of such taxes for which Tenant is primarily
liable hereunder.

15.2 Tenant shall pay to Landlord each year, as additional rental,
upon demand, the ad valorem taxes, or taxes levied in lieu thereof, assessments
and other governmental charges and insurance premiums paid with respect to the
Demised Premises during the Lease Term. The payment to be made by Tenant for
the tax year in which this lease terminates shall bear the same ratio to the
payment which would be required to be made for the full tax year as the number
of lease months falling within such tax year bears to a full tax year.

15.3 If, through the efforts of outside consultants, taxes to be paid
by Tenant are lowered from initial renditions, the Tenant shall pay the cost of
such consultants, but in no event shall Tenant pay more than it would have
under such intial rendition.

15.4 In the event a tax on rentals is now or hereafter imposed, such
tax shall be paid upon demand by Tenant to Landlord as additional rental
hereunder.

ARTICLE 16. DEFAULT BY TENANT AND REMEDIES.

16.1 The following events shall be deemed to be events of default by
Tenant under this lease:

(a) Tenant shall fail to pay any installment of rent
hereunder and such failure shall continue for a period of ten (10) days after
receipt of written notice from Landlord.

<PAGE> 7
(b) Tenant shall fail to comply with any term, provision, or
covenant of this lease, other than the payment of rent, and shall not cure such
failures within fifteen (15) days after receipt of written notice thereof to
Tenant.

(c) Tenant or any guarantor of Tenant's obligations under this
lease shall become insolvent, or shall make a transfer in fraud of creditors, or
shall make an assignment for the benefit of creditors.

(d) Tenant or any guarantor of Tenant's obligations under this
lease shall file a petition under any section or chapter of the Bankruptcy
Reform Act, as amended, or under any similar law or statute of the United States
or any State thereof; or Tenant or any guarantor of Tenant's obligations under
this lease shall be adjudged bankrupt or insolvent in proceedings filed against
Tenant or any guarantor of Tenant's obligations under this lease thereunder.

(e) A receiver or trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or any
guarantor of Tenant's obligations under this lease.

(f) Tenant shall desert or vacate any substantial portion of
the Demised Premises for more than 10 consecutive days.

(g) Tenant shall do or permit to be done anything which creates
a lien upon the Demised Premises and fails to discharge, bond such lien or post
security with Landlord within 30 days after receipt by Tenant of written notice
thereof.

Upon the occurrence of any such events of default, Landlord shall have the
option to pursue any one or more of the following remedies without notice or
demand whatsoever:

(a) Terminate this lease in which event Tenant shall
immediately surrender the Demised Premises to Landlord, and if Tenant fails to
do so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Demised
Premises and expel or remove Tenant and any other person who may be occupying
said Demised Premises or any part thereof, by force if necessary, without being
liable for prosecution or any claim for damages therefor; and Tenant agrees to
pay to Landlord on demand the amount of all loss and damage which Landlord may
suffer by reason of such termination, whether through inability to relet the
Demised Premises on satisfactory terms or otherwise.

(b) Enter upon and take possession of the Demised Premises and
expel or remove Tenant and any other person who may be occupying said Demised
Premises or any part thereof, by force if necessary, without being liable for
prosecution or any claim for damages therefor, and, if Landlord so elects, relet
the Demised Premises on such terms as Landlord may deem advisable and receive
the rent therefor; and Tenant agrees to pay to Landlord on demand any deficiency
that may arise by reason of such reletting. No re-entry or retaking possession
of the Demised Premises by Landlord shall be construed as an election to
terminate this lease, unless Landlord furnishes to Tenant a written notice of
termination.

(c) Enter upon the Demised Premises by force if necessary
without being liable for prosecution or any claim for damages therefor, and do
whatever Tenant is obligated to do under the terms of this lease; and Tenant
agrees to reimburse Landlord on written demand for any expenses which Landlord
may incur in this affecting compliance with Tenant's obligations under this
lease, and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or provided by law, nor shall pursuit of any other such
remedy constitute a forfeiture or waiver of any rent due to Landlord hereunder
or of any damages accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. Forbearance by Landlord to
enforce one or more of the remedies herein provided upon a default shall not be
deemed or construed to constitute a waiver of such default. In determining the
amount of loss or damage which Landlord may suffer by reason of termination of
this lease or the deficiency arising by reason of any reletting by Landlord as
above provided, allowance shall be made for the expenses of repossession and any
repairs or remodeling undertaken by Landlord following repossession.

16.2 In the event that at any time during the Lease Term either
Landlord or Tenant shall institute any action or proceeding against the other,
then, and in that event, the unsuccessful party in such action or proceeding
agrees to reimburse the successful party for the reasonable expense of
attorney's fees and disbursements incurred therein by the successful party.

ARTICLE 17. LANDLORD'S LIEN.

IN ADDITION TO THE STATUTORY LANDLORD'S LIEN, LANDLORD SHALL HAVE AT
ALL TIMES A VALID SECURITY INTEREST TO SECURE PAYMENT OF ALL RENTALS AND OTHER
SUMS OF MONEY BECOMING DUE HEREUNDER FROM TENANT, AND TO SECURE PAYMENT OF ANY
DAMAGES OR LOSS WHICH LANDLORD MAY SUFFER BY REASON OF THE BREACH BY TENANT OF
ANY COVENANT, AGREEMENT, OR CONDITION CONTAINED HEREIN, UPON ALL GOODS, WARES,
EQUIPMENT, FIXTURES, FURNITURE, IMPROVEMENTS AND OTHER PERSONAL PROPERTY OF
TENANT PRESENTLY, OR WHICH MAY HEREAFTER BE, SITUATED ON THE DEMISED PREMISES,
AND ALL PROCEEDS

6
<PAGE> 8
THEREFROM, AND SUCH PROPERTY SHALL NOT BE REMOVED THEREFROM WITHOUT THE WRITTEN
CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT AS WELL AS ANY AND ALL OTHER
SUMS OF MONEY THEN DUE TO LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID AND
DISCHARGED AND ALL THE COVENANTS, AGREEMENTS AND CONDITIONS HEREOF HAVE BEEN
FULLY COMPLIED WITH AND PERFORMED BY TENANT. UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT BY TENANT, LANDLORD MAY, IN ADDITION TO ANY OTHER REMEDIES PROVIDED
HEREIN OR UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED BY THE STATE IN WHICH THE
DEMISED PREMISES ARE LOCATED (INCLUDING WITHOUT LIMITATION TEXAS SECTION
9.505(B) THEREOF OR ITS EQUIVALENT), ENTER UPON THE DEMISED PREMISES AND TAKE
POSSESSION OF ANY AND ALL GOODS, WARES, EQUIPMENT, FIXTURES, FURNITURE,
IMPROVEMENTS AND OTHER PERSONAL PROPERTY OF TENANT SITUATED ON THE DEMISED
PREMISES, WITHOUT LIABILITY FOR TRESPASS OR CONVERSION, AND SELL THE SAME AT
PUBLIC OR PRIVATE SALE, WITH OR WITHOUT HAVING SUCH PROPERTY AT THE SALE, AFTER
GIVING TENANT REASONABLE NOTICE OF THE TIME AND PLACE OF ANY PUBLIC SALE OR OF
THE TIME AFTER WHICH ANY PRIVATE SALE IS TO BE MADE, AT WHICH SALE THE LANDLORD
OR ITS ASSIGNS MAY PURCHASE UNLESS OTHERWISE PROHIBITED BY LAW. UNLESS
OTHERWISE PROVIDED BY LAW, AND WITHOUT INTENDING TO EXCLUDE ANY OTHER MANNER OF
GIVING TENANT REASONABLE NOTICE, THE REQUIREMENT OF REASONABLE NOTICE SHALL BE
MET IF SUCH NOTICE IS GIVEN IN THE MANNER PRESCRIBED IN THIS LEASE AT LEAST TEN
(10) DAYS BEFORE THE TIME OF SALE. ANY SALE MADE PURSUANT TO THE PROVISION OF
THIS PARAGRAPH SHALL BE DEEMED TO HAVE BEEN A PUBLIC SALE CONDUCTED IN A
COMMERCIALLY REASONABLE MANNER IF HELD IN THE ABOVE DESCRIBED DEMISED PREMISES
OR WHERE THE PROPERTY IS LOCATED AFTER THE TIME, PLACE AND METHOD OF SALE AND A
GENERAL DESCRIPTION OF THE TYPES OF PROPERTY TO BE SOLD HAVE BEEN ADVERTISED IN
A DAILY NEWSPAPER PUBLISHED IN THE COUNTY IN WHICH THE DEMISED PREMISES IS
LOCATED FOR FIVE (5) CONSECUTIVE DAYS BEFORE THE DATE OF THE SALE. THE PROCEEDS
FROM ANY SUCH DISPOSITION, LESS ANY AND ALL EXPENSES CONNECTED WITH THE TAKING
OF POSSESSION, HOLDING AND SELLING OF THE PROPERTY, (INCLUDING REASONABLE
ATTORNEY'S FEES AND LEGAL EXPENSES), SHALL BE APPLIED AS A CREDIT AGAINST THE
INDEBTEDNESS SECURED BY THE SECURITY INTEREST GRANTED IN THIS PARAGRAPH. ANY
SURPLUS SHALL BE PAID TO TENANT OR AS OTHERWISE REQUIRED BY LAW; THE TENANT
SHALL PAY ANY DEFICIENCIES FORTHWITH. UPON REQUEST BY LANDLORD, TENANT AGREES
TO EXECUTE AND DELIVER TO LANDLORD A FINANCING STATEMENT IN FORM SUFFICIENT TO
PERFECT THE SECURITY OF LANDLORD IN THE AFOREMENTIONED PROPERTY AND PROCEEDS
THEREOF UNDER THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE IN FORCE IN THE
STATE IN WHICH THE DEMISED PREMISES IS LOCATED. THE STATUTORY LIEN FOR RENT IS
NOT HEREBY WAIVED, THE SECURITY INTEREST HEREIN GRANTED BEING IN ADDITION AND
SUPPLEMENTARY THERETO.

ARTICLE 18. HOLDING OVER.

In the event Tenant remains in possession of the Demised Premises after
the expiration of this lease and without the execution of a new lease, it shall
be deemed to be occupying said Demised Premises as a Tenant from month to month
at a rental equal to the rental herein provided plus twenty-five percent (25%)
of such amount and otherwise subject to all the conditions, provisions and
obligations of this lease insofar as the same are applicable to a month to month
tenancy.

ARTICLE 19. SUBORDINATION.

Tenant accepts this lease subject and subordinate to any mortgage, deed
of trust, or other lien presently existing upon the Demised Premises or the
Demised Premises as a whole, and to any renewals and extensions thereof; but
Tenant agrees that any such mortgagee shall have the right at any time to
subordinate such mortgage, deed of trust, or other lien to this lease. Landlord
is hereby irrevocably vested with full power and authority to subordinate this
lease to any mortgage, deed of trust, or other lien hereafter placed upon the
Demised Premises or the Demised Premises as a whole, and Tenant agrees upon
demand to execute such further instruments subordinating this lease as Landlord
may request, provided such subordination shall be upon the express condition
that this lease shall be recognized by the mortgagee, and that the rights of
Tenant shall remain in full force and effect during the Lease Term so long as
Tenant shall continue to perform all of the covenants and conditions of this
lease.

ARTICLE 20. NOTICES.

Whenever any notice is required or permitted hereunder, such notice shall
be in writing. Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not when
deposited in the United States Mail, postage prepaid, Certified or Registered
Mail, Return Receipt Requested, addressed to the parties hereto at the
respective addresses set out in Article 1.1 above (even if Tenant shall have
vacated) or at such other addresses as they have theretofore specified by
written notice. If "Tenant" is more than one person, corporation, or other
entity, all of them shall join in executing such written notice specifying a
different address or Landlord may elect to disregard such change of address.

ARTICLE 21. WAIVER OF SUBROGATION.

Anything herein to the contrary notwithstanding, each of Landlord and
Tenant hereby releases the other from any and all liability or responsibility to
the other or anyone claiming through or under them by way of subrogation or
otherwise for any loss or damage to property caused by fire or any of the
extended coverage or supplementary contract casualties, even if such fire or
other casualty shall have been caused by the fault or negligence of the other
party, or any one for whom such party may be responsible; provided, however,
that if the releasor carries insurance upon his or its property against fire and
other casualties, this release shall be applicable and in force and effect only
with respect to loss or damage occurring during such time as the releasor's
policies shall contain a clause or endorsement to the effect that such release
shall not adversely affect or impair such policies or prejudice the right of the
releasor to recover thereunder. Each of Landlord and Tenant agrees that it
will request its insurance carriers to include in its policies such a clause or
endorsement,

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<PAGE> 9
ARTICLE 22. MISCELLANEOUS.

22.1 Nothing herein contained shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture between the parties
hereto, it being understood and agreed that neither the method of computation
of rent, nor any other provision contained herein, nor any acts of the parties
hereto, shall be deemed to create any relationship between the parties hereto
other than the relationship of Landlord and Tenant. Whenever herein the
singular number is used, the same shall include the plural, and words of any
gender shall include each other gender.

22.2 The captions used herein are for convenience only and do not
limit or amplify the provisions hereof.

22.3 One or more waivers of any covenant, term, or condition of this
lease by either party shall not be construed as a waiver of a subsequent breach
of the same covenant, term, or condition. The consent or approval by either
party to or of any act by the other party requiring such consent or approval
shall not be deemed to waiver or render unnecessary consent to or approval of
any subsequent similar act.

22.4 Whenever a period of time is herein prescribed for action to be
taken by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded from the computation of any such period of time, any delays
due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions, or any other causes of any kind
whatsoever which are beyond the reasonable control of Landlord. At any time
when there is outstanding a mortgage, deed of trust, or similar security
interest covering Landlord's interest in the Demised Premises, Tenant may not
exercise any remedies for default by Landlord hereunder unless and until the
holder of the indebtedness secured by such mortgage, deed of trust, or similar
security instrument shall have received written notice of such default and a
reasonable time for curing such default shall thereafter have elapsed.

22.5 Landlord agrees that if Tenant shall perform all of the covenants
and agreements herein required to be performed by Tenant, Tenant shall, subject
to the terms of this lease, at all times during the continuance of this lease
have the peaceable and quiet enjoyment and possession of the Demised Premises.

22.6 This lease contains the entire agreement between the parties, and
no agreement shall be effective to change, modify or terminate this lease in
whole or in part unless such agreement is in writing and duly signed by the
party against whom enforcement of such change, modification, or termination is
sought.

22.7 Tenant agrees that it will from time to time upon request by
Landlord execute and deliver to Landlord a statement in recordable form
certifying that this lease is unmodified and in force and effect (or if there
have been modifications, that the same is in full force and effect as so
modified).

22.8 The laws of the state in which the Demised Premises is located
shall govern the interpretation, validity, performance and enforcement of this
lease. If any provision of this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby.

22.9 The terms, provisions and covenants contained in this lease shall
apply to, inure to the benefit of and be binding upon all parties hereto and
their respective heirs, successors in interest and legal representatives,
except as otherwise herein expressly provided.

22.10 In addition to the Minimum Guaranteed Rental, all other payments
to be made by Tenant shall be deemed to be and shall become additional rental
hereunder whether or not the same be designated as such, and Landlord shall
have the same remedies for failure to pay the same as for non-payment of rent.
Tenant shall not withhold or make other adjustments in its specified rental
amounts for any reason.

22.11 If Tenant is more than one person, corporation, or other entity
(i) all persons, corporations and other entities constituting Tenant shall be
jointly and severally liable as Tenant hereunder, and (ii) the term "Tenant"
under this lease shall refer to any one of the persons, corporations, or other
entities constituting Tenant.

22.12 No act or thing done by Landlord or its agent during the Lease
Term shall be deemed an acceptance of a surrender of the Demised Premises, and
no agreement to accept a surrender of the Demised Premises shall be valid
unless the same be made in writing and subscribed by Landlord.

22.13 There are attached hereto and incorporated herein by reference
the following exhibits and addenda:

Legal Description

22.14 Tenant warrants that it has had no dealings with any broker or
agent in connection with the negotiation or execution of this lease other than
Landlord's broker, if any, and Tenant agrees to indemnify

6
<PAGE> 10
Landlord and hold Landlord harmless from and against any and all cost, expense,
or liability for commissions or other compensation and charges claimed by any
other broker or agent with respect to this lease.

22.15 The submission of this lease to Tenant for examination does not
constitute a reservation of or option for the Demised Premises and this lease
becomes effective only upon execution by Landlord and Tenant. Tenant
acknowledges that Landlord or Landlord's agents and employees have made no
representations or promises with respect to the Demised Premises or the Demised
Premises except as herein expressly set forth and Tenant further acknowledges no
rights, easements, or licenses are acquired by Tenant by implication or
otherwise, except as herein expressly set forth.

22.16 This instrument supersedes in its entirety all leases between the
parties (including Tenant's predecessor in interest, TYLER NEPHROLOGY
ASSOCIATES, P.A.) relating to the Demised Premises. Landlord and Tenant ratify
and confirm the Consent to Collateral Assignment of this lease to Tyler Bank &
Trust, N.A.

ARTICLE 23. OPTIONS TO RENEW.

Contingent upon Tenant satisfying all of the following conditions, Tenant
is hereby granted options to extend the Lease Term for two (2) additional
periods of sixty (60) months each. The conditions are:

(a) Tenant shall have fully performed all of its covenants,
duties and obligations hereunder during the Lease Term and any extended term;

(b) Tenant shall have given written notice to Landlord not less
than ninety (90) days prior to the expiration of the Lease Term or extended term
of Tenant's exercise of such option.

(c) Time is of the essence in the exercise of this option and
should Tenant fail to exercise this option by timely notice, this option shall
lapse and be of no further force or effect. If Tenant effectively exercises one
or both options herein granted, then all of the terms and provisions of this
lease shall be applicable during any extension term except Tenant shall have no
further right to renew or extend the Lease Term after the expiration or
termination of the extended terms set forth in this Article and the Minimum
Guaranteed Rental shall be adjusted as set forth in this paragraph. The Minimum
Guaranteed Rental for each extended term shall be increased to reflect the
percentage increase in the Bureau of Labor Statistics of the United States
Department of Labor, Consumer Price Index, "All Urban Consumers, U.S. City
Average, All Items" ("Index"). The increase shall be based on the original
Minimum Guaranteed Rental in effect on the Commencement Date. Such increase
shall be calculated for the period from and including the month in which the
Commencement Date falls through and including the month in which the applicable
extended term begins. If the Index is discontinued, the parties agree to accept
such substitute index or formula as may be designated or promulgated by the
United States Department of Labor Statistics or some other mutually acceptable
replacement or substitute for the Index. The adjusted Minimum Guaranteed Rental
shall remain the same during the applicable extended term.

Executed as of the dates hereinabove stated.

LANDLORD:

/s/ James R. Cotton, M.D.
---------------------------------------------
JAMES R. COTTON, M.D.

/s/ Thomas A. Lowery, M.D.
---------------------------------------------
THOMAS A. LOWERY, M.D.

/s/ Roy D. Gerard, Jr., M.D.
---------------------------------------------
ROY D. GERARD, JR., M.D.

/s/ Kevin A. Curran, M.D.
---------------------------------------------
KEVIN A. CURRAN, M.D.

TENANT:

RENAL CARE GROUP TEXAS, INC.

By: /s/ ?
------------------------------------------
Its Authorized Officer

<PAGE> 1
EXHIBIT 10.11

LEASE AGREEMENT
---------------

(TYLER)
-------

THE STATE OF TEXAS :
:
COUNTY OF SMITH :

This lease is entered into by and between the Landlord and the Tenant
hereinafter named.

<TABLE>
<Caption:
ARTICLE 1. DEFINITIONS AND CERTAIN BASIC PROVISIONS.
- -----------------------------------------------------
<S> <C> <C> <C> <C>
1.1. (a) "Landlord": JAMES R. COTTON, M.D.
THOMAS A. LOWERY, M.D.
ROY D. GERARD, JR., M.D.
KEVIN A. CURRAN, M.D.

(b) Landlord's Address: 807 East First Street
Tyler, Texas 75701

(d) Tenant's Address: 1801 West End Avenue,
Suite 1100
Nashville, Tennessee 37203

(e) Tenant's Trade Name: WATSON WISE REGIONAL DIALYSIS CENTER

(f) "Demised Premises": The property described on Exhibit A attached
to this lease, including a building of
approximately 20,092, square feet

(g) "Lease Term": Ten (10) years

(h) "Commencement Date": The Closing of the transaction contemplated under
that certain Amended and Restated Transfer
Agreement (Stock Transfer) dated as of
November 8, 1995 between RENAL CARE GROUP, INC. and
Tenant's predecessor in interest, TYLER NEPHROLOGY
ASSOCIATES, P.A.

(i) Minimum Guaranteed Rental: TWENTY THOUSAND NINETY-TWO AND NO/100 ($20,092.00)
DOLLARS per month for the first five (5) years.
Beginning with and including the sixty-first (61st)
month, the Minimum Guaranteed Rental shall be
increased to reflect the percentage increase in the
Bureau of Labor Statistics of the United States
Department of Labor, Consumer Price Index, "All Urban
Consumers, U.S., City Average, All Items" ("Index").
Such increase shall be calculated for the period from and
including the month in which the Commencement Date falls
through and including the sixtieth (60th) month of this
lease. If the Index is discontinued, the parties agree
to accept such substitute Index or formula as may be
designated or promulgated by the United States Bureau
of Labor Statistics or some other mutually acceptable
replacement or substitute for the Index.

(j) Permitted Use: For no other purpose than the operation of a dialysis
clinic.

1.2 Each of the foregoing definitions and basic provisions shall be construed in conjunction with and limited by the
references thereto in the other provisions of this lease.
</TABLE>

<PAGE> 2
ARTICLE 2. GRANTING CLAUSE

In consideration of the obligation of Tenant to pay as herein provided
and in consideration of the other terms, covenants and conditions hereof,
Landlord hereby demises and leases to Tenant, and Tenant hereby takes from
Landlord, the Demised Premises, TO HAVE AND TO HOLD said premises for the Lease
Term, and upon the terms and conditions set forth in this lease.

ARTICLE 3. OCCUPANCY AND ACCEPTANCE OF PREMISES.

3.1 By occupying the Demised Premises, Tenant shall be deemed to
have accepted the same and to have acknowledged that the same comply fully with
Landlord's covenants and obligations hereunder.

ARTICLE 4. RENT.

4.1 Rental shall accrue hereunder from the Commencement Date, and
shall be payable to Landlord at Landlord's address.

ARTICLE 5. USE AND CARE OF PREMISES, COVENANT TO CONTINUOUSLY OPERATE.

5.1 The Demised Premises may be used only for the purposes specified
in Article 1.1(j) above and for no other purpose without the prior written
consent of Landlord. Tenant shall not at any time leave the Demised Premises
vacant, but shall in good faith continuously throughout the Lease Term conduct
and carry on in the entire Demised Premises the type of business for which the
Demised Premises are leased. Tenant shall operate its business in a reputable
manner.

5.2 All property kept, stored, or maintained within the Demised
Premises by Tenant shall be at Tenant's sole risk.

5.4 Tenant shall take good care of the Demised Premises and keep the
same free from waste at all times. Tenant shall keep the Demised Premises and
sidewalks, serviceways and loading areas adjacent to the Demised Premises neat,
clean and free from dirt and rubbish at all times, and shall store all trash and
garbage within the Demised Premises, arranging for the regular pick-up of such
trash and garbage at Tenant's expense. Receiving and delivery of goods and
merchandise and removal of garbage and trash shall be made only in the manner
and areas prescribed by Landlord. Tenant shall not operate an incinerator or
burn trash or garbage on the Demised Premises. Tenant shall be responsible for
removal and disposition of all hazardous wastes.

5.5. Tenant shall procure at its sole expense any permits and
licenses required for the transaction of business in the Demised Premises and
otherwise comply with applicable laws, ordinances and governmental regulations.
Tenant shall, and will be responsible for causing its employees, subtenants,
licensees and concessionaires to comply with all reasonable rules and
regulations which Landlord, in its discretion, may prescribe for the Demised
Premises.

2
<PAGE> 3

ARTICLE 6. MAINTENANCE AND REPAIRS.

6.2 Tenant shall keep the Demised Premises in good clean condition
and shall at its sole cost and expense keep the Demised Premises free of
insects, rodents and other pests and make all needed repairs and replacements,
including replacement of cracked or broken glass, fire protection, sprinkler
systems, electrical, heating, air conditioning and plumbing, fixtures, systems,
ducts, conduits, pipes and wiring in, under and above the Demised Premises. If
any repairs required to be made by Tenant hereunder are not made within ten (10)
days after written notice delivered to Tenant by Landlord, Landlord may at its
option make such repairs without liability to Tenant for any loss or damage
which may result to Tenant's business by reason of such repairs, and Tenant
shall pay the Landlord upon demand as additional rental hereunder the cost of
such repairs plus interest at the rate of ten percent (10%) per annum from the
date of payment by Landlord until repaid by Tenant. At the expiration of this
lease Tenant shall surrender the Demised Premises in good condition, reasonable
wear and tear, and loss by fire or other casualty excepted.

(a) regularly service the air conditioning unit(s) on the
Demised Premises on a semi-annual basis, changing belts, filters and other parts
as required;

(b) perform emergency and extraordinary repairs on the air
conditioning unit(s); and

(c) keep a detailed record of all services performed on the
Demised Premises and prepare a yearly service report to be furnished to the
Tenant at the end of each calendar year.

ARTICLE 7. ALTERATIONS.

7.1 Tenant shall not make any alterations, additions or improvements
to the Demised Premises without the prior written consent of Landlord, except
for the installation of unattached, movable trade fixtures which may be
installed without drilling, cutting, or otherwise defacing the Demised Premises.
All alterations, additions, improvements and fixtures (other than unattached,
movable trade fixtures) which may be made or installed by either party upon the
Demised Premises, including any floor covering cemented or adhesively attached,
shall remain upon and be surrendered with the Demised Premises and become the
property of Landlord at the termination of this lease, unless Landlord requests
their removal in which event Tenant shall remove the same and restore the
Demised Premises to their original condition at Tenant's expense.

ARTICLE 8. LANDLORD'S RIGHT OF ACCESS; USE OF ROOF.

Landlord shall have the right to enter upon the Demised Premises at any
time upon reasonable prior notice to Tenant (except in the vent of an emergency)
for the purpose of inspecting the same, or of making repairs to the Demised
Premises, or removing hazardous materials, if any; or of making repairs,
alterations, or additions to adjacent Demised Premises, or of showing the
Demised Premises to prospective purchasers, leases, or lenders. Use of the roof
above the Demised Premises is reserved to Landlord.

ARTICLE 9. UTILITIES.

9.1 Landlord agrees to provide at the Commencement Date the utility
service connections necessary to supply water, electricity, telephone service
and sewerage service to the Demised Premises. Any changes to existing service
due to Tenant's occupancy is Tenant's expense.

<PAGE> 4

9.2 Tenant shall promptly pay all charges for electricity, water,
gas, telephone service, sewerage service and other utilities furnished to the
Demised Premises including initial connection charges and shall furnish all
electric light bulbs and tubes.

9.3 Landlord shall not be liable for any interruption whatsoever in
utility services.

ARTICLE 10. INDEMNITY AND PUBLIC LIABILITY INSURANCE.

10.1 Landlord shall not be liable to Tenant or to Tenant's employees,
agents, or visitors, or to any other person whomsoever, for any injury to person
or damage to property on or above the Demised Premises caused by the negligence
or misconduct of Tenant, its employees, subtenants, licensees, or
concessionaires, or of any other person entering the Demised Premises under
express or implied invitation of Tenant, or arising out of the use of the
Demised Premises by Tenant and the conduct of its business therein, or arising
out of any breach or default by Tenant in the performance of its obligations
hereunder; and Tenant hereby agrees to indemnify Landlord and hold it harmless
from any loss, expense, or claims rising out of such damage or injury.

10.2 Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost and expense, insuring
both Landlord and Tenant against all claims, demands, or actions arising out of
or in connection with Tenant's use or occupancy of the Demised Premises, or by
the condition of the Demised Premises, the limits of such policy or policies to
be in an amount of not less than ONE MILLION AND NO/100 ($1,000,000.00) DOLLARS
in respect of injuries or death to any one accident or disaster, and in an
amount of not less than ONE MILLION AND NO/100 ($1,000,000.00) DOLLARS in
respect to property damage, and to be written by insurance companies reasonably
satisfactory to Landlord. The limit of said insurance shall not, however,
limit the liability of the Tenant hereunder. Tenant may carry said insurance
under a blanket policy providing an endorsement naming Landlord as an
additional insured is attached hereto. Tenant shall obtain a written obligation
of the part of each insurance company to notify Landlord at least ten (10) days
prior to cancellation of such insurance. Such policies or duly executed
certificates of insurance shall be promptly delivered to Landlord and renewals
thereof as required shall be delivered to Landlord at least forty-five (45)
days prior to the expiration of the respective policy terms. If Tenant should
fail to comply with the foregoing requirements relating to insurance, upon 30
days prior written notice and opportunity to cure, Landlord may obtain such
insurance and Tenant shall pay to Landlord on demand as additional rent
hereunder the premium cost thereof plus interest at a rate of ten percent (10%)
per annum from date of payment by Landlord until repaid by Tenant.

ARTICLE 11. NON-LIABILITY FOR CERTAIN DAMAGES.

Landlord and Landlord's agents and employees shall not be liable to
Tenant for any injury to person or damage to property caused by the Demised
Premises or other portions of the Demised Premises being or becoming out of
repair or by defect in or failure of equipment, sprinkler systems, pipes or
wiring, or broken glass, or by the backing up of drains, or by gas, water,
steam, electricity, or oil leaking, escaping, or flowing into the Demised
Premises, nor shall Landlord be liable to Tenant for any loss or damage that may
be occasioned by or through the acts or omissions of third parties or other
tenants of the Demised Premises.

ARTICLE 12. DAMAGE BY CASUALTY.

12.1 Tenant shall give immediate written notice to Landlord of any
damage caused to the Demised Premises by fire or other casualty.

12.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises, and this
lease shall continue in force and effect. If the Demised Premises or any part
of the Demised Premises is damaged by fire or other casualty to such an extent
that rebuilding thereof cannot reasonably be completed within ninety (90) days
after such casualty, then Landlord may elect either to terminate this lease or
to proceed to rebuild and repair the Demised Premises, or other part of the
Demised Premises. Landlord shall give written notice to Tenant of such election
within sixty (60) days after the occurrence of such casualty.

12.3 Landlord's obligation to rebuild and repair under this Article
12 shall in any event be limited to restoring the Demised Premises to
substantially the condition in which the same existed prior to such casualty,
exclusive of any work performed by and improvements, fixtures and equipment
installed by Tenant. Tenant agrees that promptly after completion of such work
by Landlord, Tenant will proceed with reasonable diligence and at Tenant's sole
cost and expense to restore, repair and replace all alterations, additions,
improvements, fixtures, signs and equipment installed by Tenant. Tenant agrees
at all times to keep its merchandise, fixtures and other property situated
within the Demised Premises insured against fire and other casualties.

4
<PAGE> 5
ARTICLE 13. EMINENT DOMAIN.

13.1 If more than twenty percent (20%) of the floor area of the Demised
Premises should be taken for any public or quasi-public use under any
governmental law, ordinance, or regulation or by right of eminent domain or by
private purchase in lieu thereof, this lease shall terminate. Upon any such
termination the rent shall be abated during the unexpired portion of this lease,
effective on the date physical possession is taken by the condemning authority.

13.2 If twenty percent (20%) or less of the Demised Premises should be
taken as aforesaid, this lease shall not be terminated (except as provided
above); however, the Minimum Guaranteed Rental payable hereunder during the
unexpired portion of this lease shall be reduced in proportion to the area
taken, effective on the date physical possession is taken by the condemning
authority. Following such partial taking, Landlord shall make all necessary
repairs or alterations to the remaining Demised Premises required to make the
remaining portions of the Demised Premises an architectural whole, exclusive of
any work performed by Tenant and improvements, fixtures and equipment installed
by Tenant.

13.3 All compensation awarded for any taking (or the proceeds of
private sale in lieu thereof) of the Demised Premises or Common Area shall be
the property of Landlord, and Tenant hereby assigns its interest in any such
award to Landlord; provided, however, Landlord shall have no interest in any
award made to Tenant for loss of business or for the taking of Tenant's fixtures
and other property if a separate award for such items is made to Tenant.

ARTICLE 14. ASSIGNMENT AND SUBLETTING.

14.1 Tenant shall not assign, mortgage, encumber, or in any manner
transfer this lease or any estate or interest therein, or sublet the Demised
Premises or any part thereof, or grant any license, concession, or other right
of occupancy of any portion of the Demised Premises without the prior written
consent of Landlord. Consent by Landlord to one or more assignments or
sublettings shall not operate as a waiver of Landlord's rights as to any
subsequent assignments and sublettings. Notwithstanding any assignment or
subletting, Tenant and any guarantor of Tenant's obligations under this lease
shall at all times remain fully and primarily responsible and liable for the
payment of the rent herein specified and for compliance with all of its other
obligations under this lease.

14.2 In the event of the transfer and assignment by Landlord of its
interest in this lease and in the Demised Premises to a person expressly
assuming Landlord's obligations under this lease, Landlord shall thereby be
released from any further obligations hereunder, and Tenant agrees to attorn to
and look solely to such successor in interest of the Landlord for performance of
such obligations. Any security given by Tenant to secure performance of
Tenant's obligations hereunder may be assigned and transferred by Landlord to
such successor in interest, and Landlord shall thereby be discharged of any
further obligation relating thereto. Tenant agrees promptly to execute such
documents as shall evidence recognizing of such succession to Landlord and
attornment by Tenant.

ARTICLE 15. PROPERTY TAXES AND INSURANCE.

15.2 Tenant shall pay to Landlord each year, an additional rental, upon
demand, the ad valorem taxes, or taxes levied in lieu thereof, assessments and
other governmental charges and insurance premiums paid with respect to the
Demised Premises during the Lease Term. The payment to be made by Tenant for
the tax year in which this lease terminates shall bear the same ratio to the
payment which would be required to be made for the full tax year as the number
of lease months falling within such tax year bears to a full tax year.

15.4 In the event a tax on rentals is now or hereafter imposed, such
tax shall be paid upon demand by Tenant to Landlord as additional rental
hereunder.

ARTICLE 16. DEFAULT BY TENANT AND REMEDIES.

16.1 The following events shall be deemed to be events of default by
Tenant under this lease:

(a) Tenant shall fail to pay any installment of rent hereunder
and such failure shall continue for a period of ten (10) days after receipt of
written notice from Landlord.

5
<PAGE> 6

(b) Tenant shall fail to comply with any term, provision, or
covenant of this lease, other than the payment of rent, and shall not cure such
failure within fifteen (15) days after receipt of written notice thereof to
Tenant.

(c) Tenant or any guarantor of Tenant's obligations under this
lease shall become insolvent, or shall make a transfer in fraud of creditors, or
shall make an assignment for the benefit of creditors.

(e) A receiver or trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or any
guarantor of Tenant's obligations under this lease.

(f) Tenant shall desert or vacate any substantial portion of
the Demised Premises for more than 10 consecutive days.

(g) Tenant shall do or permit to be done anything which creates
a lien upon the Demised Premises or fails to discharge, bond such lien or post
security with Landlord within 30 days after receipt by Tenant of written notice
thereof.

Upon the occurrence of any such events of default, Landlord shall have the
option to pursue any or more of the following remedies without notice or demand
whatsoever:

(c) Enter upon the Demised Premises by force if necessary
without being liable for prosecution or any claim for damages therefor, and do
whatever Tenant is obligated to do under the terms of this lease; and Tenant
agrees to reimburse Landlord on written demand for any expenses which Landlord
may incur in this effecting compliance with Tenant's obligations under this
lease, and Tenant further agrees that Landlord shall not be liable for any
damages resulting to the Tenant from such action.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any other
remedies herein provided or provided by law, nor shall pursuit of any other such
remedy constitute a forfeiture or waiver of any rent due to Landlord hereunder
or of any damage accruing to Landlord by reason of the violation of any of the
terms, provisions and covenants herein contained. Forbearance by Landlord to
enforce one or more of the remedies herein provided upon a default shall not be
deemed or construed to constitute a waiver of such default. In determining the
amount of loss or damage which Landlord may suffer by reason of termination of
this lease or the deficiency arising by reason of any reletting by Landlord as
above provided, allowance shall be made for the expenses of repossession and any
repairs or remodeling undertaken by Landlord following repossession.

16.2 In the event that at any time during the Lease Term either
Landlord or Tenant shall institute any action or proceeding against the other,
then, and in that even, the unsuccessful party in such action or proceeding
agrees to reimburse the successful party for the reasonable expense of
attorney's fees and disbursements incurred therein by the successful party.

ARTICLE 17. LANDLORD'S LIEN.

IN ADDITION TO THE STATUTORY LANDLORD'S LIEN, LANDLORD SHALL HAVE AT ALL
TIMES A VALID SECURITY INTEREST TO SECURE PAYMENT OF ALL RENTALS AND OTHER SUMS
OF MONEY BECOMING DUE HEREUNDER FROM TENANT, AND TO SECURE PAYMENT OF ANY
DAMAGES OR LOSS WHICH LANDLORD MAY SUFFER BY REASON OF THE BREACH BY TENANT OF
ANY COVENANT, AGREEMENT, OR CONDITION CONTAINED HEREIN, UPON ALL GOODS, WARES,
EQUIPMENT, FIXTURES, FURNITURE, IMPROVEMENTS AND OTHER PERSONAL PROPERTY OF
TENANT PRESENTLY, OR WHICH MAY HEREAFTER BE, SITUATED ON THE DEMISED PREMISES,
AND ALL PROCEEDS

<PAGE> 7
THEREFROM, AND SUCH PROPERTY SHALL NOT BE REMOVED THEREFROM WITHOUT THE WRITTEN
CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT AS WELL AS ANY AND ALL OTHER
SUMS OF MONEY THEN DUE TO LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID AND
DISCHARGED AND ALL THE COVENANTS, AGREEMENTS AND CONDITIONS HEREOF HAVE BEEN
FULLY COMPLIED WITH AND PERFORMED BY TENANT. UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT BY TENANT, LANDLORD MAY, IN ADDITION TO ANY OTHER REMEDIES PROVIDED
HEREIN OR UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED BY THE STATE IN WHICH THE
DEMISED PREMISES ARE LOCATED (INCLUDING WITHOUT LIMITATION TEXAS SECTION
9.505(B) THEREOF OR ITS EQUIVALENT), ENTER UPON THE DEMISED PREMISES AND TAKE
POSSESSION OF ANY AND ALL GOODS, WARES, EQUIPMENT, FIXTURES, FURNITURE,
IMPROVEMENTS AND OTHER PERSONAL PROPERTY OF TENANT SITUATED ON THE DEMISED
PREMISES, WITHOUT LIABILITY FOR TRESPASS OR CONVERSION, AND SELL THE SAME AT
PUBLIC OR PRIVATE SALE, WITH OR WITHOUT HAVING SUCH PROPERTY AT THE SALE, AFTER
GIVING TENANT REASONABLE NOTICE OF THE TIME AND PLACE OF ANY PUBLIC SALE OR OF
THE TIME AFTER WHICH ANY PRIVATE SALE IS TO BE MADE, AT WHICH SALE THE LANDLORD
OR ITS ASSIGNS MAY PURCHASE UNLESS OTHER PROHIBITED BY LAW. UNLESS OTHERWISE
PROVIDED BY LAW, AND WITHOUT INTENDING TO EXCLUDE ANY OTHER MANNER OF GIVING
TENANT REASONABLE NOTICE, THE REQUIREMENT OF REASONABLE NOTICE SHALL BE MET IF
SUCH NOTICE IS GIVEN IN THE MANNER PRESCRIBED IN THIS LEASE AT LEAST TEN (10)
DAYS BEFORE THE TIME OF SALE. ANY SALE MADE PURSUANT TO THE PROVISION OF THIS
PARAGRAPH SHALL BE DEEMED TO HAVE BEEN A PUBLIC SALE CONDUCTED IN A COMMERCIALLY
REASONABLE MANNER IF HELD IN THE ABOVE DESCRIBED DEMISED PREMISES OR WHERE THE
PROPERTY IS LOCATED AFTER THE TIME, PLACE AND METHOD OF SALE AND A GENERAL
DESCRIPTION OF THE TYPES OF PROPERTY TO BE SOLD HAVE BEEN ADVERTISED IN A DAILY
NEWSPAPER PUBLISHED IN THE COUNTY IN WHICH THE DEMISED PREMISES IS LOCATED FOR
FIVE (5) CONSECUTIVE DAYS BEFORE THE DATE OF THE SALE. THE PROCEEDS FROM ANY
SUCH DISPOSITION, LESS ANY AND ALL EXPENSES CONNECTED WITH THE TAKING OF
POSSESSION, HOLDING AND SELLING OF THE PROPERTY (INCLUDING REASONABLE ATTORNEY'S
FEES AND LEGAL EXPENSES), SHALL BE APPLIED AS A CREDIT AGAINST THE INDEBTEDNESS
SECURED BY THE SECURITY INTEREST GRANTED IN THIS PARAGRAPH. ANY SURPLUS SHALL
BE PAID TO TENANT OR AS OTHERWISE REQUIRED BY LAW; THE TENANT SHALL PAY ANY
DEFICIENCIES FORTHWITH. UPON REQUEST BY LANDLORD, TENANT AGREES TO EXECUTE AND
DELIVER TO LANDLORD A FINANCING STATEMENT IN FORM SUFFICIENT TO PERFECT THE
SECURITY OF LANDLORD IN THE AFOREMENTIONED PROPERTY AND PROCEEDS THEREOF UNDER
THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE IN FORCE IN THE STATE IN WHICH THE
DEMISED PREMISES IS LOCATED. THE STATUTORY LIEN FOR RENT IS NOT HEREBY WAIVED,
THE SECURITY INTEREST HEREIN GRANTED BEING IN ADDITION AND SUPPLEMENTARY
THERETO.

ARTICLE 18. HOLDING OVER

ARTICLE 19. SUBORDINATION.

Tenant accepts this lease subject and subordinate to any mortgage, deed
of trust, or other lien presently existing upon the Demised Premises or the
Demised Premises as a whole, and to any renewals and extensions thereof; but
Tenant agrees that any such mortgage shall have the right at any time to
subordinate such mortgage, deed of trust, or other lien to this lease. Landlord
is hereby irrevocably vested with full power and authority to subordinate this
lease to any mortgage, deed of trust, or other lien hereafter placed upon the
Demised Premises or the Demised Premises as a whole, and Tenant agrees upon
demand to execute such further instruments subordinating this lease as Landlord
may request, provided such subordination shall be upon the express condition
that this lease shall be recognized by the mortgage, and that the rights of
Tenant shall remain in full force and effect during the Lease Term so long as
Tenant shall continue to perform all of the covenants and conditions of this
lease.

ARTICLE 20. NOTICES.

ARTICLE 21. WAIVER OF SUBROGATION.

Anything herein to the contrary notwithstanding, each of Landlord and
Tenant hereby releases the other from any and all liability or responsibility to
the other or anyone claiming through or under them by way of subrogation or
otherwise for any loss or damage to property caused by fire or any of the
extended coverage or supplementary contract casualties, even if such fire or
other casualty shall have been caused by the fault or negligence of the other
party, or any one for whom such party may be responsible; provided, however,
that if the releasor carries insurance upon his or its property against fire and
other casualties, this release shall be applicable and in force and effect only
with respect to loss or damage occurring during such time as the releasor's
policies shall contain a clause or endorsement to the effect that such release
shall not adversely affect or impair such policies or prejudice the right of the
releasor to recover thereunder. Each of Landlord and Tenant agrees that it will
request its insurance carriers to include in its policies such a clause or
endorsement.
7
<PAGE> 8

ARTICLE 22. MISCELLANEOUS.

22.1 Nothing herein contained shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of partnership or of joint venture between the parties
hereto, it being understood and agreed that neither the method of computation of
rent, nor any other provision contained herein, nor any acts of the parties
hereto, shall be deemed to create any relationship between the parties hereto
other than the relationship of Landlord and Tenant. Whenever herein the
singular number is used, the same shall include the plural, and words of any
gender shall include each other gender.

22.2 The captions used herein are for convenience only and do not limit
or amplify the provisions hereof.

22.6 This lease contains the entire agreement between the parties, and
no agreement shall be effective to change, modify, or terminate this lease in
whole or in part unless such agreement is in writing and duly signed by the
party against whom enforcement of such change, modification, or termination is
sought.

22.10 In addition to the Minimum Guaranteed Rental, all other payments
to be made by Tenant shall be deemed and shall become additional rental
hereunder whether or not the same be designated as such, and Landlord shall have
the same remedies for failure to pay the same as for non-payment of rent.
Tenant shall not withhold or make other adjustments in its specified rental
amounts for any reason.

22.11 If Tenant is more than one person, corporation, or other entity
(i) all persons, corporation and other entities constituting Tenant shall be
jointly and severally liable as Tenant hereunder, and (ii) the term "Tenant"
under this lease shall refer to any one of the persons, corporations, or other
entities constituting Tenant.

22.12 No act or thing done by Landlord or its agent during the Lease
Term shall be deemed an acceptance of a surrender of the Demised Premises, and
no agreement to accept a surrender of the Demised Premises shall be valid unless
the same be made in writing and subscribed by Landlord.

22.13 There are attached hereto and incorporated herein by reference the
following exhibits and addenda:

Legal Description

22.14 Tenant warrants that it has had no dealings with any broker or
agent in connection with the negotiation or execution of this lease other than
the Landlord's broker, if any, and Tenant agrees to indemnify

8
<PAGE> 9

Landlord and hold Landlord harmless from and against any and all cost, expense,
or liability for commissions or other compensation and charges claimed by any
other broker or agent with respect to this lease.

ARTICLE 23. OPTIONS TO RENEW.

(a) Tenant shall have fully performed all of its covenants,
duties and obligations hereunder during the Lease Term and any extended term;

(b) Tenant shall have given written notice to Landlord not less
than ninety (90) days prior to the expiration of the Lease term or extended term
of Tenant's exercise of such option.

(c) Time is of the essence in the exercise of this option and
should Tenant fail to exercise this option by timely notice, this option shall
lapse and be of no further force or effect. If Tenant effectively exercises one
or both options herein granted, then all of the terms and provisions of this
lease shall be applicable during any extension term except Tenant shall have no
further right to renew or extend the Lease Term after the expiration or
termination of the extended terms set forth in this Article and the Minimum
Guaranteed Rental shall be adjusted as set forth in this paragraph. The Minimum
Guaranteed Rental for each extended term shall be increased to reflect the
percentage increase in the Bureau of Labor Statistics of the United States
Department of Labor, Consumer Price Index, "All Urban Consumers, U.S. City
Average, All Items" ("Index"). The increase shall be based on the original
Minimum Guaranteed Rental in effect on the Commencement Date. Such increase
shall be calculated for the period from and including the month in which the
Commencement Date falls through and including the month in which the applicable
extended term begins. If the Index is discontinued, the parties agree to accept
such substitute index or formula as may be designated or promulgated by the
United States Department of Labor Statistics or some other mutually acceptable
replacement or substitute for the Index. The adjusted Minimum Guaranteed
Rental shall remain the same during the applicable extended term.

Executed as of the dates hereinabove stated:

LANDLORD:

/s/ James R. Cotton, M.D.
--------------------------------------------
JAMES R. COTTON, M.D.

/s/ Thomas A. Lowery, M.D.
---------------------------------------------
THOMAS A. LOWERY, M.D.

/s/ Roy D. Gerard, Jr., M.D.
---------------------------------------------
ROY D. GERARD, JR., M.D.

/s/ Kevin A. Curran, M.D.
---------------------------------------------
KEVIN A. CURRAN, M.D.

TENANT:

RENAL CARE GROUP TEXAS, INC.

By: /s/ ?
-----------------------------------------
Its Authorized Officer

<PAGE> 1

EXHIBIT 10.13

SUBLEASE AGREEMENT

THIS SUBLEASE AGREEMENT (the "Sublease") is dated as of February
12,1996 by and between RENAL CARE GROUP TEXAS, INC., a Texas business
corporation ("Tenant") and TYLER DIALYSIS & TRANSPLANT ASSOCIATES, P.A., a
Texas professional association ("Subtenant") (the words "Tenant" and
"Subtenant" to include their respective legal representatives, successors and
permitted assigns where the context requires or permits).

W I T N E S S E T H:

WHEREAS, Tenant and James R. Cotton, M.D., Thomas A. Lowery, M.D., Roy
D. Gerard, Jr., M.D. and Kevin A. Curran, M.D.(collectively, "Landlord") have
entered into that certain Lease Agreement date of even date herewith (the
"Lease") for approximately 10,092 square feet of space at 807 E. First Street,
Tyler, Texas 75701 (the "Demised Premises"); and

WHEREAS, Tenant desires to sublease to Subtenant and Subtenant desires
to sublease from Tenant approximately 2,727 square feet of the Demised Premises
(the "Subleased Space") upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises, Ten and No/100
Dollars ($10.00) in hand paid by each party to the other, the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to the
following:

1. Term. Tenant does hereby lease and demise unto Subtenant, and
Subtenant does hereby hire, lease and accept, from Tenant the Subleased Space
for a term (the "Term") commencing on February 12, 1996 (the "Commencement
Date") and continuing until the earlier of (i) the second anniversary of the
Commencement Date or (ii) expiration or earlier termination of the Lease. The
Subleased Space is being leased by Tenant to Subtenant "as is" and Tenant shall
not be obligated to construct any demising walls or make any improvements
whatsoever with regard to the Subleased Space.

2. Rent. Subtenant shall pay to Tenant, at the address set forth
in the next sentence, $2,727 per month as minimum guaranteed rental ("Rent")
for the Subleased Space, payable in advance, without demand and without
abatement, reduction, set-off or deduction, on the first day of each calendar
month during the Term with appropriate prorations for partial months. The
address for rent payments is as follows:

RENAL CARE GROUP TEXAS, INC.
807 East First Street
Tyler, Texas 75701
<PAGE> 2

3. Operating Expense. Subtenant agrees to pay to Tenant, as additional
rental and in the same manner as Rent is paid, Subtenant's pro rata share of
operating expenses for the Subleased Space. "Operating expenses," as such term
is used herein, shall mean all charges for electricity, water, gas, telephone
service, sewerage service and other utilities furnished to the Demised
Premises; all costs incurred by Tenant in maintaining or repairing the exterior
of the building, the parking lot, landscaping, and common utility services;
real estate ad valorem taxes or taxes levied in lieu thereof; assessments and
other governmental charges; and insurance premiums paid with respect to the
Demised Premises during the Term. Subtenant's pro rata share of operating
expenses shall be determined by multiplying the operating expenses by a
fraction, the numerator of which is the number of square feet in the Subleased
Space and the denominator of which is the number of square feet in the Demised
Premises.

4. Renewal Options.

(a) Tenant hereby grants to Subtenant four (4)
consecutive options to extend the Term for a period of two (2) years each time,
each option to be exercised by Subtenant giving written notice of its exercise
to Tenant in the manner provided in this Sublease at least one hundred eighty
(180) days prior to (but not more than two hundred ten (210) days prior to) the
expiration of the Term, as it may have been previously extended. No extension
option may be exercised by Subtenant if an event of default has occurred and is
then continuing or any facts or circumstances then exist which, with the giving
of notice or the passage of time, or both, would constitute an event of default
either at the time of exercise of the option or at the time the applicable Term
would otherwise have expired if the applicable option had not been exercised.

(b) The Rent for each option term shall be determined by
multiplying the Minimum Guaranteed Rental under the Lease for the same period
as the option term by a fraction, the numerator of which is the number of
square feet in the Subleased Space and the denominator of which is the number
of square feet in the Demised Premises.

(c) Except for the Rent, which shall be determined as set
forth in subparagraph (b) above, leasing of the Sublease Space by Subtenant for
the applicable extended term shall be subject to all of the same terms and
conditions set forth in this Sublease, including Subtenant's obligation to pay
Subtenant's share of Operating Expenses as provided in this Sublease.

5. Relationship to Lease. This Sublease and all of Subtenant's
rights hereunder are expressly subject to and subordinate to all of the terms
of the Lease, a copy of which is attached hereto and incorporated herein as
Exhibit A. Subtenant hereby agrees to assume all obligations of Tenant under
the Lease with respect to the Subleased Space. Subtenant hereby acknowledges
that Subtenant shall look solely to Landlord for the performance of all the
Landlord's obligations under the Lease and that Tenant shall not be obligated
to provide any services to Subtenant or otherwise perform any obligations in

- 2 -
<PAGE> 3

connection with this Sublease. Subtenant acknowledges that any termination of
the Lease will result in a termination of the Sublease.

6. Use. Subtenant's use of the Subleased Space shall be strictly
in accordance with the use provisions of the Lease.

7. Default. Any act or omission by Subtenant that would constitute
a default under the Lease shall, subject to the same notice and cure provisions
provided in the Lease, be deemed a default by Subtenant under this Sublease.
In addition, any failure by Subtenant to pay Rent when due (and the continuance
of such failure for five (5) days following notice from Tenant to Subtenant) or
any failure by Subtenant to perform any other obligations required under this
Sublease, shall be deemed a default hereunder. Any such default by Subtenant
shall entitle Tenant to exercise any and all remedies available to Landlord
under the Lease or any other remedies available at law or in equity under the
laws of the State of Texas.

8. Quiet Enjoyment. Provided Subtenant has performed its
obligations hereunder, Subtenant shall have the quiet enjoyment of the
Subleased Space during the Term without interference by Tenant or anyone
claiming by, through or under Tenant. Tenant shall comply with its obligations
under the Lease.

9. Insurance and Indemnities. Subtenant hereby agrees to indemnify
and hold Landlord and Tenant harmless, with regard to Subtenant's leasing and
use of the Subleased Space, to the same extent that Tenant is required to
indemnify and hold Landlord harmless with respect to the Demised Premises under
the Lease. Likewise, Subtenant hereby agrees to obtain and provide evidence
satisfactory to Tenant, on or before the date of this Sublease, that Subtenant
is carrying insurance in the same amounts and of the same types required to be
carried by Tenant under the Lease with regard to the Demised Premises.

10. Subleasing and Assignment. Subtenant shall have no right to
sublease or assign its rights under this Sublease or its rights with regard to
the Subleased Space without the prior written consent of Tenant, which consent
may be withheld in Tenant's sole discretion.

11. Condition of Subleased Space. Upon the expiration or earlier
termination of this Sublease, Subtenant shall return the Subleased Space to
Tenant in the condition required by the Lease, normal wear and tear and damage
by casualty (not otherwise required to be insured against by Subtenant) or
condemnation excepted.

12. Miscellaneous. This Sublease shall be governed by the laws of
the State of Texas. Time shall be of the essence with regard to the
obligations under this Sublease. This Sublease supersedes all prior
discussions and agreements between the parties and incorporates their entire
agreement. Any capitalized term used in this Sublease which is not defined
herein shall have the same meaning attributable to that term in the Lease.

- 3 -
<PAGE> 4

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
under seals, the day and year first above written.

TENANT:

RENAL CARE GROUP TEXAS, INC.

By: /s/ Roy D. Gerard, Jr., M.D.
----------------------------
Name: Roy D. Gerard, Jr., M.D.
----------------------------
Title: President
--------------

SUBTENANT:

TYLER DIALYSIS & TRANSPLANT
ASSOCIATES, P.A.

By: /s/ Roy D. Gerard, Jr., M.D.
----------------------------
Name: Roy D. Gerard, Jr., M.D.
----------------------------
Title: President
--------------

Landlord, as landlord under the Lease, does hereby consent to the
subleasing by Tenant to Subtenant of the Subleased Space.

LANDLORD:

/s/ James R. Cotton, M.D.
-------------------------
JAMES R. COTTON, M.D.

/s/ Thomas A. Lowery, M.D.
--------------------------
THOMAS A. LOWERY, M.D.

/s/ Roy D. Gerard, Jr., M.D.
----------------------------
ROY D. GERARD, JR., M.D.

/s/ Kevin A. Curran, M.D.
-------------------------
KEVIN A. CURRAN, M.D.

- 4 -
<PAGE> 5

LEASE AGREEMENT

(TYLER)

THE STATE OF TEXAS

COUNTY OF SMITH

This lease is entered into by and between the Landlord and the Tenant
hereinafter named.

<TABLE>
<CAPTION>
ARTICLE 1. DEFINITIONS AND CERTAIN BASIC PROVISIONS:
<S> <C> <C>
1.1 (a) "Landlord": JAMES R. COTTON, M.D.
THOMAS A. LOWERY, M.D.
ROY D. GERARD, JR. M.D.
KEVIN A. CURRAN, M.D.

(b) Landlord's Address: 807 East First Street
Tyler, Texas 75701

(d) Tenant's Address: 1501 West End Avenue, Suite 1100
Nashville, Tennessee 37203

(e) Tenant's Trade Name: WATSON WISE REGIONAL DIALYSIS CENTER

(f) "Demised Premises": The property described on Exhibit A attached
to this lease, including a building of
approximately 20,092 square feet

(g) "Lease Term": Ten (10) years

(h) "Commencement Date": The Closing of the transaction contemplated
under that certain Amended and Restated
Transfer Agreement (Stock Transfer) dated as
of November 5, 1995 between RENAL CARE
GROUP, INC. and Tenant's predecessor in
interest, TYLER NEPHROLOGY ASSOCIATES, P.A.

(i) Minimum Guaranteed Rental: TWENTY THOUSAND NINETY-TWO AND NO/100
($20,092.00) DOLLARS per month for the first
five (5) years. Beginning with and including
the sixty-first (61st) month, the Minimum
Guaranteed Rental shall be increased to
reflect the percentage increase in the
Bureau of Labor Statistics of the United
States Department of Labor, Consumer Price
Index, "All Urban Consumers, U.S. City
Average, All Items" ("Index"). Such
increase shall be calculated for the period
from and including the month in which the
Commencement Date falls through and inclu-
ding the sixtieth (60th) month of this
lease. If the Index is discontinued, the
parties agree to accept such substitute
Index or formula as may be designated or
promulgated by the United States Bureau of
Labor Statistics or some other mutually
acceptable replacement or substitute for the
Index.

(j) Permitted Use: For no other purpose than the operation of a
dialysis clinic.
</TABLE>

1.2 Each of the foregoing definitions and basic provisions shall be
construed in conjunction with and limited by the reference thereto in the other
provisions of this lease.

EXHIBIT "A"

<PAGE> 6
ARTICLE 2. GRANTING CLAUSE.

In consideration of the obligation of Tenant to pay rent as herein
provided in consideration of the other terms, covenants and conditions hereof,
Landlord hereby demises and leases to Tenant, and Tenant hereby takes from
Landlord, the Demised Premises, TO HAVE AND TO HOLD said premises for the Lease
Term, and upon the terms and conditions set forth in this lease.

ARTICLE 3. OCCUPANCY AND ACCEPTANCE OF PREMISES.

3.1 By occupying the Demised Premises, Tenant shall be deemed to have
accepted the same and to have acknowledged that the same comply fully with
Landlord's covenants and obligations hereunder.

ARTICLE 4. RENT.

4.1 Rental shall accrue hereunder from the Commencement Date, and
shall be payable to Landlord at Landlord's address.

4.2 Tenant shall pay Minimum Guaranteed Rental in monthly
installments in the amounts specified in Article 1.1(i) above. The first such
monthly installment shall be prepaid, and subsequent installments shall be due
on the fist day of each succeeding calendar month during the Lease Term.

4.3 It is understood that the Minimum Guaranteed Rental is payable on
or before the first day of the month without offset or deduction of any nature.
In the event any rental payment is received more than five (5) days after its
due date for any reason whatsoever it is agreed that the Minimum Guaranteed
Rental for that month shall be increased by an amount equal to ten percent
(10%) of the Minimum Guaranteed Rental due as a service and processing fee. If
any rental shall remain unpaid for thirty (30) days after the rental payment is
due the Minimum Guaranteed Rental for that month shall be further increased by
an additional ten percent (10%) service and processing fee (for a total of
twenty percent (20%)) of the Minimum Guaranteed Rental due. Any such increase
shall be payable as additional rent hereunder and shall be payable immediately
upon demand. If any such increased rental is payable more than twice during
one calendar year of the Lease Term, or if twice during one calendar year of
the Lease Term a check of Tenants shall not be paid by Tenant's bank
immediately upon presentation, Landlord may require, by giving written notice
to Tenant, (and in addition to any penalty arising out of the above) that all
future rental payments are to be made by cash, cashier's check, or money order,
and that the delivery of Tenant's personal or corporate check will no longer
constitute a payment of rental as provided in this lease. Any acceptance of
personal or corporate checks thereafter by Landlord shall not be construed as a
subsequent waiver of said rights.

ARTICLE 5. USE AND CARE OF PREMISES, COVENANT TO CONTINUOUSLY OPERATE.

5.2 All property kept, stored, or maintained within the Demised
Premises by Tenant shall be at Tenant's sole risk.

5.3 Tenant shall not permit any objectionable or unpleasant odors
nor any sounds to emanate from the Demised Premises, nor place or permit any
radio, television, loud-speaker, or amplifier on the roof or outside the
Demised Premises or where the same can be seen or heard from outside the
building; nor place any antenna, awning, or other projection on the exterior of
the Demised Premises; nor take any other action which would constitute a
nuisance.

5.4 Tenant shall take good care of the Demised Premises and keep the
same free from waste at all times. Tenant shall keep the Demised Premises and
sidewalks, serviceways and loading areas adjacent to the Demised Premises neat,
clean and free from dirt and rubbish at all times, and shall store all trash
and garbage within the Demised Premises, arranging for the regular pick-up of
such trash and garbage at Tenant's expense. Receiving and delivery of goods
and merchandise and removal of garbage and trash shall be made only in the
manner and areas prescribed by Landlord. Tenant shall not operate an
incinerator or burn trash or garbage on the Demised Premises. Tenant shall be
responsible for removal and disposition of all hazardous wastes.

5.5 Tenant shall procure at its sole expense any permits and licenses
required for the transaction of business in the Demised Premises and otherwise
comply with applicable laws, ordinances and governmental regulations. Tenant
shall, and will be responsible for causing its employees, subtenants, licensees
and concessionaires to comply with all reasonable rules and regulations which
Landlord, in its discretion, may prescribe for the Demised Premises.

2
<PAGE> 7

ARTICLE 6. MAINTENANCE AND REPAIRS.

6.2 Tenant shall keep the Demised Premises in good clean condition
and shall at its sole cost and expense keep the Demised Premises free of
insects, rodents and other pests and make all needed repairs and replacements,
including replacement of cracked or broken glass, fire protection, sprinkler
systems, electrical, heating, air conditioning and plumbing, fixtures, systems,
ducts, conduits, pipes and wiring in, under and above the Demised Premises. If
any repairs required to be made by Tenant hereunder are not made within ten
(10) days after written notice delivered to Tenant by Landlord, Landlord may at
its option make such repairs without liability to Tenant for any loss or
damage which may result to Tenant's business by reason of such repairs, and
Tenant shall pay the Landlord upon demand as additional rental hereunder the
cost of such repairs plus interest at the rate of ten percent (10%) per annum
from the date of payment by Landlord until repaid by Tenant. At the expiration
of this lease Tenant shall surrender the Demised Premises in good condition,
reasonable wear and tear, and loss by fire or other casualty excepted.

6.3 Tenant, at its sole cost, shall maintain the heating, ventilating
and air conditioning system for the Demised Premises in good condition and
repair throughout the Lease Term. As a part of this maintenance obligation,
Tenant shall enter into an annual contract with an air conditioning repair
firm, fully licensed by the state of Texas to repair air conditioning units,
which firm shall:

(a) regularly service the air conditioning unit(s) on the
Demised Premises on a semi-annual basis, changing belts, filters and other
parts as required;

(b) perform emergency and extraordinary repairs on the air
conditioning unit(s); and

(c) keep a detailed record of all services performed on the
Demised Premises and prepare a yearly service report to be furnished to the
Tenant at the end of each calendar year.

ARTICLE 7. ALTERATIONS.

7.1 Tenant shall not make any alterations, additions or improvements
to the Demised Premises without the prior written consent of Landlord, except
for the installation of unattached, movable trade fixtures which may be
installed without drilling, cutting, or otherwise defacing the Demised
Premises. All alterations, additions, improvements and fixtures (other than
unattached, movable trade fixtures) which may be made or installed by either
party upon the Demised Premises, including any floor covering cemented or
adhesively attached, shall remain upon and be surrendered with the Demised
Premises and become the property of Landlord at the termination of this lease,
unless Landlord requests their removal in which event Tenant shall remove the
same and restore the Demised Premises to their original condition at Tenant's
expense.

7.2 All construction work done by Tenant within the Demised
Premises shall be performed in a good workmanlike manner, in compliance with
all governmental requirements, and in such manner as to cause a minimum of
interference with other construction in progress and with the transaction of
business in the Demised Premises. Tenant agrees to indemnify Landlord and hold
him harmless against any loss, liability, or damage resulting from such work,
and Tenant shall, if requested by Landlord, furnish bond or other security
satisfactory to Landlord against any such loss, liability, or damage.

ARTICLE 8. LANDLORD'S RIGHT OF ACCESS; USE OF ROOF.

Landlord shall have the right to enter upon the Demised Premises at any
time upon reasonable prior notice to Tenant (except in the event of an
emergency) for the purpose of inspecting the same, or of making repairs to the
Demised Premises, or removing hazardous materials, if any; or of making
repairs, alterations, or additions to adjacent Demised Premises, or of showing
the Demised Premises to prospective purchasers, lessees, or lenders. Use of
the roof above the Demised Premises is reserved to Landlord.

ARTICLE 9. UTILITIES.

3
<PAGE> 8
9.2 Tenant shall promptly pay all charges for electricity, water, gas,
telephone service, sewerage service and other utilities furnished to the Demised
Premises including initial connection charges and shall furnish all electric
light bulbs and tubes.

9.3 Landlord shall not be liable for any interruption whatsoever in
utility services.

ARTICLE 10. INDEMNITY AND PUBLIC LIABILITY INSURANCE.

10.1 Landlord shall not be liable to Tenant or to Tenant's employees,
agents, or visitors, or to any other person whomsoever, for any injury to person
or damage to property on or above the Demised Premises caused by the negligence
or misconduct of Tenant, its employees, subtenants, licensees, or
concessionaires, or of any other person entering the Demised Premises under
express or implied invitation of Tenant, or arising out of the use of the
Demised Premises by Tenant and the conduct of its business therein, or arising
out of any breach or default by Tenant in the performance of its obligations
hereunder; and Tenant hereby agrees to indemnify Landlord and hold it harmless
from any loss, expense, or claims arising out of such damage or injury.

10.2 Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost an expense, insuring
both Landlord and Tenant against all claims, demands, or actions arising out of
or in connection with Tenant's use or occupancy of the Demised Premises, or by
the condition of the Demised Premises, the limits of such policy or policies to
be in an amount of not less than ONE MILLION AND NO/100 ($1,000,000.00) DOLLARS
in respect of injuries or death to any one accident or disaster, and in an
amount of not less than ONE MILLION AND NO/100 ($1,000,000.00) DOLLARS in
respect to property damage, and to be written by insurance companies
reasonably satisfactory to Landlord. The limit of said insurance shall not,
however, limit the liability of the Tenant hereunder. Tenant may carry said
insurance under a blanket policy providing an endorsement naming Landlord as an
additional insured is attached thereto. Tenant shall obtain a written
obligation of the part of each insurance company to notify Landlord at least
ten (10) days prior to cancellation of such insurance. Such policies or duly
executed certificates of insurance shall be promptly delivered to Landlord and
renewals thereof as required shall be delivered to Landlord at least forty-five
(45) days prior to the expiration of the respective policy terms. If Tenant
should fail to comply with the foregoing requirements relating to insurance,
upon 30 days prior written notice and opportunity to cure, Landlord may obtain
such insurance and Tenant shall pay to Landlord on demand as additional rent
hereunder the premium cost thereof plus interest at a rate of ten percent (10%)
per annum from date of payment by Landlord until repaid by Tenant.

ARTICLE 11. NON-LIABILITY FOR CERTAIN DAMAGES.

Landlord and Landlord's agents and employees shall not be liable to
Tenant for any injury to person or damage to property caused by the Demised
Premises or other portions of the Demised Premises being or becoming out of
repair or by defect in or failure of equipment, sprinkler systems, pipes or
wiring, or broken glass, or by the backing up of drains, or by gas, water,
steam, electricity, or oil leaking, escaping, or flowing into the Demised
Premises, nor shall Landlord be liable to Tenant for any loss or damage that may
be occasioned by or through the acts or omissions of third parties or other
tenants of the Demised Premises.

ARTICLE 12. DAMAGE BY CASUALTY.

12.1 Tenant shall give immediate written notice to Landlord of any
damage caused to the Demised Premises by fire or other casualty.

12.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises, and this
lease shall continue in force and effect. If the Demised Premises or any part
of the Demised Premises is damaged by fire or other casualty to such an extent
that rebuilding thereof cannot reasonably be completed within ninety (90) days
after such casualty, then Landlord may elect either to terminate this lease or
to proceed to rebuild and repair the Demised Premises, or other part of the
Demised Premises. Landlord shall give written notice to Tenant of such election
within sixty (60) days after the occurrence of such casualty.

12.3 Landlord's obligation to rebuild and repair under this Article 12
shall in any event be limited to restoring the Demised Premises to substantially
the condition in which the same existed prior to such casualty, exclusive of any
work performed by and improvements, fixtures and equipment installed by Tenant.
Tenant agrees that promptly after completion of such work by Landlord, Tenant
will proceed with reasonable diligence and at Tenant's sole cost and expense to
restore, repair and replace all alterations, additions, improvements, fixtures,
signs and equipment installed by Tenant. Tenant agrees at all times to keep its
merchandise, fixtures and other property situated within the Demised Premises
insured against fire and other casualties.

<PAGE> 9
ARTICLE 13. EMINENT DOMAIN.

13.1 If more than twenty percent (20%) of the floor area of the
Demised Premises should be taken for any public or quasi-public use under any
governmental law, ordinance, or regulation or by right of eminent domain or by
private purchase in lieu thereof, this lease shall terminate. Upon any such
termination the rent shall be abated during the unexpired portion of this
lease, effective on the date physical possession is taken by the condemning
authority.

13.3 All compensation awarded for any taking (or the proceeds of
private sale in lieu thereof) of the Demised Premises or Common Area shall be
the property of Landlord; and Tenant hereby assigns its interest in any such
award to Landlord; provided, however, Landlord shall have no interest in any
award made to Tenant for loss of business or for the taking of Tenant's
fixtures and other property if a separate award for such items is made to
Tenant.

ARTICLE 14. ASSIGNMENT AND SUBLETTING.

14.1 Tenant shall not assign, mortgage, encumber, or in any manner
transfer this lease or any estate or interest therein, or sublet the Demised
Premises or any part thereof, or grant any license, concession, or other right
of occupancy of any portion of the Demised Premises without the prior written
consent of Landlord. Consent by Landlord to one or more assignments or
sublettings shall not operate as a waiver of Landlord's rights as to any
subsequent assignments and sublettings. Notwithstanding any assignment or
subletting, Tenant and any guarantor of Tenant's obligations under this lease
shall at all times remain fully and primarily responsible and liable for the
payment of the rent herein specified and for compliance with all of its other
obligations under this lease.

14.2 In the event of the transfer and assignment by Landlord of its
interest in this lease and in the Demised Premises to a person expressly
assuming Landlord's obligations under this lease, Landlord shall thereby be
released from any further obligations hereunder, and Tenant agrees to attorn to
and look solely to such successor in interest of the Landlord for performance
of such obligations. Any security given by Tenant to secure performance of
Tenant's obligations hereunder may be assigned and transferred by Landlord to
such successor in interest, and Landlord shall thereby be discharged of any
further obligation relating thereto. Tenant agrees promptly to execute such
documents as shall evidence recognizing of such succession to Landlord and
attornment by Tenant.

ARTICLE 15. PROPERTY TAXES AND INSURANCE.

15.3 If, through the efforts of outside consultants, taxes to be
paid by Tenant are lowered from initial renditions, the Tenant shall pay the
cost of such consultants, but in no event shall Tenant pay more than it would
have under such initial rendition.

15.4 In the event a tax on rentals is now or hereafter imposed, such
tax shall be paid upon demand by Tenant to Landlord as additional rental
hereunder.

ARTICLE 16. DEFAULT BY TENANT AND REMEDIES.

16.1 The following events shall be deemed to be events of default by
Tenant under this lease:

(a) Tenant shall fail to pay any installment of rent hereunder and
such failure shall continue for a period of ten (10) days after receipt of
written notice from Landlord.

<PAGE> 10

(c) Tenant or any guarantor of Tenant's obligations under this
lease shall become insolvent, or shall make a transfer in fraud of creditors,
or shall make an assignment for the benefit of creditors.

(d) Tenant or any guarantor of Tenant's obligations under this
lease shall file a petition under any section or chapter of the Bankruptcy
Reform Act, as amended, or under any similar law or statute of the United
States or any State thereof; or Tenant or any guarantor of Tenant's obligations
under this lease shall be adjudged bankrupt or insolvent in proceedings filed
against Tenant or any guarantor of Tenant's obligations under this lease
thereunder.

(e) A receiver or trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or any
guarantor of Tenant's obligations under this lease.

(f) Tenant shall desert or vacate any substantial portion of the
Demised Premises for more than 10 consecutive days.

(g) Tenant shall do or permit to be done anything which creates a
lien upon the Demised Premises and fails to discharge, bond such lien or post
security with Landlord within 30 days after receipt by Tenant or written notice
thereof.

Upon the occurrence of any such events of default, Landlord shall have the
option to pursue any one or more of the following remedies without notice or
demand whatsoever:

(a) Terminate this lease in which event Tenant shall immediately
surrender the Demised Premises to Landlord, and if Tenant fails to do so,
Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Demised
Premises and expel or remove Tenant and any other person who may be occupying
said Demised Premises or any part thereof, by force if necessary, without being
liable for prosecution or any claim for damages therefor; and Tenant agrees to
pay to Landlord on demand the amount of all loss and damage which Landlord may
suffer by reason of such termination, whether through inability to relet the
Demised Premises on satisfactory terms or otherwise.

(c) Enter upon the Demised Premises by force if necessary without
being liable for prosecution or any claim for damages therefor, and do whatever
Tenant is obligated to do under the terms of this lease; and Tenant agrees to
reimburse Landlord on written demand for any expenses which Landlord may incur
in this effecting compliance with Tenant's obligations under this lease, and
Tenant further agrees that Landlord shall not be liable for any damages
resulting to the Tenant from such action.

Pursuit of any of the foregoing remedies shall not preclude pursuit of any
other remedies herein provided or provided by law, nor shall pursuit of any
other such remedy constitute a forfeiture or waiver of any rent due to Landlord
hereunder or of any damages accruing to Landlord by reason of the violation of
any of the terms, provisions and covenants herein contained. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon a default
shall not be deemed or construed to constitute a waiver of such default. In
determining the amount of loss or damage which Landlord may suffer by reason of
termination of this lease or the deficiency arising by reason of any reletting
by Landlord as above provided, allowance shall be made for the expenses of
repossession and any repairs of remodeling undertaken by Landlord following
repossession.

16.2 In the event that at any time during the Lease Term either
Landlord or Tenant shall institute any action or proceeding against the other,
then, and in that event, the unsuccessful party in such action or proceeding
agrees to reimburse the successful party for the reasonable expenses of
attorney's fees and disbursements incurred therein by the successful party.

ARTICLE 17. LANDLORD'S LIEN.

<PAGE> 11
THEREFROM, AND SUCH PROPERTY SHALL NOT BE REMOVED THEREFROM WITHOUT THE
WRITTEN CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT AS WELL AS ANY AND ALL
OTHER SUMS OF MONEY THEN DUE TO LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID
AND DISCHARGED AND ALL THE COVENANTS, AGREEMENTS AND CONDITIONS HEREOF HAVE
BEEN FULLY COMPLIED WITH AND PERFORMED BY TENANT. UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT BY TENANT, LANDLORD MAY, IN ADDITION TO ANY OTHER REMEDIES
PROVIDED HEREIN OR UNDER THE UNIFORM COMMERCIAL CODE AS ADOPTED BY THE STATE IN
WHICH THE DEMISED PREMISES ARE LOCATED (INCLUDING WITHOUT LIMITATION TEXAS
SECTION 9.505(B) THEREOF OR ITS EQUIVALENT), ENTER UPON THE DEMISED PREMISES
AND TAKE POSSESSION OF ANY AND ALL GOODS, WARES, EQUIPMENT, FIXTURES,
FURNITURE, IMPROVEMENTS AND OTHER PERSONAL PROPERTY OF TENANT SITUATED ON THE
DEMISED PREMISES, WITHOUT LIABILITY FOR TRESPASS OR CONVERSION, AND SELL THE
SAME AT PUBLIC OR PRIVATE SALE, WITH OR WITHOUT HAVING SUCH PROPERTY AT THE
SALE, AFTER GIVING TENANT REASONABLE NOTICE OF THE TIME AND PLACE OF ANY PUBLIC
SALE OR OF THE TIME AFTER WHICH ANY PRIVATE SALE IS TO BE MADE, AT WHICH SALE
THE LANDLORD OR ITS ASSIGNS MAY PURCHASE UNLESS OTHERWISE PROHIBITED BY LAW,
UNLESS OTHERWISE PROVIDED BY LAW, AND WITHOUT INTENDING TO EXCLUDE ANY OTHER
MANNER OF GIVING TENANT REASONABLE NOTICE, THE REQUIREMENT OF REASONABLE NOTICE
SHALL BE MET IF SUCH NOTICE IS GIVEN IN THE MANNER PRESCRIBED IN THIS LEASE AT
LEAST TEN (10) DAYS BEFORE THE TIME OF SALE. ANY SALE MADE PURSUANT TO THE
PROVISION OF THIS PARAGRAPH SHALL BE DEEMED TO HAVE BEEN A PUBLIC SALE
CONDUCTED IN A COMMERCIALLY REASONABLE MANNER IF HELD IN THE ABOVE DESCRIBED
DEMISED PREMISES OR WHERE THE PROPERTY IS LOCATED AFTER THE TIME, PLACE AND
METHOD OF SALE AND A GENERAL DESCRIPTION OF THE TYPES OF PROPERTY TO BE SOLD
HAVE BEEN ADVERTISED IN A DAILY NEWSPAPER PUBLISHED IN THE COUNTY IN WHICH THE
DEMISED PREMISES IS LOCATED FOR FIVE (5) CONSECUTIVE DAYS BEFORE THE DATE OF
THE SALE. THE PROCEEDS FROM ANY SUCH DISPOSITION, LESS ANY AND ALL EXPENSES
CONNECTED WITH THE TAKING OF POSSESSION, HOLDING AND SELLING OF THE PROPERTY
(INCLUDING REASONABLE ATTORNEY'S FEES AND LEGAL EXPENSES), SHALL BE APPLIED AS
A CREDIT AGAINST THE INDEBTEDNESS SECURED BY THE SECURITY INTEREST GRANTED IN
THIS PARAGRAPH. ANY SURPLUS SHALL BE PAID TO TENANT OR AS OTHERWISE REQUIRED
BY LAW; THE TENANT SHALL PAY ANY DEFICIENCIES FORTHWITH. UPON REQUEST BY
LANDLORD, TENANT AGREES TO EXECUTE AND DELIVER TO LANDLORD A FINANCING
STATEMENT IN FORM SUFFICIENT TO PERFECT THE SECURITY OF LANDLORD IN THE
AFOREMENTIONED PROPERTY AND PROCEEDS THEREOF UNDER THE PROVISIONS OF THE
UNIFORM COMMERCIAL CODE IN FORCE IN THE STATE IN WHICH THE DEMISED PREMISES IS
LOCATED. THE STATUTORY LIEN FOR RENT IS NOT HEREBY WAIVED, THE SECURITY
INTEREST HEREIN GRANTED BEING IN ADDITION AND SUPPLEMENTARY THERETO.

ARTICLE 18. HOLDING OVER.

ARTICLE 19. SUBORDINATION.

Tenant accepts this lease subject and subordinate to any mortgage, deed
of trust, or other lien presently existing upon the Demised Premises or the
Demised Premises as a whole, and to any renewals and extensions thereof; but
Tenant agrees that any such mortgagee shall have the right at any time to
subordinate such mortgage, deed of trust, or other lien to this lease.
Landlord is hereby irrevocably vested with full power and authority to
subordinate this lease to any mortgage, deed of trust, or other lien hereafter
placed upon the Demised Premises or the Demised Premises as a whole, and Tenant
agrees upon demand to execute such further instruments subordinating this lease
as Landlord may request, provided such subordination shall be upon the express
condition that this lease shall be recognized by the mortgagee, and that the
rights of Tenant shall remain in full force and effect during the Lease Term so
long as Tenant shall continue to perform all of the covenants and conditions of
this lease.

ARTICLE 20. NOTICES.

Whenever any notice is required or permitted hereunder, such notice
shall be in writing. Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered whether actually received
or not when deposited in the United States Mail, postage prepaid, Certified or
Registered Mail, Return Receipt Requested, addressed to the parties hereto at
the respective addresses set out in Article 1.1 above (even if Tenant shall
have vacated) or at such other addresses as they have theretofore specified by
written notice. If "Tenant" is more than one person, corporation, or other
entity, all of them shall join in executing such written notice specifying a
different address or Landlord may elect to disregard such change of address.

ARTICLE 21. WAIVER OF SUBROGATION.

Anything herein to the contrary notwithstanding, each of Landlord and
Tenant hereby releases the other from any and all liability or responsibility
to the other or anyone claiming through or under them by way of subrogation or
otherwise for any loss or damage to property caused by fire or any of the
extended coverage or supplementary contract casualties, even if such fire or
other casualty shall have been caused by the fault or negligence of the other
party, or any one for whom such party may be responsible; provided, however,
that if the releasor carries insurance upon his or its property against fire
and other casualties, this release shall be applicable and in force and effect
only with respect to loss or damage occurring during such time as the
releasor's policies shall contain a clause or endorsement to the effect that
such release shall not adversely affect or impair such policies or prejudice
the right of the releasor to recover thereunder. Each of Landlord and Tenant
agrees that it will request its insurance carriers to include in its policies
such a clause or endorsement.

7
<PAGE> 12
ARTICLE 22. MISCELLANEOUS

22.1 Nothing herein contained shall be deemed or construed by the
parties hereto, nor by any third party, as creating the relationship of
principal agent or of partnership or of joint venture between the parties
hereto, it being understood and agreed that neither the method of computation of
rent, nor any other provision contained herein, nor any acts of the parties
hereto, shall be deemed to create any relationship between the parties hereto
other than the relationship of Landlord and Tenant. Whenever herein the
singular number is used, the same shall include the plural, and words of any
gender shall include each other gender.

22.2 The captions used herein are for convenience only and do not
limit of amplify the provisions hereof.

22.4 Whenever a period of time is herein prescribed for action to be
taken by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded form the computation of any such period of time, any delays
due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions, or any other causes of any kind
whatsoever which are beyond the reasonable control of Landlord. At any time
when there is outstanding a mortgage, deed of trust, or similar security
interest covering Landlord's interest in the Demised Premises, Tenant may not
exercise any remedies for default by Landlord hereunder unless and until the
holder of the indebtedness secured by such mortgage, deed of trust, or similar
security instrument shall have received written notice of such default and a
reasonable time for curing such default shall thereafter have elapsed.

22.5 Landlord agrees that if Tenant shall perform all of the
covenants and agreements herein required to be performed by Tenant, Tenant
shall, subject to the terms of this lease, at all times during the continuance
of this lease have the peaceable and quiet enjoyment and possession of the
Demised Premises.

22.6 This lease contains the entire agreement between the parties,
and no agreement shall be effective to change, modify, or terminate this lease
in whole or in part unless such agreement is in writing and duly signed by the
party against whom enforcement of such change, modification, or termination is
sought.

22.8 The laws of the state in which the Demised Premises is locate
shall govern the interpretation, validity, performance and enforcement of this
lease. If any provision of this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be effected thereby.

22.9 The terms, provisions and covenants contained in this lease
shall apply to, inure to the benefit of and be binding upon all parties hereto
and their respective heirs, successors in interest and legal representatives,
except as otherwise herein expressly provided.

22.10 In addition to the Minimum Guaranteed Rental, all other
payments to be made by Tenant shall be deemed to be and shall become additional
rental hereunder whether or not the same be designated as such, and Landlord
shall have the same remedies for failure to pay the same as for non-payment of
rent. Tenant shall not withhold or make other adjustments in its specified
rental amounts for any reason.

22.13 There are attached hereto and incorporated herein by reference
the following exhibits and addenda:

Legal Description

<PAGE> 13
Landlord and hold Landlord harmless from and against any and all cost, expense,
or liability for commissions or other compensation and charges claimed by any
other broker or agent with respect to this lease.

22.15 The submission of this lease to Tenant for examination does not
constitute a reservation of or option for the Demised Premises and this lease
becomes effective only upon execution by Landlord and Tenant. Tenant
acknowledges that Landlord or Landlord's agents and employees have made no
representations or promises with respect the Demised Premises or the Demised
Premises except as herein expressly set forth and Tenant further acknowledges
no rights, assessments, or licenses are acquired by Tenant by implication or
otherwise, except as herein expressly set forth.

27.16 This instrument supersedes in its entirety all leases between the
parties (including Tenant's predecessor in interest, TYLER NEPHROLOGY
ASSOCIATES, P.A.) relating to the Demised Premises. Landlord and Tenant ratify
and confirm the Consent to Collateral Assignment of this lease to Tyler Bank &
Trust, N.A.

ARTICLE 23. OPTIONS TO RENEW.

(a) Tenant shall have fully performed all of its
convenants, duties and obligation hereunder during the Lease Term and any
extended term;

(b) Tenant shall have given written notice to Landlord not
less than ninety (90) days prior to the expiration of the Lease Term or
extended term of Tenant's exercise of such option.

(c) Time is of the essence in the exercise of this option
and should Tenant fail to exercise this option by timely notice, this option
shall lapse and be of no further force or effect. If Tenant effectively
exercises one or both options herein granted, then all of the terms and
provisions of this lease shall be applicable during any extension term except
Tenant shall have no further right to renew or extend the Lease Term after the
expiration or termination of the extended terms set forth in this Article and
the Minimun Guaranteed Rental shall be adjusted as set forth in this paragraph.
The Minimum Guaranteed Rental for each extended term shall be increased to
reflect the percentage increase in the Bureau of Labor Statistics of the United
States Department of Labor, Consumer Price Index, "All Urban Consumers, U.S.
City Average, All Items" ("Index"). The increase shall be based on the
original Minimum Guaranteed Rental in effect on the Commencement Date. Such
increase shall be calculated for the period from and including the month in
which the Commencement Date falls through and including the month in which the
applicable extended term begins. If the Index is discontinued, the parties
agree to accept such substitute index or formula as may be designated or
promulgated by the United States Department of Labor Statistics or some other
mutually acceptable replacement or substitute for the Index. The adjusted
Minimum Guaranteed Rental shall remain the same during the applicable extended
term.

Executed as of the dates hereinabove stated.

LANDLORD:

/s/ James R. Cotton, M.D.
-------------------------------------
JAMES R. COTTON, M.D.

/s/ Thomas A. Lowery, M.D.
-------------------------------------
THOMAS A. LOWERY, M.D.

/s/ Roy D. Gerard, Jr., M.D.
-------------------------------------
ROY D. GERARD, JR., M.D.

/s/ Kevin A. Curran, M.D.
-------------------------------------
KEVIN A. CURRAN, M.D.

TENANT:

RENAL CARE GROUP TEXAS, INC.

By: /s/
----------------------------------
Its Authorized Officer

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