LEASE AGREEMENT
THIS LEASE AGREEMENT, effective the 1st day of July, 1999 ("Lease"), by
and between DIALYSIS CORPORATION OF AMERICA, a Florida corporation, with
offices at 27 Miller Avenue, Lemoyne, Pennsylvania 17043 (hereinafter referred
to as "Lessor") and RENAL TREATMENT CENTERS - MID-ATLANTIC, INC., a Delaware
corporation, with offices at 1180 West Swedesford Road, Suite Two, Berwyn,
Pennsylvania 19312 (hereinafter referred to as "Lessee"), replaces the Lease
Agreement dated March 28, 1988 and the three Lease Agreement Amendments to that
Lease Agreement, the First Amendment dated November 16, 1992, the Second
Amendment dated December 30, 1996 and the Third Amendment dated March 31, 1998.
1. PREMISES
--------
Lessor, in consideration of the rents and covenants hereinafter mentioned,
does demise and lease unto Lessee, all that certain space consisting of 7,441
square feet of rentable space, which includes 5,403 square feet of space on the
first floor used solely for a kidney dialysis center and related offices
purposes, and 2,038 square feet of space on the second floor used solely for
office space (the "Space"), in the building located at 402 Marvel Court, Easton,
Maryland 21601 (the "Building").
2. TERM
----
2.1 Term. This Lease is for the term of ten (10) years, commencing on
----
the first day of July, 1999 and ending on June 30, 2009 (the "Term").
2.2 Renewal Option.
---------------
This Lease shall be renewable for two additional periods of five (5) years
each ("First Renewal Period" and "Second Renewal Period") each under the terms
and conditions of this Lease, provided that:
(i) Lessee is not in default of the Lease terms, provisions and
obligations;
(ii) Lessee has given written notice of its intent to renew the
Lease not less than one hundred twenty (120) days prior to the expiration of
the current Term or the First Renewal Period, as the case may be; and
(iii) The rents for each Renewal Period will be at a rate to be
negotiated upon the same terms and conditions as contained in this Lease, which
rate shall in no event be in excess of thirty percent (30%) of the current
rental payment under this Lease; and such rent will commence on the day of the
month immediately following the expiration of the Term or the First Renewal
Period, as the case may be.
2.3 Holdover as Renewal.
--------------------
A holdover by Lessee beyond the Term of this Lease or any Renewal Period
shall, at the option of Lessor, be deemed a renewal of this Lease on a year to
year basis, with the renewal being under and subject to all provisions
contained in this Lease; provided, any holdover renewal being under and subject
to an automatic six percent (6%) increase in the Base Rent and Additional Rent
as those terms are defined in Article 4.
3. POSSESSION AND USE
------------------
3.1 Acceptance of Premises.
----------------------
Lessee shall accept the Space in its condition as of the commencement date
of the Term, subject to all applicable laws, ordinances, regulations, covenants
and restrictions. Lessor has made no representation or warranty as to the
suitability of the Space for the conduct of Lessee's business, and Lessee waives
any implied warranty that the Space is suitable for Lessee's intended purposes
and Use. Except as provided in Section 6, in no event shall Lessor have any
obligation for any defects in the Space or any limitation on its Use. The
taking of possession of the Space shall be conclusive evidence that Lessee
accepts the Space and that the Space was in good condition at the time
possession was taken.
3.2 Possession.
----------
Possession of the Space includes the exclusive use of the same, together
with the use, concurrent with any other occupants of the Building, of the
common hallways, stairs, elevators (if any), toilet rooms, parking areas, air
conditioning, storage, waste removal, electric, heat, light and water. Lessee,
its agents, invitees, employees, servants and visitors (collectively "Agents")
shall have the right of ingress and egress to and from the said Space and the
Building.
3.3 Use Availability.
----------------
The first floor of the Space, consisting of 5,403 square feet of rentable
space shall be used only for the purpose of an outpatient dialysis center and
related uses and offices, and the second floor, consisting of 2,038 square feet
of rentable space, shall be used only for general business offices and no other
purposes ("Use").
It shall be Lessee's responsibility at its own expense to determine and,
if necessary, submit the appropriate applications for the Use of the Space to
and comply with all the requirements of the appropriate governmental officials,
agencies, commissions and boards having jurisdiction over the Use of the Space,
including but not limited to the Americans With Disabilities Act ("Government
Compliance"). If Lessee is unable to obtain the appropriate permits,
variances, licenses and/or other approvals for the Use of the Space, Lessor
may, at its option but is not otherwise required, obtain such Government
Compliance, and Lessee will use its best efforts to assist Lessor in obtaining
such compliance, and all costs and expenses to effect such Government
Compliance to be charged to Lessee as Additional Rent as defined in Section 4.2
accruing for the month following effectuation of such compliance; or if Lessor
does not exercise its option to obtain the Government Compliance, this Lease
will automatically and immediately terminate and become null and void.
4. RENT
----
4.1 Base Rent.
---------
Lessee agrees to pay as base rent to Lessor for the Use of the Space
during the Term One Hundred Fourteen Thousand Two Hundred Ten and 55/100
($114,210.55) Dollars per year ("Base Rent") to be paid in monthly install-
ments of Nine Thousand Five Hundred Seventeen and 55/100 ($9,517.55) Dollars,
payable monthly in advance, without demand, deduction or set-off, on the first
day of each calendar month during the Term; the Base Rent to increase three
(3%) percent each year during the Term.
2
4.2 Additional Rent.
---------------
The Lessee shall pay as additional rent above the Base Rent ("Additional
Rent"):
(a) Ninety (90%) percent of the following:
(i) common water charges (exclusive of the R/O dedicated water); and
(ii) real estate taxes
(b) Seventy-One (71%) percent of the following:
(i) electric charges for second floor.
(c) One hundred (100%) percent of the following:
(i) R/O dedicated water charges; and
(ii) electric charges for the first floor.
Subject to the provisions of Section 4.1, if any installment of Base Rent
or Additional Rent is not paid within five (5) days of its due date then Lessor
may assess a late charge of ten (10%) percent of the total amount of Base Rent
or Additional Rent then due until the date of payment, which charge shall be
immediately due and payable as further Additional Rent. Payments, when
received by the Lessor, shall be applied first to delinquent rents and late
charges, if any. Base and Additional Rent may be referred to collectively
throughout this Lease as "Rent."
4.3 Security Deposit.
----------------
Lessee has paid to Lessor a refundable Ten Thousand Three Hundred Twenty-
Three and 93/100 ($10,323.93) Dollar security deposit.
The security deposit is held by Lessor subject to the terms of this Lease
as debtor not trustee and will be returned to Lessee without interest thirty
(30) days after Lessee has surrendered the Space as per Section 17 of this
Lease provided Lessor is reasonably satisfied with the condition of said Space,
reasonable wear and tear excepted, keys surrendered and Lessee shall not be in
default of the terms and conditions of this Lease.
In the event of any delinquent payments or breach of any terms, covenants
and conditions of this Lease or upon each occurrence of an Event of Default
(hereinafter defined in Section 11 of this Lease), the security deposit will be
credited immediately in the amount due to the Lessor. If all or any part of the
security deposit is applied to an obligation of Lessee hereunder, Lessee shall
immediately upon request by Lessor restore the security deposit to the amount
held. Upon any conveyance by Lessor of its interest under this Lease, the
security deposit shall be delivered by Lessor to Lessor's grantee or trans-
feree. Upon any such delivery, and after Lessor has provided Lessee with
written notice of such delivery, Lessee hereby releases Lessor, herein named,
of any and all liability with respect to the security deposit, its application
and return, and Lessee agrees to look solely to such grantee or transferee.
It is further understood that this provision shall also apply to subsequent
grantees and transferees.
The security deposit is not an advance Rent payment or Rent deposit or any
measure of damages to Lessor in case of Lessee's default and no part of the
security deposit is or may be used as any Rent payment.
5. UTILITIES
---------
In the event Lessee requires additional utilities or equipment, the
installation and maintenance thereof shall be at Lessee's sole obligation,
provided that such installation shall be subject to Lessor's written consent
which shall not be unreasonably withheld or delayed.
3
Lessee covenants and agrees that at all times its use of the utilities and
services shall never exceed the capacity provided by Lessor. Lessor shall not
be liable to Lessee or its Agents for any interruption of or failure to provide
electrical service, heating, air conditioning, or water, or other utility
service, or any change in the quality or character of the utility services or
for such no longer being suitable for Lessee's requirements which is due to any
energy shortage, power failure, or other cause beyond the control of Lessor, or
is required in order to enable Lessor to perform required and necessary
maintenance or repairs within the Building; nor shall any non-supply or change
in supply of any utility service in any way effect the tenancy or relieve Lessee
of any obligation under the terms of this Lease.
Any telephone, fax, e-mail modem and similar services, including
installation and charges therefor, are the sole responsibility and expense of
Lessee.
6. OPERATING RESPONSIBILITIES OF THE LESSOR
----------------------------------------
Lessor shall be responsible for the repair and maintenance of the following
during the Term and any Renewal Period.
(i) To keep and maintain in good condition and repair the roof,
exterior walls, foundation, and outside walks and other structural components
of the Building, and maintaining the landscaping, uninsured losses and damages
caused by Lessee and its Agents excluded. The term "walls" as used in this
Section 6 shall not include windows, glass or plate glass, doors or overhead
doors, special fronts or office entries;
(ii) To keep and maintain in good condition and repair the main
plumbing and electrical components leading into the Building, other than those
installed by Lessee and within the Space, the latter to be the responsibility
of the Lessee;
(iii) To maintain the parking area, if any;
(iv) To handle the snow removal from the parking area and walk-ways
leading up to the Building;
(v) Subject to Section 7(iv) of this Lease, to permit Lessee's
installation of interior and exterior signs identifying the Lessee and its
business, such signs to be reasonable in number, size and design, subject to
Lessor's written approval which shall not be unreasonably withheld;
(vi) To maintain existing exterior lighting to the Building; and
(vii) To keep and maintain in good condition and repair the existing
air conditioning and heating systems, including but not limited to all
necessary plumbing, electrical and ventilation ("HVAC Systems"), satisfactory
in size and capacity to meet basic heating and cooling standards of the
Building.
7. OPERATING RESPONSIBILITIES OF LESSEE
------------------------------------
Lessee shall be responsible at its sole expense for the following during
the Term and any Renewal Period:
(i) To Use the Space in a proper, safe and careful manner;
4
(ii) To make and pay for all necessary alterations and improvements to
the Space, including any additional plumbing, electrical and partitioning for
Lessee's own purposes, which shall be made at Lessee's expense; Lessee shall
obtain Lessor's prior written approval for any alterations and improvements;
all such work shall be done at such time and in such manner as shall minimize
any inconvenience to other occupants of the Building. As a condition precedent
to Lessor's consent, Lessee shall deliver to Lessor written plans and
specifications for all work and written plans and specifications for all
heating, ventilating and air conditioning. Lessor shall have the right to
approve any contractor to be used by Lessee in connection with any approved
alterations and improvements to the Space, such approval not to be unreasonably
withheld. Lessee shall comply with all governmental rules and regulations in
connection with such work. Lessee may remove furniture, fixtures, and movable
improvements installed within the Space at the expiration of the Lease; Lessee
shall promptly repair any damage to the Space and the Building as a result of
such removal, other than normal wear and tear.
Notwithstanding anything herein to the contrary, the Lessee shall not
make structural alterations or additions to the Building or the Space, nor erect
or paint any sign or other identification on any window or part of the Building,
except as provided in Sections 6(v) and 7, provided Lessor consents thereto in
writing. All structural alterations or improvements made by Lessee shall be at
Lessee's sole cost and expense and shall become the property of the Lessor at
the termination of this Lease.
Lessee shall not permit any mechanic's liens, or similar liens, to
remain upon the Building or the Space for labor and material furnished to Lessee
or claimed to have been furnished to Lessee in connection with work of any
character performed or claimed to have been performed at the direction of Lessee
and shall cause any such lien to be released and an instrument evidencing
discharge of same to be recorded forthwith without any cost to Lessor. Lessee
shall indemnify and save Lessor harmless from all injury, loss, claims, liens or
damage to any person or property occasioned by or arising from such work. If
Lessor incurs any costs and expenses, including reasonable attorney's fees, then
Lessee shall pay the Lessor that sum so incurred as Additional Rent;
(iii) To provide janitorial services and supplies for the Space, trash
removal from the Space, and maintain the Space in good condition and repair;
and to provide and pay for a trash dumpster with the understanding that all
refuse and rubbish must be placed inside the dumpster, not on top or outside
around the dumpster; all medical or other regulated waste shall be maintained
and disposed of in accordance with all applicable laws;
(iv) Installation of any signs, subject to Section 6(v), shall be at the
sole expense of the Lessee; and Lessee shall be responsible for the removal of
all such signs at the termination of this Lease and any expenses therefor as
well as repairing any damage to the Building and Space as a result of such
removal; and
(v) Subject to Lessor's obligations in Section 6, Lessee at its expense
shall repair, replace and maintain in good condition all portions of the Space.
Such repair and replacements include capital expenditures and repairs whose
benefit may extend beyond the Term and any Renewal Periods. If Lessee fails
to perform any repair or replacement for which it is responsible, Lessor may
perform such work and be reimbursed by Lessee within 10 days after demand
therefor, or alternatively, at the sole discretion of the Lessor, be included
as Additional Rent for the month immediately succeeding the month in which such
charges, costs and expenses were incurred. Subject to Sections 14 and 15,
Lessee shall bear the full cost of any repair or replacement to any part of the
Building that results from damage caused by Lessee or its Agents.
5
8. NEGATIVE COVENANTS OF LESSEE
----------------------------
8.1 Waste, Damage, or Injury to Space; Restoration. No waste, damage or
----------------------------------------------
injury to the Space shall be committed, and at the end of the Term, the Space
shall be restored to the same condition in which it was at the commencement of
the Term, unless otherwise agreed to in writing by the Lessor, and the cost of
said restoration shall be paid by Lessee, which cost shall be treated as
Additional Rent due and owing under the terms of this Lease. This Section 8.1
is subject to the exceptions of ordinary wear and tear.
8.2 Lawful Possession, Fire Precautions, Machinery Weights. Lessee shall
------------------------------------------------------
not carry on any unlawful business in or about the Space, and shall not carry
on any business which will endanger the Building from fire or cause the
forfeiture of any fire insurance, and Lessee will indemnify Lessor for and
replace lost insurance and/or any deductible under existing insurance policy
if caused by Lessee. Lessee shall not operate any machinery or equipment
harmful to the Building or disturbing to other occupants' use and enjoyment of
the Building, nor place anything in any portion of the Space with such weight
that is beyond the safe carrying capacity of the Building. Any violation will
be grounds for immediate eviction and deemed a material breach of the Lease.
8.3 Assigning, etc. by Lessee. Lessee shall not have the privilege of
-------------------------
assigning or subletting the Space, or mortgaging any interest it may have by
virtue of this Lease, unless the written consent of Lessor is first obtained,
such consent to be reasonable and shall not be arbitrarily withheld.
8.4 Encumbrance. The Lessee shall not, by any act or omission, encumber
-----------
the title of the Lessor nor shall the interest or estate of the Lessor be in
any way subject to any claim by way of lien or encumbrance, whether claimed by
operation of law or by virtue of any express or implied contract by Lessee.
Lessee will hold harmless the Lessor against any such claims. Any such claims
may be charged against the security deposit in accordance with Section 4.3.
8.5 Building Security. Lessee and Lessee's Agents shall use their best
-----------------
efforts in maintaining the security of the Building, including, if Lessee or
Lessee's Agents remain in the Building after 6 p.m., and upon leaving the
Building, locking outside access doors for which they have a key, insuring all
doors and windows are closed in the Space, turning out all lights in hallways
and in the Space, and turning back the temperature for any air conditioning
and/or heat pumps.
8.6 Conduct. Lessee shall not conduct or give notice of any auction,
-------
liquidation, or going out of business sale at the Space. Lessee shall not
permit any objectionable or unpleasant odors, smoke, dust, gas, noise, or
vibrations to emanate from the Space, or take any other action that would
constitute a nuisance or would disturb, unreasonably interfere with, or
endanger Lessor or any tenants of the Building. Outside storage, including
without limitation, storage of trucks and other vehicles, is prohibited. The
Space shall not be used as a place of public accommodation under the Americans
With Disabilities Act or similar state statutes or local ordinances or any
regulations promulgated thereunder, all as may be amended from time to time.
If any increase in the cost of any insurance at the Space or the Building is
caused by the Lessee's Use of the Space, or because Lessee vacates the Space,
then Lessee shall pay the amount of such increase to Lessor.
8.7 Parking. Lessee acknowledges the parking adjacent to and for the
-------
Building is limited and is available to all tenants, including Lessee, the
Lessor and their invitees, and such limited parking is on a first come, first
serve basis; and Lessee agrees to have its employees park in the area furthest
from the Building. Lessor shall not be responsible for enforcing any parking
rights of any tenant's against each other or third parties. Lessor has the
right at any time to designate a reasonable number of reserved and handicapped
spaces for its own use and purposes.
6
9. LESSOR'S RIGHTS
---------------
9.1 Right of Inspection. It is agreed and understood that Lessor and
-------------------
Lessor's duly authorized agents, employees, representatives and contractors
("Lessor's Agents") may enter the Space during normal business hours and at
any other reasonable times during the Term, for the purpose of inspecting and
maintaining the Space and the Building. Lessor may erect a suitable sign on
the Building stating the Space is available to let or that the Building is
available for sale. Lessor may grant easements, make public dedications,
designate common areas and create restrictions on or about the Space, provided
that no such easement, dedication, designation or restriction materially
interferes with Lessee's Use. At Lessor's request, Lessee shall execute such
instruments as may be necessary for such easements, dedications or restrictions.
9.2 Rules and Regulations. Lessor may from time to time establish
---------------------
reasonable rules and regulations for the safety, care, and cleanliness of the
Space and the Building, and for the preservation of good order therein. Such
rules and regulations shall, when notice thereof is given to Lessee, form a
part of this Lease and to which Lessee shall be bound.
10. RESPONSIBILITIES OF LESSEE
--------------------------
10.1 Damages or Injury to Property. All damages or injuries done to the
-----------------------------
Space or to the Building or to the HVAC systems by the Lessee and/or Lessee's
customers, clerks, Agents, visitors, invitees of Lessee, and individuals for
whom Lessee is responsible other than those caused by ordinary wear and tear,
shall be the sole responsibility of Lessee and shall be repaired by Lessee at
its expense. Lessee covenants and agrees to make such repairs within ten (10)
days' written notice given to Lessee by Lessor, and if Lessee shall neglect to
make said repairs or commence to make the same promptly or complete the same
within ten (10) days after receiving such notice, Lessor shall have the right
to make such repairs at the expense and cost of Lessee, and the amount thereof
may be charged against the security deposit in accordance with Section 4.3 or
otherwise charged directly to Lessee as Additional Rent accruing for the month
following the date of repair.
10.2 Payment of Judgments, etc. Lessee shall bear, pay and discharge,
-------------------------
when and as the same become due and payable, all judgments and lawful claims
for damages or otherwise against Lessor, arising from Lessee's and the Lessee's
Agent's, customers', clerks', visitors' and invitees' use or occupancy of the
Space and Lessee will assume the burden and expense of defending all such suits,
whether brought before or after the expiration of this Lease, and will protect,
indemnify and save harmless Lessor or Lessor's Agents, and Lessee will pay
Lessor's reasonable legal fees in bringing an action against or defending an
action caused by Lessee or Lessee's Agents, customers, clerks, visitors and
invitees.
10.3 Discharge of Liability. In consideration of securing this Lease at
----------------------
the above-stated Rent, Lessee does hereby release and discharge the Lessor and
its Agents, and said Lessor's successors and/or assigns, from any and all
liability by reason of any injury, loss and/or damage to any person or property,
caused by any fire, the breaking, bursting, stoppage and/or leakage of any
water pipe, gas pipe, sewer, basin, water closet, steam pipe, and drain in any
part or portion of the Space and/or any part or portion of the Building, and
from all liability for any and all injury, loss and/or damage caused by the
water, gas, steam, waste, and contents of said water pipes, gas pipes, steam
pipes, sewers, basins, water closets, and drains or the elements or from any
kind of injury, loss, and/or damage which may arise from any negligence of
Lessee and/or its Agents; provided, however, that this Section 10.3 shall not
be operative or effective for any liability, damage, loss and/or injury
resulting from the negligence of the Lessor or Lessor's Agents while in, upon
or in any way connected with said Space and/or Building during the Term
7
or for liability and losses on account of or arising out of the failure of the
Lessor, its Agents to maintain the premises as per Section 6 of this Lease.
11. EVENTS OF DEFAULT
-----------------
Each of the following events shall be an event of default ("Event of
Default") by Lessee under this Lease:
(i) Lessee shall fail to pay any installment of Rent or any other
payment required herein when due, and such failure shall continue for a period
of five days from the date such payment was due.
(ii) Lessee shall (A) make a general assignment for the benefit of
creditors; (B) commence any case, proceeding or other action seeking to have an
order for relief entered on its behalf as a debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or of any substantial part of its property (collectively a
"proceeding for relief"); (C) become the subject to any proceeding for relief
which is not dismissed within 60 days of its filing or entry; or (D) be
dissolved or otherwise fail to maintain its legal existence.
(iii) Any insurance required to be maintained by Lessee pursuant to this
lease shall be canceled or terminated or shall expire or shall be materially
reduced or changed, except, in each case, as permitted in this Lease.
(iv) Lessee shall attempt or there shall occur any assignment, subleasing
or other transfer of Lessee's interest in or with respect to this Lease except
as otherwise permitted in this Lease.
(v) Lessee shall fail to discharge any lien placed upon the Space or the
Building in violation of this Lease within 30 days after any such lien or
encumbrance is filed against the Space or the Building.
(vi) Lessee shall fail to comply with any provision of this Lease other
than those specifically referred to in this Section 11, and except as otherwise
expressly provided herein, such default shall continue for more than 30 days
after Lessee shall have given Lessor written notice of such default; provided
that if the nature of the default is such that it cannot be reasonably cured
within said thirty (30) days, Lessee shall not be deemed to be in default if it
shall commence performance within said thirty (30) day period and diligently
proceeds to so cure the default thereafter. If Lessee shall not cure or
commence to cure the said default within the thirty (30) day period, Lessor may
not terminate this Lease and vacate the Space, but rather may only cure the
default and deduct reasonable costs and expenses for such cure from Rent or
Additional Rent or any other amounts accrued hereunder due.
12. REMEDIES OF LESSOR
------------------
Upon each occurrence of an Event of Default and so long as such Event of
Default shall be continuing, Lessor may at any time thereafter at its election
terminate this Lease and Lessee's right of possession (but Lessee shall remain
liable as hereinafter provided), and/or pursue any other remedies at law or in
equity. Upon the termination of this Lease and Lessee's right of possession,
it shall be lawful for Lessor to re-enter the Space by summary dispossession
proceedings or any other action or proceeding authorized by law and to remove
Lessee and all persons and property therefrom. If Lessor re-enters the Space,
Lessor shall have the right to keep in place and use, or remove and store, all
of the furniture, fixtures and equipment at the Space.
8
Upon Lessor's termination of this Lease, Lessor may recover from Lessee
the sum of: all Rent, Additional Rent and all other amounts accrued hereunder
to the date of such termination; the cost of reletting the whole or any part
of the Space, including without limitation brokerage fees and/or leasing
commissions incurred by Lessor, and costs of removing and storing Lessee's or
any other occupant's property, repairing, altering, remodeling, or otherwise
putting the Space into condition acceptable to a new tenant or tenants, and
all reasonable expenses incurred by Lessor in pursuing its remedies, including
reasonable attorneys' fees and court costs.
If the Space is relet and a sufficient sum shall not be realized from such
reletting [after first deducting therefrom, for retention by Lessor, the unpaid
Rent, Additional Rent and other amounts accrued hereunder at the time of
reletting, the cost of recovering possession (including reasonable attorneys'
fees and costs of suit), all of the costs and expenses of repairs, changes,
alterations, and additions, the expense of such reletting (including without
limitation brokerage fees and leasing commissions) and the cost of collection
of the Rent and Additional Rent accruing therefrom] to satisfy the Rent
provided for in this Lease to be paid, then Lessee shall immediately satisfy
and pay any such deficiency.
Exercise by Lessor of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance of surrender of the
Space and/or a termination of this Lease by Lessor, whether by agreement or by
operation of law. Any law, usage, or custom to the contrary notwithstanding,
Lessor shall have the right at all times to enforce the provisions of this
Lease in strict accordance with the terms hereof; and the failure of Lessor at
any time to enforce its rights under this Lease strictly in accordance with
same shall not be construed as having created a custom in any way or manner
contrary to the specific terms, provisions, and covenants of this Lease or as
having modified the same. Lessee and Lessor further agree that forbearance or
waiver by Lessor to enforce its rights pursuant to this Lease or at law or in
equity, shall not be a waiver of Lessor's right to enforce one or more of its
rights in connection with any subsequent default. A receipt by Lessor of Rent
or other payment with knowledge of the breach of any term or covenant of this
Lease shall not be deemed a waiver of such breach, and no waiver by Lessor of
any provision of this Lease shall be deemed to have been made unless expressed
in writing and signed by Lessor. To the greatest extent permitted by law,
Lessee waives the service of notice of Lessor's intention to re-enter as
provided for in any statute, or to institute legal proceedings to that end, and
also waives all right of redemption in case Lessee shall be dispossessed by a
judgment or by warrant of any court or judge. Any reletting of the Space shall
be on such terms and conditions as Lessor in its sole discretion may determine
(including without limitation a term different than the remaining Term, rental
concessions, alterations and repair of the Space, lease of less than the entire
Space to any tenant and leasing any or all other portions of the Building before
reletting the Space). Lessor shall not be liable, nor shall Lessee's
obligations hereunder be diminished because of, Lessor's failure to relet the
Space or collect Rent due in respect of such reletting.
13. REMEDIES OF LESSEE
------------------
In the event of a default under the terms, covenants or conditions of this
Lease on the part of the Lessor, Lessee shall notify Lessor in writing of said
default and Lessor shall have thirty (30) days to cure or commence to cure said
default; provided that if the nature of the default is such that it cannot be
reasonably cured within said thirty (30) days, Lessor shall not be deemed to be
in default if it shall commence performance within said thirty (30) day period
and diligently proceeds to so cure the default thereafter. If Lessor shall not
cure or commence to cure the said default within the thirty (30) day period,
Lessee may not terminate this Lease and vacate the Space, but rather may only
cure the default and deduct reasonable costs and expenses for such cure from
Rent or Additional Rent or any other amounts accrued hereunder due.
9
All obligations of Lessor hereunder shall be construed as covenants, not
conditions; and, except as may be otherwise expressly provided in this Lease,
Lessee may not terminate this Lease for breach of Lessor's obligations
hereunder. All obligations of Lessor under this Lease will be binding upon
Lessor only during the period of its ownership of the Building and not
thereafter. The term "Lessor" in this lease shall mean only the owner, for
the time being of the Building, and in the event of the transfer by such owner
of its interest in the Building, such owner shall thereupon be released and
discharged from all obligations of Lessor thereafter accruing, but such
obligations shall be binding during the Term upon each new owner for the
duration of such owner's ownership. Any liability of Lessor under this Lease
shall be limited solely to its interest in the Building, and in no event shall
any personal liability be asserted against Lessor in connection with this Lease
nor shall any recourse be had to any other property or assets of Lessor.
14. INSURANCE
---------
14.1 Lessee Insurance. Lessee, at its cost, shall maintain a policy of
----------------
Combined Single Limit Bodily Injury and Property Damage Insurance during the
Term and any Renewal Period, such insurance to provide protection in the amount
of One Million ($1,000,000) Dollars combined single limit, insuring Lessor and
Lessee against any liability arising out of and in connection with Lessee's Use
or occupancy of the Space. Lessee should also obtain and maintain a policy or
policies of insurance covering loss or damage to the Space, providing protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, flood (in the event such is required by
a lender having a lien on the Building), and special extended perils ("All risk"
as such term is used in the insurance industry). Lessee shall also maintain
workmen's compensation insurance with no less than the minimum limits required
by law. The commercial liability insurance policies shall name Lessor as an
additional insured, insure on an occurrence and not a claims-made basis, contain
a hostile fire endorsement and a contractual liability endorsement and provide
primary coverage to Lessor (any policy issued to Lessor providing duplicate or
similar coverage shall be deemed in excess over Lessee's policies).
14.2 Lessor Insurance. Lessor shall obtain and maintain insurance on the
----------------
Building, primarily a policy of Combined Single Limit Bodily Injury and
Property Damage Insurance insuring against any liability arising out of the
ownership or maintenance of the Building and all areas appurtenant thereto in
an amount not less than combined single limit of One Million ($1,000,000)
Dollars.
14.3 Reputable Carriers. Insurance required hereunder shall be placed
------------------
with reputable insurance companies. Each party shall deliver to the other
copies of policies of liability insurance required under this Section 14 or
certificates evidencing the existence and amounts of such insurance. No such
policy shall be cancelable or subject to reduction of coverage or other
modification except after thirty (30) days prior written notice to Lessor or
Lessee, as the case may be. Lessor and Lessee shall, at least thirty (30) days
prior to the expiration of such policies, furnish the other party with renewals
or "binders" thereof, or the other party, after ten (10) days written notice,
may order such insurance, provided such is during and for the Term or any
Renewal Period, and charge the cost thereof to the non-renewing party which
amount shall be payable upon demand. Lessor and Lessee shall not do or permit
to be done anything which shall invalidate the insurance policies referred to
in this Section 14.
14.4 Subrogation. Lessee and Lessor each hereby release and relieve the
-----------
other (which includes the other party's Agents) from any liability, whether for
negligence or otherwise, in connection with loss covered by any insurance
policies which the releasor carries with respect to the Building and/or the
Space or any interest or property therein or thereon, but only to the extent
that such loss is collected under said insurance policies. Such release is
also conditioned upon the inclusion in the policy of a provision whereby any
such release does not adversely affect such policy or prejudice any right of the
10
releasor to recover thereunder. Each party's insurance policies shall include
such a provision so long as it is obtainable without extra cost.
14.5 Business Interruption. Lessor and Lessor's Agents shall not be liable
---------------------
for, and Lessee hereby waives all claims against such parties for, business
interruption and losses occasioned thereby sustained by Lessee or any person
claiming through Lessee resulting from any accident or occurrence in or upon
the Space or the Building from any cause whatsoever, including without
limitation, damage caused in whole or in part, directly or indirectly, by the
negligence of Lessor or Lessor's Agents.
15. FIRE OR CASUALTY
----------------
15.1 Substantial Damage; Rent Abatement. In the event that the Building
----------------------------------
or the Space shall be totally or substantially damaged by fire or other
casualty or happening, to the extent that the business of the Lessee cannot
reasonably be conducted therein and if such damage cannot be or is not
repaired, restored, or rebuilt by the Lessor, as the case may be, to
substantially the same condition as it was immediately prior to such damage
or destruction within three (3) months after such damage, then either the
Lessor or Lessee shall have the option of terminating this Lease by written
notice delivered to the other party not later than thirty (30) days following
such failure to rebuild; in either event Lessee shall immediately vacate and
surrender possession of the Space to Lessor. If neither Lessee nor Lessor
elects to terminate this Lease, or if the Building or the Space is not damaged
to the extent that the damage unreasonably interferes with Lessee's Use, Lessor
shall proceed with said repairs with all reasonable diligence, but in no event
shall the repairs exceed ninety (90) days. The Rent payable hereunder shall
entirely abate in case the Space or the Building is substantially destroyed or
so damaged as to render the Space untenantable or not useable or convenient or
in a condition for its Use, or abate proportionately according to the extent of
the injury or damage sustained by the Building or the Space, if such is not
substantially destroyed or is rendered partially untenantable, until the
Building and the Space shall have been restored, repaired, or rebuilt and put
in proper condition for the Use and occupancy of Lessee.
15.2 Damage for Interruption of Use. Lessor shall not be liable for any
------------------------------
damage, compensation or claim by reason of inconvenience of annoyance arising
from the necessity of making repairs, alterations and/or additions to any
portion of the Building or the Space, the interruption in the Use of the Space,
or the termination of this Lease by reason of the destruction of the Space.
16. ENVIRONMENTAL REQUIREMENTS
--------------------------
Lessee shall not permit or cause any party to bring any Hazardous Material
into the Space or transport, store, use, generate, manufacture or release any
Hazardous Material in or about the Space without Lessor's prior written consent.
Lessor consents to Lessee's use of materials customarily used in the operation
of dialysis centers. Lessee, at its sole cost and expense, shall operate its
business in the Space in strict compliance with all Environmental Requirements
and shall remediate in a manner reasonably satisfactory to Lessor any Hazardous
Materials released on or from the Building by Lessee and/or its Agents. Lessee
shall complete and certify to disclosure statements as requested by Lessor from
time to time relating to Lessee's transportation, storage, use, generation,
manufacture, or release of Hazardous Materials on or about the Space or the
Building. The term "Environmental Requirements" means all applicable present
and future statutes, regulations, ordinances, rules, codes, judgments, orders or
other similar enactments of any governmental authority or agency regulating or
relating to health, safety, or environmental conditions on, under or about the
Space or the Building or the environment, including without limitation, the
following: the Comprehensive Environmental Response, Compensation and Liability
Act; the Resource Conservation and Recovery Act; and all state and local
counterparts thereto, and any regulations or policies promulgated or issued
thereunder. The term "Hazardous Materials" means and includes any substance,
material, waste, pollutant, or contaminant listed or defined
11
as hazardous or toxic, under any Environmental Requirements, asbestos and
petroleum, including crude oil or any fraction thereof, natural gas, or
synthetic gas usable for fuel (or mixtures of natural gas and such synthetic
gas). As defined in Environmental Requirements, Lessee is and shall be
deemed to be the "operator" of Lessee's "facility" and the "owner" of all
Hazardous Materials brought into the Space or the Building by Lessee and its
Agents, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.
Lessee shall indemnify, defend, and hold Lessor harmless from and against
any and all losses (including, without limitation, diminution in value of the
Space or the Building and loss of rental income from the Building), claims,
demands, actions, suits, damages (including, without limitation, punitive
damages), expenses (including, without limitation, remediation, removal,
repair, corrective action, or cleanup expenses), and costs (including, without
limitation, actual attorneys' fees, consultant fees or expert fees and
including, without limitation, removal or management of any asbestos brought
into the Space or the Building in breach of the requirements of this Section
16, regardless of whether such removal or management is required by law) which
are brought or recoverable against, or suffered or incurred by Lessor as a
result of any release of Hazardous Materials for which Lessee is obligated to
remediate as provided above or any other breach of the requirements under this
Section 16 by Lessee and its Agents, regardless of whether Lessee had knowledge
of such noncompliance. The obligations of Lessee under this Section 16 shall
survive any termination of this Lease.
Lessor shall have access to, and a right to perform inspections and tests
of, the Space to determine Lessee's compliance with Environmental Requirements,
its obligations under this Section 16, or the environmental condition of the
Space. Access shall be granted to Lessor upon Lessor's prior notice to Lessee
and at such times so as to minimize, so far as may be reasonable under the
circumstances, any disturbance to Lessee's operations. Such inspections and
tests shall be conducted at Lessor's expense, unless such inspections or tests
reveal that Lessee has not complied with any Environmental Requirement, in
which case Lessee shall reimburse Lessor for the reasonable cost of such
inspection and tests. Lessor's receipt of or satisfaction with any
environmental assessment in no way waives any rights that Lessor holds against
Lessee.
17. SURRENDER
---------
Upon expiration or earlier termination of the Lease in accordance with
its terms, Lessee shall surrender the Space to Lessor in the same condition as
received, broom clean, ordinary wear and tear and casualty loss and condemna-
tion covered by Sections 15 and 18 excepted. Any trade fixtures, Lessee-made
alterations and property not so removed by Lessee as permitted or required
herein shall be deemed abandoned and may be stored, removed, and disposed of by
Lessor at Lessee's expense, and Lessee waives all claims against Lessor for any
damages resulting from Lessor's retention and disposition of such property. All
obligations of Lessee hereunder not fully performed as of the termination of the
Lease shall survive the termination of the Lease, including without limitation,
indemnity obligations, payment obligations with respect to Rent, and all
obligations concerning the condition and repair of the Space.
18. CONDEMNATION
------------
If any part of the Space should be taken or condemned for a public or
quasi-public use, and a part thereof remains which is susceptible for the Use
intended, this Lease shall, as to the part so taken, terminate as of the date
title shall vest in the condemnor, and the Rent payable hereunder shall be
adjusted so that the Lessee shall be required to pay for the remainder of the
Term or any Renewal Period, if applicable, only such portion of such Rent at
the value of the part remaining after the condemnation bears to the value of
the entire Space at the date of condemnation; but in such event Lessor shall
have the option to terminate this Lease as of the date when title to the part
so condemned vests in the condemnor. If all
12
the Space, or such part thereof be taken or condemned so that there does not
remain a portion susceptible for the Use intended hereunder, this Lease shall
thereupon terminate. Whether or not a portion of the Space is susceptible for
the Use intended shall be determined by arbitration if the parties cannot
otherwise agree on said portion. If a part of all of the Space be taken or
condemned, all compensation, except as otherwise provided in this Section 18,
awarded upon such condemnation or taking shall, go to the Lessor and the Lessee
shall have no claim thereto.
19. SUBORDINATION; ASSIGNMENT BY LESSOR
-----------------------------------
The rights and interest of Lessee under this Lease shall be subject and
subordinate to any mortgage that may be placed upon the Space and to any and all
advances to be made thereunder, and to the interest thereon, and all renewals,
replacements, and extensions thereof. Any mortgagee may elect to give the
rights and interests of Lessee under this Lease priority over its mortgage. In
the event of such election and upon notification by such mortgagee to Lessee to
that effect, the rights and interests of Lessee under this Lease shall be deemed
to have priority over the lien of said Mortgage. Whether this Lease is dated
prior to or subsequent to the date of said mortgage, Lessee shall execute and
deliver whatever instruments may be required for such purposes and in the event
Lessee fails to do so within ten (10) days after demand in writing, Lessee does
hereby make, constitute and irrevocably appoint Lessor as its attorney-in-fact
and in its name, place and stead so to do. Lessor may assign its interest in
this Lease or any part thereof, and such assignee shall thereupon be deemed
Lessor hereunder.
20. QUIET ENJOYMENT
---------------
Lessor covenants and agrees that Lessee, upon paying the Rent and
performing the covenants of this Lease, on its part to be performed, shall and
may peaceably and quietly have, hold and enjoy the Space and the common areas
for the Term and any duly authorized Renewal Period.
21. SPACE PREPARATION
-----------------
It is understood that the Space shall be rented by the Lessee on an "as
is" basis, and the only Space preparation work that shall be done shall be the
work as outlined on Exhibit A attached to and made a part of this Lease.
22. AUTHORIZATON
------------
Lessor and Lessee each has all the requisite right, power, legal capacity
and authority, corporate and otherwise, to enter into this Lease and to assume
and perform their respective obligations hereunder. The execution and delivery
of this Lease and the performance by Lessor and Lessee of their obligations
hereunder have been duly authorized by their respective boards of directors
and/or partners, as the case may be, and this Lease is a binding and enforce-
able Lease of Lessor and Lessee according to its terms. The execution, delivery
and performance of this Lease by Lessor and Lessee will not result in any
violation of and will not conflict with, or result in any breach of any of the
terms of or constitute a default under, or constitute an event which with
notice or the passage of time or both would constitute a default under, any
provision of any law to which Lessor or Lessee is subject, any partnership
agreement, the articles of incorporation, and/or by-laws of any party, or any
mortgage, indenture, agreement, instrument, judgment, decree, or rule or
resolution or other restriction to which Lessor or Lessee is bound. The
representations as contained herein are only made by Lessor and Lessee as to
their own corporate acts, articles of incorporation, by-laws and/or partnership
agreements, as the case may be, and their respective related agreements and
regulations and neither makes any representations as to the other's acts,
articles of incorporation, by-laws, partnership agreements, as the case may be,
and related agreements and regulations.
13
No action, approval, consent or authorization, including but not limited
to any action, approval or consent of any shareholder, note holder, partner,
or order of any court or governmental agency, commission, board, bureau or
instrumentality, otherwise than as specifically provided in this Lease, is
necessary in order to constitute this Lease as a valid, binding and enforceable
obligation of the parties hereto in accordance with its terms.
23. ESTOPPEL CERTIFICATES
---------------------
Lessee agrees, from time to time, within 10 days after request of Lessor,
to execute and deliver to Lessor, or Lessor's designee, any estoppel certifi-
cate requested by Lessor, stating that this Lease is in full force and effect,
the date to which Rent has been paid, that Lessor is not in default hereunder
(or specifying in detail the nature of Lessor's default), the termination date
of this Lease and such other matters pertaining to this Lease as may reasonably
be requested by Lessor. Lessee's obligation to furnish each estoppel
certificate in a timely fashion is a material inducement to Lessor's execution
of this Lease. No cure or grace period provided in this Lease shall apply to
Lessee's obligations to timely deliver an estoppel certificate. Lessee hereby
irrevocably appoints Lessor as its attorney-in-fact to execute on its behalf
and in its name any such estoppel certificate if Lessee fails to execute and
deliver the estoppel certificate within 10 days after Lessor's written request
thereof.
24. WAIVER OF JURY TRIAL
--------------------
LESSEE AND LESSOR WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN LESSOR AND LESSEE ARISING OUT OF THIS LEASE OR ANY OTHER
INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH OR THE TRANSACTIONS RELATED HERETO.
25. FORCE MAJEURE
-------------
Neither Lessor nor Lessee shall be held responsible for delays in the
performance of its obligations hereunder when caused by strikes, lockouts,
labor disputes, acts of God, inability to obtain labor or materials or
reasonable substitutes therefor, and other than and subject to Section 3.3,
governmental restrictions, governmental regulations, governmental controls,
delay in issuance of permits, enemy or hostile governmental action, civil
commotion, fire or other casualty, and other causes beyond the reasonable
control of Lessor or Lessee ("Force Majeure"); provided, however, no Force
Majeure event shall relieve Lessee from its obligation to pay Rent, or from
its obligations under Section 3.3, or from other monetary obligations hereunder.
26. NOTICES
-------
All Rent payments, notices, requests, demands and other communications
under this Lease shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice
is to be given, or on the third day after mailing if mailed to the party to
whom notice is to be given, by first class mail, registered or certified,
postage prepaid, or the next day or second day if effected by such overnight
mail, and properly addressed as follows:
To Lessor: Dialysis Corporation of America
27 Miller Street
Lemoyne, PA 17043
Attn: Bart Pelstring, President
14
Copy To: Lawrence E. Jaffe, Esq.
777 Terrace Avenue
Hasbrouck Heights, NJ 07604
To Lessee: Karen Steib, Vice President
Renal Treatment Centers - Mid-Atlantic, Inc.
1180 West Swedesford Road
Berwyn, PA 19312-1086
Copy To: General Counsel
Total Renal Care Holdings, Inc.
21250 Hawthorne Boulevard
Torrance, CA 90593
Any party may change its address for purposes of this Section 26 by giving
the other parties written notice of the new address in the manner set forth
above.
27. BROKERS
-------
Lessor and Lessee each represents and warrants that neither has dealt with
any broker, agent or other person in connection with this transaction and no
broker, agent or other person brought about this transaction, and Lessor and
Lessee each agree to indemnify and hold the other harmless from and against any
claims by any broker, agent or other person claiming a commission or other form
of compensation by virtue of having dealt with Lessor or Lessee, as the case may
be, with regard to this leasing transaction.
28. APPLICABLE LAW
--------------
This Lease shall be construed under the laws of the State of Maryland. If
any provision of this Lease, or portion thereof, or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Lease shall not be affected thereby and each provision of
this Lease shall be valid and enforceable to the fullest extent permitted by
law.
29. LEASE CONTAINS ALL AGREEMENTS
-----------------------------
It is expressly understood by the parties that the whole agreement between
them is embodied in this Lease (executed in duplicate) and that no part or items
are omitted, unless the terms are hereinafter modified by written agreement(s).
30. SUCCESSORS
----------
This Lease shall be binding upon the parties hereto and their respective
successors and/or assigns.
31. HEADINGS NO PART OF LEASE
-------------------------
Any headings preceding the text of the several Sections and Subsections
hereof are inserted solely for convenience of reference and shall not
constitute a part of this Lease nor shall they affect its meaning, construc-
tion or effect.
15
32. NO ESTATE IN REALTY
-------------------
This Lease shall create the relationship of Lessor and Lessee between the
parties hereto; no estate shall pass out of Lessor. Lessee has no interest
subject to levy or sale, and Lessee's interest, which is Use of the Space upon
payment of the Rent and not being in default of this Lease, is not assignable,
except in accordance with Section 8.3 of this Lease.
33. EFFECT OF TERMINATION OF LEASE
------------------------------
No termination of this Lease prior to the normal ending thereof, by lapse
of time or otherwise, shall affect Lessor's right to collect Rent for the
period prior to termination thereof or for any indemnifications of Lessee to
Lessor as contained herein.
34. COUNTERPARTS
------------
This Lease may be executed in several counterparts and each such
counterpart shall be deemed an original, and all counterparts shall constitute
a single original Lease.
35. ATTORNMENT
----------
In the event of a sale, transfer or assignment of Lessor's interest in
the Building or any part thereof, including the Space, or in the event any
proceedings are brought for the foreclosure of or for the exercise of any
power of sale under any mortgage made by Lessor covering the Building or any
part thereof, including the Space, Lessee shall attorn to and recognize such
transferee, purchaser, or mortgagee as Lessor under this Lease, provided,
however, that such transferee, purchaser, or mortgagee recognizes Lessee's
rights under this Lease.
36. GUARANTEE
---------
Lessee and the Guarantor identified in the Guarantee attached at the end
of this Lease shall be jointly and severally liable for all of the obligations
of Lessee under this Lease.
37. AUTHORSHIP
----------
Neither party to this Lease shall be benefited or burdened by any rule of
document interpretation that otherwise would interpret a document against the
interest of the author.
IN WITNESS WHEREOF, the parties hereto have each caused this instrument
to be signed by their respective officers thereunto duly authorized, all on
the date and year first above written.
DIALYSIS CORPORATION OF AMERICA
/s/ Bart Pelstring
By:-------------------------------------
BART PELSTRING, President
RENAL TREATMENT CENTERS -
MID-ATLANTIC, INC.
/s/ Karen Steib
By:-------------------------------------
KAREN STEIB, Vice President
16
GUARANTY
In consideration of and as a material basis for Dialysis Corporation of
America ("Lessor") entering into a Lease of which this Guaranty is a part with
Renal Treatment Centers - Mid-Atlantic, Inc. ("Lessee") for the Space located
at 402 Marvel Court, Easton, Maryland 21601, Total Renal Care Holdings, Inc.,
a Delaware corporation, (referred to as "Guarantor"), hereby guarantees to
Lessor the strict and full performance of and observance by Lessee of all the
agreements, provisions, terms, conditions, covenants and rules in the Lease.
Guarantor agrees that no separate notice to it is required, and notice to
Lessee in accordance with the Lease shall be deemed notice to Guarantor.
Guarantor agrees to be equally liable with Lessee so that the Lessor may sue
the Guarantor directly without first suing Lessee. Guarantor further agrees
that this Guaranty shall remain in full force and effect even if the Lease is
renewed or is not renewed, changed or extended in any way and even if Lessor
has to make a claim against Guarantor, until all obligations of Lessee under
the Lease have been fully and faithfully discharged, satisfied or performed.
No defense to the enforcement of this Lease against Lessee (for example, the
bankruptcy or insolvency of Lessee) shall excuse or release the obligations of
the undersigned Guarantor. Lessor and Guarantor agree to waive trial by jury
in any action, proceeding or counterclaim brought against the other on any
matters concerning the Lease and this Guaranty.
TOTAL RENAL CARE HOLDINGS, INC.
/s/ Barry Cosgrove
By:-------------------------------------
BARRY COSGROVE, Senior Vice President
17
EXHIBIT A
SPECIFICATIONS OF SPACE
See attached renovation plans.