Exhibit 10.39


 


LEASE AGREEMENT


 


BY
THIS LEASE dated February 1, 2001, CROMG PARTNERS, a California general
partnership, herein called “Lessor,” leases to COASTAL RADIATION ONCOLOGY
MEDICAL GROUP, INC., a California corporation, herein called “Lessee,”
that certain real property, herein called “the Premises,” in the City of
Salinas, County of Monterey, State of California, commonly known as 1069 Los
Palos Drive, Salinas, California, and more particularly described in Exhibit A,
attached hereto.


 


ARTICLE 1.  TERM OF LEASE


 


Original Term


 


Section 1.01.                             This Lease
shall be for a term of fifteen (15) years, commencing on February 1, 2001,
and ending on January 31, 2016.


 


Extended Term


 


Section 1.02.                             Should Lessee
perform all the terms and conditions of this Lease and provided Lessee is not
then in default under the terms of this Lease, Lessee may extend this Lease for
two (2) additional, separate terms of ten (10) years each, commencing
on expiration of the preceding term, by giving Lessor written notice of Lessee’s
desire to extend the term hereof not less than one hundred eighty (180) days
prior to expiration of the preceding term. 
This option to extend the term of this Lease is personal to Lessee and
may not be transferred by Lessee without Lessor’s prior written consent.


 


Hold Over


 


Section 1.03.                             Should Lessee
hold over and continue in possession of the Premises after expiration of the
term of this Lease or any extension thereof, Lessee’s continued occupancy of
the Premises shall be considered a month-to-month tenancy subject to all the
terms and conditions of this Lease, except that the base rent shall be in an
amount equal to 100% of the last monthly rent. 
If Lessee fails to surrender the Premises upon the expiration of this
Lease, Lessee shall indemnify and hold Lessor harmless from all loss or
liability, including without limitation, any claims made by any succeeding
tenant founded on or resulting from such failure to surrender.


 


ARTICLE 2.  RENT


 


Base Rent


 


Section 2.01.                             For the first
year of the term hereof, Lessee agrees to pay to Lessor a fixed rental for the
use and occupancy of the Premises of Sixteen Thousand Seven Hundred Eighty
Eight Dollars ($16,788.00) per month, payable on the first (1st) day of each
and every calendar month commencing on February 1, 2001, at 316 S.
Stratford Avenue, Santa Maria, CA 93454, or at such other place or places as
Lessor may from time to time designate by written notice delivered to Lessee.


 

















 


Rent Adjustment


 


Section 2.02.                             The Base Rent
provided for in Section 2.01 above shall be increased by three percent
(3%) one year after the commencement of the term hereof and annually thereafter
on the same date each calendar year until April 1, 2002.  Commencing on April 1, 2002 the Base
Rent shall be reduced to Thirteen Thousand One Hundred Forty One Dollars
($13,141.00) per month.  On April 1
of each calendar year thereafter, including any exercised options to extend (“the
adjustment date”) the Base Rent shall be adjusted by three percent (3%) per
year.


 


Base Rent for Extension Terms


 


(a)                                  In the event
Lessee timely exercises its option to extend the lease term under Section 1.02
above, then within fifteen (15) days of Lessee’s written notice to Lessor of
Lessee’s exercise of such option, Lessor and Lessee shall meet to establish the
Base Rent for the first year of the Extension Term (“Rent Meeting”).  The Base Rent per square foot of leaseable
area in the Premises for the first year of each extension term shall be the
fair market rental value of the Premises, determined in accordance with the
following formula:


 


Vault Sq. Ft. X (Market
Rent x 2.67)  +  Medical Sq. Ft X (Market
Rent)

(divided by) total leaseable square footage


 


= Base Rent per square foot


 


As
used in the above formula, “Vault Sq. Ft.” means the total square footage of
the treatment vaults, other than any treatment vaults added at the Lessee’s
cost and expense.  “Market Rent” is the
current fair market rent per square foot for medical office space in the City
of Salinas, California on a triple net basis. 
This space will be leased (not subleased) and will be comparable in
size, location and quality to the Premises. 
“Medical Sq. Ft” refers to all leaseable space in the Premises other
than Vault Sq. Ft.  “Total leaseable
square footage” shall be the total leaseable square footage in the Premises
determined by survey.


 


In
the event that the parties cannot agree on the Market Rent for the first year
of an extension term, then within ten (10) days after the Rent Meeting,
Lessor and Lessee shall each specify in writing to the other party its
determination of such Market Rent Rate. 
If either party fails to submit its written determination in accordance
with this Section, the Base Rent for the extension term shall be the
determination submitted by the other party.


 


(b)                                 Within ten (10) days
after the parties have exchanged written determinations, Lessor and Lessee
shall mutually select three commercial realtors within the City of Salinas to
determine the Market Rent.  Each such
realtor shall (i) be disinterested; (ii) be qualified to determine
the fair market rental rates for real estate similar to the Premises; and (iii) have
been actively engaged in the leasing of comparable medical space in the City of
Salinas for a period of not less than five (5) continuous years
immediately preceding his or her appointment. 
If Lessor and Lessee are unable to mutually select three such commercial
realtors, then either party, on behalf of both, may request such appointment by
the President of the local chapter of the California Realtors Association.  If such Association is not then in existence,
either party, on behalf of both, may request such appointment by the presiding
judge of the Superior Court of the 


 


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Judicial District in which the property is
located.  Each such realtor shall submit
their respective determinations of Market Rent for the area in writing to both
parties and shall provide the basis for such determination.


 


(c)                                  The average of
the three written determinations of Market Rent prepared by the realtors so
selected shall be utilized to determine the Base Rent of the Premises for the
initial year of the extension term.  The
costs of the three realtors’ services shall be shared equally by the
parties.  The decision of the realtors
shall be binding upon the Lessor and Lessee.


 


(d)                                 In the event
that the parties have not agreed on the Market Rent or the realtors have not
been selected and the Market Rent determined before the commencement of the
extension term, Lessee shall continue to pay the same lease rate in effect at
the end of the lease year immediately preceding the commencement of the
extension term.  Lessee shall pay such
sum as Base Rent until the initial Base Rent for the extension term is
determined, at which time Lessee shall promptly pay Lessor any additional rent
due by reason of any increase in the Base Rent during the extension term over
the Base Rent previously paid by Lessee. 
If the Base Rent actually paid by Lessee during this period is
ultimately determined to be more than the revised Base Rent as finally
determined as above provided, any such over payment shall constitute a credit
against the revised Base Rent, and that credit shall be applied to the
following month or months until such credit is exhausted.


 


(e)                                  The Base Rent
as above determined shall be subject to increase at the end of the first lease
year of the extension term in the same manner as provided in Section 2.02
above.


 


Taxes, Utilities and Operating Expenses as Additional Rent


 


Section 2.03.                             In addition to
the rent specified in Sections 2.01 and 2.02 above, Lessee shall pay, as
additional rent, all Utilities, Insurance, Personal and Real Property
Taxes and Operating Expenses directly to the vendor or creditor for such items,
or otherwise as set forth in this Section 2.03.  If Lessee fails to pay any such amount,
Lessor may in its sole discretion, advance monies to pay such items, and demand
reimbursement in full from Lessee (referred to as “additional rent” herein),
including without limitation any cost, expense, assessment or charge, as well
as interest as provided in this Lease.


 


Utilities


 


(a)                                  Lessee shall
pay, and hold Lessor and the property of Lessor including the Premises, free
and harmless from, all charges for the furnishing of gas, water, sewer,
electricity, telephone service, garbage and trash removal and other public
utilities during the entire term of this Lease or any extension thereof.  All such charges shall be paid by Lessee
directly to the provider of the service and shall be paid as they become due
and payable but in any event before delinquency.


 


Lessee
agrees that Lessor shall not be liable for damages, by abatement of Rent or
otherwise, for failure to furnish or delay in furnishing any service (including
telephone and telecommunication services) or for diminution in the quality or
quantity of any service when the failure, delay, or diminution is entirely or
partially caused by:


 


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(i)                  Breakage
repairs, replacements, or improvements;


 


(ii)               Strike,
lockout, or other labor trouble;


 


(iii)            Inability to
secure electricity, gas, water, or other fuel at the Building after reasonable
effort to do so;


 


(iv)           Accident or
casualty;


 


(v)              Act or default
of Lessee or other parties; or


 


(vi)           Any other cause
beyond Lessor’s reasonable control.


 


Such
failure, delay, or diminution shall not be considered to constitute an eviction
or a disturbance of Lessee’s use and possession of the Premises or relieve
Lessee from paying rent or performing any of its obligations under this
Lease.  Lessor shall not be liable under
any circumstances for a loss of or injury to property or for injury to or
interference with Lessee’s business, including loss of profits through, in
connection with, or incidental to a failure to furnish any of the utilities or
services under this Section 2.03. 
Lessor may comply with mandatory or voluntary controls or guidelines
promulgated by any government entity relating to the use or conservation of
energy, water, gas, light, or electricity or the reduction of automobile or
other emissions without creating any liability of Lessor to Lessee under this
Lease as long as compliance with voluntary controls or guidelines does not
materially and unreasonably interfere with Lessee’s use of the Premises.


 


Personal Property Taxes


 


(b)                                 Lessee shall
pay before they become delinquent all taxes, assessments and other charges
levied or imposed by any governmental entity on the furniture, trade fixtures,
equipment and other personal property placed by Lessee in, on or about the
Premises.


 


Real Property Taxes


 


(c)                                  Lessee shall
pay all real property taxes and general and special assessments on the
Premises, including any increases in such taxes and assessments, before they
become delinquent.


 


The
real property taxes and assessments levied against the Premises for the first
and last years of the term hereof shall be prorated between Lessor and Lessee
for purposes of this section as of 12:01 AM. on the date of commencement and
termination respectively of this Lease.


 


Lessee
shall have the right, at Lessee’s sole cost and expense, to protest or contest
in good faith the amount of any tax or assessment.  As a condition precedent to Lessee’s right to
protest such taxes or assessments, Lessee shall either pay the disputed amount
and file for refund or deposit with Lessor the disputed amount plus one (1) years
interest at the rate then charged by said county plus any estimated penalty
which Lessor may incur by non-payment. 
Upon such payment or deposit, Lessor shall cooperate with Lessee in
prosecuting such dispute.


 


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Operating Expenses


 


(d)                                 Lessee shall
pay all Operating Expenses attributable to the occupation and use of the
Premises.


 


The
term “Operating Expenses” as used in this Lease shall mean all expenses, costs
and fees attributable to Lessee’s use and occupancy of the Premises under this
Lease, including but not limited to:


 


(i)                  Miscellaneous operating
costs, maintenance, security services, replacement for normal wear and tear,
repair, re-striping and resurfacing of paving, insurance (including public
liability and property damage, rent continuation, boiler and machinery and
extended coverage insurance), and cleaning of the Premises and all parts
thereof and all furnishings, fixtures and equipment therein.  The term “Operating Expenses” shall include
the annual amortization of costs (including financing at the then prevailing
rate, if any) of any improvements, equipment, or devices required by any
governmental authority or incurred as a labor saving measure or to reduce
operation or maintenance expenses with respect to the Premises where such costs
are amortized over the useful life thereof.


 


(ii)               Operating Expenses shall
also include licenses, permits, charges and assessments which are levied,
assessed, imposed or collected by any governmental authority or improvement or
assessment district during any calendar year with respect to the Premises and
Lessee’s use and occupancy of the Premises and the land on which the premises
are located, and any improvements, fixtures, equipment and other property of
Lessor, real or personal, used in connection with the operation or maintenance
of the Premises (computed on a cash basis or as if paid in permitted
installments regardless of whether actually so paid), as well as any tax which
shall be levied or assessed in addition to or in lieu of any tax described in
Sections 2.03 (b) or (c) above (it being acknowledged that because of
the passage of laws which limit increases in property taxes, government
agencies may impose fees, charges, assessments or other levies in connection
with services previously furnished without charge or at a lesser charge and
which were previously paid for in whole or in part, directly or indirectly by
real property taxes), any gross excise tax or other similar tax, and any costs
or expenses of contesting any such taxes, licenses, charges or assessments, but
excluding any federal or state income or gift tax or any franchise, capital
stock, estate or Inheritance taxes.


 


Late Charges


 


Section 2.04.                             If any
installment of rent or other payment required to be paid by Lessee to Lessor is
not paid within ten (10) days of the date on which it is due, a late
charge equal to five percent (5%) of the late payment shall be due from Lessee
to Lessor to compensate Lessor for the additional administrative work caused by
such default and to compensate Lessor for the loss of use of such defaulted
payment.  The late charge herein shall be
in addition to any other remedy which Lessor may have hereunder for such
default.


 


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Interest on Late Payments


 


Section 2.05.                             If any payment
required to be paid by Lessee to Lessor is not paid within ten (10) days
of the date on which it is due, such payment shall bear interest at the maximum
rate permitted by law from the date it became due until it is paid by Lessee to
Lessor.


 


ARTICLE 3.  USE OF PREMISES


 


Permitted Use


 


Section 3.01.                             The Premises
shall, during the term of this Lease and any extensions thereof, be used for
conducting a medical and radiation oncology business, for related activities
and for no other purpose without the prior written consent of Lessor.


 


Insurance Hazards


 


Section 3.02.                             Lessee shall
not commit or permit the commission of any acts on the Premises nor use or
permit the use of the Premises in any manner that will increase the existing
rates for or cause the cancellation of any fire, liability, or other insurance
policy insuring the Premises or the improvements on the Premises.


 


Waste or Nuisance


 


Section 3.03.                             Lessee shall
not commit or permit the commission by others of any waste on the Premises;
Lessee shall not maintain, commit, or permit the maintenance or commission of
any nuisance as defined in Section 3479 of the California Civil Code on
the Premises; and Lessee shall not use or permit the use of the Premises for
any unlawful purpose.


 


Hazardous Materials


 


Section 3.04.                             Lessee warrants
and represents that during the term hereof, and any extensions thereof, Lessee
shall not use the Premises in any manner that would be in violation of any
federal, state or local law, ordinance or regulation relating to environmental
conditions on, under or about the Premises, including but not limited to soil
and groundwater conditions.  Lessee shall
not use, generate, manufacture, produce, store or dispose of on, under or about
the Premises any hazardous materials, including without limitation, flammable
materials, explosives, asbestos, radioactive materials, hazardous wastes, toxic
substances or related injurious materials, whether injurious by themselves or
in combination with other materials, other than such materials as may be
necessary for Lessee’s normal operations on the Premises.  Lessee shall not dispose of or permit the
disposal of any hazardous materials into the sewer system serving the Premises.


 


As
used in this Section 3.04, the term “Hazardous Material” shall mean any
hazardous or toxic substance, material, or waste at any concentration that is
or becomes regulated by the United States, the State of California, or any
local government authority having jurisdiction over the Building.  Hazardous Material includes:


 


6

















 


(a)                                  Any “hazardous
substance,” as that term is defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (CERCLA) (42 United States
Code sections 9601-9675);


 


(b)                                 “Hazardous
waste,” as that term is defined in the Resource Conservation and Recovery Act
of 1976 (RCRA) (42 United States Code sections 6901-6992k);


 


(c)                                  Any pollutant,
contaminant, or hazardous, dangerous, or toxic chemical, material, or
substance, within the meaning of any other applicable federal, state or local
law, regulation, ordinance, or requirement (including consent decrees and
administrative orders imposing liability or standards of conduct concerning any
hazardous, dangerous, or toxic waste, substance, or material, now or hereafter
in effect);


 


(d)                                 Petroleum
products;


 


(e)                                  Radioactive
material, including any source, special nuclear, or byproduct material as
defined in 42 United States Code sections 2011-2297g-4;


 


(f)                                    Asbestos in any
form or condition; and


 


(g)                                 Polychlorinated
biphenyls (PCBs) and substances or compounds containing PCBs.


 


If,
during the Lease Term (including any extensions), Lessee becomes aware of (i) any
actual or threatened release of any Hazardous Material on, under, or about the
Premises or the Building or (ii) any inquiry, investigation, proceeding,
or claim by any government agency or other person regarding the presence of
Hazardous Material on, under, or about the Premises or the Building, Lessee
shall give Lessor written notice of the release or investigation within five (5) days
after learning of it and shall simultaneously furnish to Lessor copies of any
claims, notices of violation, reports, or other writings received by Lessee
that concern the release or investigation.


 


Lessee
shall, at Lessee’s sole expense and with counsel reasonably acceptable to
Lessor, indemnify, defend, and hold harmless Lessor and Lessor’s shareholders,
directors, officers, employees, partners, affiliates, agents, successors, and
assigns with respect to all losses arising out of or resulting from the release
of any Hazardous Material in or about the Premises or the Building, or the
violation of any Environmental Law, by Lessee or Lessee’s agents, assignees,
sublessees, contractors, or invitees. 
This indemnification applies whether or not the concentrations of any
such Hazardous Material is material, the concentrations exceed state or federal
maximum contaminant or action levels, or any governmental agency has issued a
cleanup order.  This indemnification
includes:


 


(1)                                  Losses
attributable to diminution in the value of the Premises or the Building;


 


(2)                                  Loss or
restriction of use of rentable space in the Building;


 


(3)                                  Adverse effect
on the marketing of any space in the Building; and


 


7

















 


(4)                                  All other
liabilities, obligations, penalties, fines, claims, actions (including remedial
or enforcement actions of any kind and administrative or judicial proceedings,
orders, or judgements), damages (including consequential and punitive damages),
and costs (including attorney, consultant, and expert fees and expenses)
resulting from the release or violation.


 


This indemnification shall survive the expiration or termination of
this Lease.


 


If
the presence of any Hazardous Material brought onto the Premises or the
Building by Lessee or Lessee’s employees, agents, contractors, or invitees results
in contamination of the Building, Lessee shall promptly take all necessary
actions to remove or remediate such Hazardous Materials, whether or not they
are present at concentrations exceeding state or federal maximum concentration
or action levels, or any governmental agency has issued a cleanup order, at
Lessee’s sole expense, to return the Premises or the Building to the condition
that existed before the introduction of such Hazardous Material.  Lessee shall first obtain Lessor’s approval
of the proposed removal or remedial action. 
This provision does not limit the indemnification obligation set forth
in Section 3.04.


 


Compliance With Law


 


Section 3.05.                             Lessee shall at
Lessee’s own cost and expense comply with all statues, ordinances, regulations,
existing use permits and requirements of all governmental entities, both
federal and state and county or municipal, relating to Lessee’s use and
occupancy of the Premises whether such statutes, ordinances, regulations, and
requirements be now in force or hereinafter enacted.  The judgment of any court of competent
jurisdiction, or the admission by Lessee in a proceeding brought against Lessee
by any government entity, that Lessee has violated any such statute, ordinance,
regulation, or requirement shall be conclusive as between Lessor and Lessee and
shall be grounds for termination of this Lease by Lessor.  Lessor agrees that any requirements of the
Municipal, State, or Federal authorities which require alteration of Lessor’s
building shall not be the responsibility of Lessee, unless required because of
an act of Lessee or a use of the Premises by Lessee.


 


ARTICLE 4.  ALTERATIONS AND REPAIRS


 


Maintenance


 


Section 4.01.                             Lessee shall at
his own cost and expense keep and maintain all portions of the Premises as well
as all improvements on the Premises and all facilities appurtenant to the
Premises, including but not limited to electrical, plumbing, heating and air
conditioning, sewage systems, roof and outer walls in good order and repair and
in as safe and clean a condition as they were when received by Lessee from
Lessor, reasonable wear and tear excepted.


 


Should
Lessee fail to maintain the Premises as set forth above, Lessor may, at Lessor’s
option, perform or contract for the performance of such maintenance for and on
behalf of Lessee.  In such event, Lessee
shall promptly on written demand of Lessor reimburse Lessor for all cost and
expense incurred by Lessor in performing Lessee’s obligations hereunder plus
interest at the maximum rate permitted by law from the date expended by Lessor
to the date of repayment by Lessee.


 


8

















 


Alterations and Liens


 


Section 4.02.                             Lessor and
Lessee agree that from time to time during the term of this Lease, Lessee may
desire alterations, changes and additions in and to the interior of the
Premises and to the Building that are necessary or convenient to the operation
of its business at the Premises.


 


Non-structural Changes


 


(a)                                  Lessee may, at
its own expense, make nonstructural changes to the interior of the Premises
(eg. revisions to interior decor, carpeting, painting, wall covering, etc.)
provided that the value of the Premises shall not be diminished thereby.  Further provided, that any non-structural
changes exceeding $5,000 in total cost must first be approved by the Lessor
prior to commencement of such changes.


 


Structural Changes


 


(b)                                 If Lessee
desires either (i) interior changes to the Premises of a structural nature
(eg. relocating interior walls); or (ii) changes to the facade or exterior
walls or roof, or (iii) desires the addition of square footage to the
Premises (i.e. addition of Medical square footage or Vault square footage) then
Lessee shall submit detailed plans and specifications for any proposed
alteration or improvement to the Premises for Lessor’s review and
approval.  The Lessor shall have the
option to approve or deny the request for structural changes in writing within
30 (thirty) days of receipt of such request, in the reasonable discretion of
the Lessor.  The failure of the Lessor to
disapprove or object to such plans and specifications or any substantial
changes therein within said thirty (30) days, shall constitute Lessor’s
disapproval of the same.  Subsequent to
such approval, minor changes in work or materials not affecting the general
character of the improvements need not be approved by Lessor but a copy of the
altered plans and specifications reflecting such changes must be promptly given
to Lessor.  If approved, the Lessor shall
have the option to pay for the changes, or not, in its sole discretion.  If the Lessor chooses to pay for the changes,
then the parties shall meet immediately to negotiate an adjustment to the Base
Rent to go into effect at the completion of the alterations.  If the Lessor chooses not to pay for the
alterations, the Lessee has the option to proceed with the alterations, in its
sole discretion and at its expense, without paying any amount of rent for the
added square footage for the remaining Original Term, only the expenses attributable
to the additional space.


 


Supervision of Alterations


 


(c)                                  All structural
changes to the Premises involving load bearing walls which require Lessor’s
approval shall be made under the supervision of a licensed architect or
licensed structural engineer in accordance with the detailed plans and
specifications submitted to Lessor as above provided.


 


Notices of Non-Responsibility


 


(d)                                 Lessee shall
provide Lessor with at least twenty (20) days written notice prior to
commencing any alteration, addition or change to the Premises requiring Lessor’s
approval and 


 


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Lessor shall have the right to enter the Premises to
post Notices of Non-Responsibility as provided by law.


 


Quality of Work; Ownership


 


(e)                                  All work with
respect to any alteration, addition or change must be performed 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 of
work.  Furthermore, any and all
alterations, additions, improvements, and fixtures, except furniture and trade
fixtures, made or placed in or on the Premises by Lessee or any other person
shall on expiration or sooner termination of this Lease become the property of
Lessor and remain on the Premises; provided, however, that Lessor shall have
the option on expiration or sooner termination of this Lease of requiring
Lessee, at Lessee’s sole cost and expense, to remove any or all such
alterations, additions, improvements, or fixtures from the Premises (excluding
vaults).  All such changes, alterations,
and improvements shall be performed and completed strictly in accordance with
the laws and ordinances relating thereto, and in such a manner as not to impede
access to the Premises.


 


Lessee
shall not be the cause or object of any liens or allow such liens to exist,
attach to, be placed on, or encumber Lessor’s or Lessee’s interest in the
Premises, Building, or Real Property by operation of law or otherwise.  Lessee shall not suffer or permit any lien of
mechanics, material suppliers, or others to be placed against the Premises,
with respect to work or services performed or claimed to have been furnished to
Lessee or the Premises.  If any such lien
attaches or Lessee receives notice of any such lien, Lessee shall cause the
lien to be immediately released and removed of record.  Despite any other provision of this Lease, if
the lien is not released and removed within 10 (ten) days after Lessor delivers
notice of the lien to Lessee, Lessor may immediately take all action necessary
to release and remove the lien, without any duty to investigate the validity of
it.  All expenses (including reasonable
attorney fees) incurred by Lessor in connection with the lien shall be
considered additional rent under this Lease and be immediately due and payable
by Lessee.


 


Additional Requirements


 


(f)                                    If Lessee pays
for the changes, the following provisions shall apply to such changes:


 


(i)                  The exterior of the
improvements shall be compatible with the design and appearance of the Premises
as it exists at the time of execution of this Lease.


 


(ii)               All work required in the
construction of the structural changes, including any site preparation work,
utility installations as well as actual construction shall be performed only
pursuant to a contract entered into by Lessee with a competent general
contractor and sub-contractors duly licensed as such under the Laws of the
State of California, with proof of adequate liability and workers compensation
insurance.


 


(iii)            The approval by Lessor of
any plans and specifications under this paragraph refers only to the conformity
of such plans and specifications to the general architectural plan for the
Building.  By approving such plans and
specifications, Lessor assumes no liability or 


 


10

















 


responsibility therefor and for any defect in any
structure constructed from such plans or specifications.


 


Inspection by Lessor


 


Section 4.03.                             Lessee shall
permit Lessor or his agents to enter into and upon the Premises during business
hours for the purpose of inspecting the same, or for the purpose of posting
notices of non-responsibility for alterations, additions or repairs or for the
purpose of placing upon the property in which the Premises are located any
usual or ordinary “for sale” signs, without any rebate of rent and without any
liability to Lessee for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned.  Lessee
shall permit Lessor, at any time within one hundred eighty (180) days prior to
the expiration of this Lease, to place upon the Premises any usual or ordinary “to
let” or “to lease” signs, provided that such entries made by Lessor hereunder
shall not unreasonably interfere with the conduct of Lessee’s business.


 


Surrender of Premises


 


Section 4.04.                             On expiration
or sooner termination of this Lease, or any extensions or renewals of this
Lease, Lessee shall promptly surrender and deliver the Premises to Lessor in as
good condition as they are on at the date of possession, reasonable wear and
tear excepted.


 


ARTICLE 5.  INDEMNITY AND INSURANCE


 


Hold-Harmless Clause


 


Section 5.01.                             To the fullest
extent permitted by law, Lessee, on its behalf and on behalf of its successors
and assignees, waives all claims (in law, equity, or otherwise) against Lessor,
its officers, directors, principals, agents, successors, assignees and agent
arising out of, knowingly and voluntarily assumes the risk of, and agrees that
Lessor shall not be liable to Lessee for any of the following acts or failure
to act set forth in paragraphs (a) to (c) below.  Lessor shall not be liable under this clause
regardless of whether the liability results from any active or passive act,
error, omission, or negligence of any of the Lessor; or is based on claims in
which liability without fault or strict liability is imposed or sought to be
imposed on any of the Lessor.  This
exculpation clause shall not apply to claims against Lessor to the extent that
a final judgment of a court of competent jurisdiction establishes that the
injury, loss, damage, or destruction was proximately caused by Lessor’s fraud,
willful injury to person or property, or violation of law.


 


(a)                                  The death or
injury of any person or persons, including Lessee or any person who is an
employee or agent of Lessee, or by reason of the damage to or destruction of
any property, including property owned by Lessee or any person who is an
employee or agent of Lessee, and caused or allegedly caused by either the
condition of the Premises, or some act or omission of Lessee or of some agent,
contractor, employee, servant, sublessee, or concessionaire of Lessee on the
Premises;


 


(b)                                 Any work
performed on the Premises or materials furnished to the Premises at the
instance or request of Lessee or any agent or employee of Lessee;


 


11














 


(c)                                  Lessee’s
failure to perform any provision of this Lease or to comply with any
requirement imposed on Lessee or the leased Premises by any duly authorized
governmental agency or political subdivision.


 


Liability Insurance


 


Section 5.02.                             Lessee shall, at
its own cost and expense, obtain and maintain during the entire term of this
Lease and any renewals or extensions thereof, a broad form comprehensive
coverage policy of public liability insurance issued by an insurance company or
companies rated by Best as A+ or better and authorized to conduct insurance
business in the State of California and insuring Lessee and Lessor against loss
or liability caused by or connected with Lessee’s occupation and use of the
Premises under this Lease in amounts not less than:


 


(a)                                  $1,000,000.00
combined single limit for injury to or death as a result of any accident or
incident.


 


(b)                                 $2,000,000.00
for damage to or destruction of any property of others.


 


Such
public liability insurance, and property damage insurance shall insure
performance by Lessee of the indemnity provisions of Section 5.01
above.  Both parties shall be named as
co-insured, and the policy shall contain cross liability endorsements, if
available.  The policy shall be primary
insurance for all claims under it and provide that any insurance carried by
Lessor is strictly excess, secondary, and noncontributing with any insurance
carried by Lessee.  Lessee may provide
such insurance under a single policy or under one or more separate policies.


 


Every
three (3) years, Lessor may increase the amount of public liability and
property damage insurance coverage required hereunder, if at that time the
existing coverage is not adequate in the opinion of Lessor’s insurance broker
or lender(s).


 


Fire and Casualty Insurance


 


Section 5.03.                             Lessee shall,
at Lessee’s sole cost and expense, at all times during the term hereof, and any
extensions thereof, keep all buildings, improvements and other structures on
the Premises insured for their full replacement cost against loss or destruction
by fire and the perils, including vandalism and malicious mischief, commonly
covered under standard extended coverage endorsements in Monterey County,
California.  Lessor shall be named as an
additional insured on all such policies and the policies shall contain a
cross-liability endorsement.


 


“Full
replacement cost” as used herein shall mean the actual cost of replacement for
the buildings and other improvements on the Premises, as determined from time
to time by Lessor.  Upon notification to
Lessee in writing of Lessor’s determination of full replacement cost, Lessee
shall, within thirty (30) days of such written notice, increase the amount of
the insurance carried to the amount stated in the notice.


 


Business Interruption Insurance


 


Section 5.04.                             Lessee shall,
at all times during the term of this Lease and any extensions thereof, maintain
at Lessee’s sole cost and expense a policy of business interruption insurance, 


 


12

















 


ensuring the rent provided for in this Lease will be
paid to Lessor for a period not less than one (1) year in the event the
Premises are destroyed or damaged so as to render operation of Lessee’s
business impossible or impractical by any casualty insured against by standard
fire and extended coverage insurance.


 


Lessee’s Personal Property


 


Section 5.05.                             Lessee shall,
at all times during the term of this Lease and any extensions thereof, maintain
at Lessee’s sole cost and expense an insurance policy issued by a company
acceptable to Lessor insuring for their full insurable value all furniture,
fixtures, equipment and alterations or improvements made to the Premises by
Lessee against loss or destruction by fire and the perils commonly covered
under the standard extended coverage endorsement to fire insurance policies in
Monterey County.  Any loss payable under
such insurance shall be payable to Lessee and shall be used to repair or
replace such furniture, fixtures, equipment and alterations and improvements.


 


Cancellation Clause


 


Section 5.06.                             Any policy of
insurance required to be obtained and maintained by Lessee under this Article shall
be written by insurance companies authorized to do business in the State of
California.  Each such policy of
insurance shall expressly provide that it cannot be cancelled for any reason or
altered in any manner unless at least thirty (30) days prior written notice has
been given to Lessor by the insurance company.


 


Deposit of Insurance with Lessor


 


Section 5.07.                             Lessee shall,
prior to taking possession of the Premises and promptly thereafter when any
such policy is replaced, rewritten, or renewed, deliver to Lessor a true and
correct copy of each insurance policy required by this Article of this
Lease or a certificate executed by the insurance company or companies or their
authorized agent evidencing such policy or policies.


 


Lessor’s Right to Procure Insurance


 


Section 5.08.                             If at any time
Lessee fails to procure or maintain the insurance required by this Article,
Lessor may obtain that insurance and pay the premiums on it for the benefit of
Lessee.  Any amounts paid by Lessor to
procure or maintain insurance pursuant to this section shall be immediately due
and repayable to Lessor by Lessee with the next then due installment of rent
under this Lease.  Failure to repay at
that time any amount expended by Lessor shall be considered the same as a
failure to pay rent and a default by Lessee under this Lease.


 


Lessor’s Indemnity


 


5.09                           Lessor
expressly agrees to indemnify, protect, defend and hold Lessee harmless from
all claims arising from any breach or default in the performance of any
obligation to be performed by Lessor under the terms of this Lease and from and
against all costs, loss, damage, legal expenses and liabilities incurred in
connection with such claim or any action or proceeding brought thereon.  Notwithstanding anything to the contrary
herein, any claim for indemnity 


 


13

















 


brought
by the Lessee under this provision shall be limited to Lessor’s interest in the
Premises, and Lessee shall not have recourse to any other assets of Lessor or
to the assets of any partner of Lessor for such claim.


 


ARTICLE 6.  SIGNS AND TRADE FIXTURES


 


Installation and Removal of Trade Fixtures


 


Section 6.01.                             Lessee shall
have the right at any time and from time to time during the term of this Lease
and any renewal or extension of such term, at Lessee’s sole cost and expense,
to install and affix in, to, or on the Premises such items, herein called “trade
fixtures”, for use in Lessee’s trade or business as Lessee may, in its sole
discretion, deem advisable.  Any and all
such trade fixtures that can be removed without structural damage to the
Premises or any building or improvement on the Premises shall remain the
property of the Lessee and may be removed by Lessee at any time or times prior
to the expiration or sooner termination of this Lease.


 


Unremoved Trade Fixtures


 


Section 6.02.                             Any trade
fixtures described in this Article that are not removed from the Premises
by Lessee within ten (10) days after the expiration or sooner termination,
regardless of cause, of this Lease shall be deemed abandoned by Lessee and
shall automatically become the property of Lessor as owner of the real property
to which they are affixed, unless Lessor notifies Lessee, in writing, of Lessor’s
election to have Lessee remove such trade fixtures and to repair any damage
caused thereby.  Upon such election by
Lessor to require Lessee to remove such trade fixtures, Lessee shall have
fifteen (15) days from the date of such notice in which to remove such trade
fixtures and repair any damage caused by such removal.  If Lessee fails to remove such trade fixtures
and repair any such damage, Lessor may do so at Lessee’s sole cost and expense,
including any costs of storing such property. 
Such costs and expenses, if incurred by Lessor for Lessee’s benefit,
shall be promptly, upon written demand therefor, reimbursed to Lessor by
Lessee, together with interest at the maximum rate permitted by law from the date
expended by Lessor to the date of reimbursement by Lessee.


 


Signs


 


Section 6.03.                             Lessee may
place and maintain, or permit any other person to place and maintain any sign
on the Premises providing such sign is in compliance with then existing
governmental regulations.  Lessee may not
place any decoration, lettering, or advertising matter on the glass of any
exterior show window of the Premises. 
Lessee shall maintain such sign at all times during this Lease in good
appearance and repair.  On expiration or
sooner termination of this Lease, all such signs not removed from the Premises
by Lessee on such expiration or termination of this Lease may, without
liability, be destroyed by Lessor.


 


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ARTICLE 7.  DAMAGE, DESTRUCTION OR CONDEMNATION


 


Duty to Repair or Restore


 


Section 7.01.                             If any
improvements, including the buildings and other structures, located on the
Premises are damaged or destroyed during the term of this Lease or any
extension thereof, the damage shall be repaired as follows:


 


(a)                                  If the damage
or destruction is caused by a peril against which fire and extended coverage
insurance is required to be carried under this Lease, Lessee shall repair that
damage as soon as reasonably possible and restore the Premises and improvements
to substantially the same condition as existed before the damage or
destruction, regardless of whether the insurance proceeds are sufficient to
cover the actual cost of repair or restoration. 
If insurance required to be carried by Lessee under this Lease has
lapsed or not been carried, Lessee shall be solely responsible for the full
cost and expense of necessary repairs and restoration.


 


(b)                                 If the damage
or destruction is caused by a peril against which insurance is not required to
be carried by this Lease, Lessor, subject to Lessor’s right to terminate this
Lease described in Section 7.02, shall repair that damage as soon as
reasonably possible and restore the Premises to substantially the same
condition as existed before the damage or destruction.


 


(c)                                  Whether the
damage of destruction is caused either by a peril against which fire and
extended coverage insurance is required by this Lease to be carried or by a
peril against which insurance is not required to be carried by this Lease,
Lessee expressly waives any right under Civil Code Sections 1931-1933 to
terminate this Lease for damage or destruction to the Premises.


 


Termination of Lease for Certain Losses


 


Section 7.02.                             (a) Notwithstanding
any other provision of this Lease, if any improvements located on the Premises
are damaged or destroyed to such extent it will cost more than $100,000.00 to
repair or replace them, and the damage or destruction is caused by a peril
against which insurance is not required to be carried by this Lease, Lessor may
terminate this Lease by giving Lessee written notice of the termination.  The notice must be given within sixty (60)
days after the occurrence of the damage or destruction.


 


(b)                                 Lessee or
Lessor shall have the right to terminate this Lease under either of the
following circumstances:


 


(i)                  If the Premises are damaged
or destroyed from any cause whatsoever, insured or uninsured, and the laws then
in effect do not permit the repair or restoration of the Premises provided for
in this Article; or


 


(ii)               If the Premises are damaged
or destroyed from any cause whatsoever, insured or uninsured, during the last
year of the term of this Lease or any extension thereof (provided Lessee has
not elected before the date of damage or destruction to extend the term of this
Lease in accordance with Section 1.02).


 


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(c)                                  Either party
may terminate this Lease by giving written notice of termination to the other
party not later than fourteen (14) days after the right to terminate accrues,
and such termination shall be effective as of the date of the notice of
termination.  In the event of a
termination under subsection (b), Lessee shall not be entitled to collect any
insurance proceeds attributable to insurance policies covering the Premises or
improvements except those proceeds attributable to Lessee’s personal property
and trade fixtures.


 


(d)                                 If this Lease
is terminated pursuant to either subsection (a) or (b) above, the
rent and other sums payable by Lessee to Lessor under this Lease shall be
prorated as of the termination date.  If
any such sums have been paid in advance by Lessee, Lessor shall refund them to
Lessee for the unexpired period for which the payment has been made.


 


Time for Construction of Repairs


 


Section 7.03.                             Any and all
repairs and restorations of improvements required by this Article shall be
commenced by Lessor or Lessee, as the case may be, within a reasonable time
after the occurrence of the damage or destruction requiring the repairs or restoration;
shall be diligently pursued after being commenced; and shall be completed
within a reasonable time after the loss. 
If Lessor is required under this Lease to perform the repairs and
restoration, Lessor shall cause the repairs and restoration to be completed
within 180 days after the occurrence of the event causing destruction or Lessee
shall have the right to terminate this Lease, unless the delays are caused by
events outside the control of Lessor.


 


Insurance Proceeds


 


Section 7.04.                             If the damage
or destruction is caused by a peril against which fire and extended coverage
insurance is required to be carried and maintained under this Lease by Lessee,
the proceeds of insurance shall be paid directly to the parties for the purpose
of making the necessary repairs to the Premises as required under this Lease.


 


Abatement of Rent


 


Section 7.05.                             In the event of
repair, replacement or restoration as herein provided, the Base Rent payable
under this Lease shall be abated proportionately with the degree to which
Lessee’s use of the Premises is impaired, from the date of the damage until
completion of repairs plus one (1) calendar month.  Lessee shall not be entitled to any
compensation of damages for loss in the use of all or part of the Premises
and/or for any inconvenience or annoyance occasioned by such damage, repair,
replacement or reconstruction.


 


Total Condemnation


 


Section 7.06.                             Should, during
the term of this Lease or any renewal or extension thereof, title and
possession of all of the Premises be taken under the power of eminent domain by
any public or quasi-public agency or entity, this Lease shall terminate as of
12:01 A.M. on the date actual physical possession of the Premises is taken
by the agency or entity exercising the power of eminent domain and both Lessor
and Lessee shall thereafter be released from all obligations, except those
specified in Section 7.10 of this Lease, under this Lease.


 


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Termination Option for Partial Condemnation


 


Section 7.07.                             Should, during
the term of this Lease or any extension thereof, title and possession of only a
portion of the Premises be taken under the power of eminent domain by any
public or quasi-public agency or entity, Lessee may, at Lessee’s option,
terminate this Lease if more than 35 percent of the floor space or more than 55
percent in value of the Premises is taken under the power of eminent
domain.  Lessee shall exercise its option
by giving written notice to Lessor within 30 days after actual physical possession
of the portion subject to the eminent domain power is taken by the agency or
entity exercising that power.  This Lease
shall terminate as of 12:01 A.M. on the date the notice is deemed given to
Lessor but the rent specified in Article 2 of this Lease shall be reduced
in the manner specified in Section 7.08 below from the date of taking to
the date of termination of the lease.


 


Partial Condemnation Without Termination


 


Section 7.08.                             Should Lessee
fail to exercise the option described in Section 7.06 of this Lease or
should the portion of the Premises taken under the power of eminent domain be
insufficient to give rise to the option described in Section 7.07 of this
Lease, then, in that event:


 


(a)                                  This Lease
shall terminate as to the portion of the Premises taken by eminent domain as of
12:01 A.M.  on the day, herein
called the “date of taking,” actual physical possession of that portion of the
Premises is taken by the agency or entity exercising the power of eminent
domain;


 


(b)                                 The rent
specified in Article 2 of this Lease shall, after the date of taking, be
reduced by an amount that bears the same ratio to the rent specified in Article 2
of this Lease as the square footage floor space of the portion of said premise
taken under the power of eminent domain bears to the total square footage floor
space of the Premises as of the date of this Lease; and


 


(c)                                  Lessor, at
Lessor’s own cost and expense, will remodel and reconstruct the building
remaining on the portion of the Premises not taken by eminent domain into a
single efficient architectural unit as soon after the date of taking, or
before, as can be reasonably done; provided, however, that the
rent specified in this Lease shall not be abated or reduced, except as provided
in subparagraph (b) of this section, during such remodeling and
reconstruction.


 


Condemnation Award


 


Section 7.09.                             Should, during
the term of this Lease or any renewal or extension thereof, title and
possession of all or any portion of the Premises be taken under the power of
eminent domain by any public or quasi-public agency or entity, the portion of
the compensation or damages for the taking awarded to each of the parties to
this Lease, Lessor and Lessee, shall belong to and be the sole property of the
party Lessor or Lessee, to whom it is awarded. 
Lessee shall be entitled to that portion of the compensation or damages
awarded for the eminent domain taking that represents (i) reasonable value
of Lessee’s rights under this Lease for the unexpired term of this Lease and (ii) the
cost or loss sustained by Lessee because of the removal of Lessee’s trade
fixtures, equipment and furnishings from the portion of the Premises taken by
eminent domain.


 


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Arbitration of Condemnation Award


 


Section 7.10.                             Should separate
awards not be made to Lessor and Lessee for the taking by eminent domain of all
or any portion of the Premises, and should Lessor and Lessee be unable to agree
on the manner the total award is to be divided between them pursuant to Section 7.09
of this Lease, the proper division of the award between Lessor and Lessee shall
be settled by arbitration as provided in Section 9.03.


 


Lessee’s Waiver


 


Section 7.11.                             Lessee agrees
that its rights to terminate this Lease due to partial condemnation are
governed by this Section.  Lessee waives
all rights it may have under California Code of Civil Procedure section
1265.13, or otherwise, to terminate this Lease based on a partial condemnation.


 


ARTICLE 8.  DEFAULT, ASSIGNMENT, AND TERMINATION


 


Subleasing or Assigning as Breach


 


Section 8.01.                             Lessee shall
not encumber, assign, or otherwise transfer this Lease, any right or interest
in this Lease, or any right or interest in the Premises or any of the
improvements that may now or hereafter be constructed or installed on the
Premises without the express written consent of Lessor first had and
obtained.  Neither shall Lessee sublet
the Premises or any part thereof or allow any other person, other than Lessee’s
patrons, agents, servants, and employees, to occupy the Premises or any part
thereof without the prior written consent of Lessor.  The consent of Lessor to any assignment of
Lessee’s interest in this Lease or the subletting by Lessee of the Premises or
parts of the Premises shall not be unreasonably withheld.  A consent by Lessor to one assignment, one
subletting, or one occupation of the Premises by another person shall not be
deemed to be a consent to any subsequent assignment, subletting, or occupation of
the Premises by another person.  Any encumbrance,
assignment, transfer, or subletting without the prior written consent of
Lessor, whether it be voluntary or involuntary, by operation of law or
otherwise, is void and shall, at the option of Lessor, terminate this Lease.  Notwithstanding the above, Lessee may assign
or sublease the Premises, or portions thereof, to a subsidiary, affiliate or
parent of Lessee.  Such permitted
assignment shall not relieve Lessee or any person who has personally guaranteed
Lessee’s performance of this Lease from any liability under this Lease or any
such guarantee.


 


Lessee’s Default


 


Section 8.02.                             The occurrence
of any one or more of the following events shall constitute a default under
this Lease by Lessee:


 


(a)                                  Non-curable
Defaults:  (i) The vacation or
abandonment of any substantial portion of the Premises by Lessee for a period
of five (5) business days or longer;


 


(ii)               Any involuntary transfer of
Lessee’s interest in this Lease or any voluntary transfer, attempted or actual,
of Lessee’s interest in this Lease, without Lessor’s prior written consent, in
violation of Section 8.01;


 


18

















 


(iii)            If the leasehold interest of
Lessee is levied upon under execution or is attached by process of law and said
levy or attachment is not promptly released;


 


(iv)           If:  (1) all or substantially all of the
Lessee’s assets are placed in the hands of a receiver or trustee, and such
receivership or trusteeship continues for a period of sixty (60) days, or


 


(2)          if Lessee makes an assignment
for the benefit of creditors or is adjudicated a bankrupt, or


 


(3)          if Lessee institutes any
proceedings under any provision of the Bankruptcy Code or under any other act
relating to the subject of bankruptcy wherein Lessee seeks to be adjudicated a
bankrupt, be discharged of its debts, or effect a plan of liquidation,
composition, arrangement or reorganization, or


 


(4)          if any involuntary
proceeding is filed against Lessee under any such bankruptcy laws and Lessee
consents thereto or acquiesces therein by pleading or default,


 


then
any such act shall be deemed a breach of this Lease, and neither this Lease nor
any interest in and to the Premises shall become an asset in any of such
proceedings and, in any such event, and in addition to any and all rights or
remedies of Lessor hereunder or provided by law, this Lease shall terminate
automatically as of the date on which any one or more of the above-described
occurrences takes place.  In such event,
it shall be lawful for Lessor to re-enter the Premises and take possession
thereof and remove all persons and all of Lessee’s personal property, fixtures,
equipment, alterations, improvements and utility installations therefrom, and
Lessee shall have no further claim to the Premises or under this Lease.  Nothing contained herein shall limit or
prejudice the right of Lessor to recover damages by reason of any such
termination equal to the maximum allowed by any statute or rule of law in
effect at the time when, and governing the proceedings in which, such damages
are to be proved, whether or not such amount is greater, equal to, or less than
the amount of damages recoverable under the provisions of this Article.  However, the foregoing provisions in this Article shall
be subject to the Bankruptcy Code, as heretofore and hereafter amended.


 


(b)                                 Curable
Defaults:  (i) The failure by Lessee
to make any payment of Basic Rent, Additional Rent or any other payment
required to be made by Lessee hereunder as and when due and which shall
continue for a period of ten (10) business days after written notice
thereof from Lessor to Lessee; provided  however, any such notice
shall be in lieu of, and not in addition to, any notice required under the
California Code of Civil Procedure or any other law, regulation or ordinance;
or


 


(ii)               The failure by Lessee to
observe or perform any non-monetary covenants, conditions or provisions of this
lease to be observed or performed by Lessee, other than the aforementioned
non-curable defaults, within thirty (30) days after Lessee has been given written
notice of such failure.  Notwithstanding
the foregoing, if Lessee cannot reasonably cure such default within thirty (30)
days, Lessee shall not be in default hereunder so long as Lessee commences to
cure the default within such thirty (30) day period and thereafter diligently
and in good faith pursues such cure to completion.


 


19

















 


Lessors Default


 


Section 8.03.                             (a) Lessor
shall be in default if it fails or refuses to perform any provision of this
Lease that it is obligated to perform and such failure continues for thirty
(30) days after written notice thereof from Lessee detailing such failure.  Notwithstanding the foregoing, if Lessor
cannot reasonably cure such default within thirty (30) days, Lessor shall not
be in default hereunder so long as Lessor commences to cure the default within
such thirty (30) day period and thereafter diligently and in good faith pursues
such cure to completion.


 


(b)                                 If Lessor is in
default hereunder, and as a consequence Lessee recovers a money judgment
against Lessor, such judgment shall be satisfied only out of the proceeds of
sale received on execution of the judgment and levy against the right, title,
and interest of Lessor in the Premises, and out of rent or other income from
such real property receivable by Lessor or out of the consideration received by
Lessor from the sale or other disposition of all or any part of Lessor’s right,
title, and interest in the Premises. 
Neither Lessor, nor any partner, agent, officer, director or employee of
Lessor shall be personally liable for any portion of such a judgment.


 


Abandonment


 


Section 8.04.                             If Lessee
vacates or abandons the Premises, this Lease shall continue in effect unless
and until expressly terminated by Lessor, and Lessor shall have all of the
remedies provided by this Lease or by law, including without limitation, the
right to maintain Lessee’s right to possession and to recover Rent as it
becomes due hereunder.  Lessor shall not
be deemed to have terminated this Lease other than by written notice of
termination from Lessor.  At any time
subsequent to vacation or abandonment of the Premises by Lessee, Lessor may
give notice of termination and shall thereafter have all of the rights hereinafter
set forth.


 


Termination


 


Section 8.05.                             Following the
occurrence of any default, Lessor shall have the right, so long as the default
continues, to terminate this Lease by written notice to Lessee setting
forth:  (a) the default; (b) the
requirements to cure it; and (c) a demand for possession, which shall be
effective in accordance with the notice provisions specified in Section 9.04.


 


Possession


 


Section 8.06.                             Following
termination under Section 8.05, without prejudice to any other remedies
Lessor may have by reason of Lessee’s default or of such termination, Lessor
may then or at any time thereafter, (a) peaceably re-enter the Premises,
or any part thereof, upon voluntary surrender by Lessee, or expel or remove
Lessee therefrom and any other persons occupying them, using such legal proceedings
as are then available; (b) repossess and enjoy the Premises, or relet the
Premises or any part thereof for such term or terms, which may be for a term
extending beyond the Term, at such rental or rentals and upon such other terms
and conditions as Lessor in its sole discretion shall determine, with the right
to make reasonable alterations and repairs to the Premises; and (c) remove
all personal property therefrom.  Lessee
hereby expressly waives any and all rights of redemption granted by or under
any present or future law in the event of Lessee’s being evicted or
dispossessed for any cause, or in the event of Lessor’s obtaining 


 


20

















 


possession of the Premises, or by reason of the
violation by Lessee of any of the items, covenants or conditions, of this
Lease, or otherwise.


 


Recovery


 


Section 8.07.                             Following
termination under Section 8.05, Lessor shall have all the rights and
remedies of a Lessor provided by Section 1951.2 of the California Civil
Code.  The amount of damages which Lessor
may recover following termination shall include:  (a) the worth at the time of the award
of the unpaid Rent which had been earned at the time of termination; (b) the
worth at the time of the award of the amount by which the unpaid Rent which
would have been earned after termination until the time of the award exceeds
the amount of such rental loss that the Lessee proves could have been
reasonably avoided; (c) the worth at the time of the award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of rental loss Lessee proves could be reasonably avoided;
and (d) any other amount necessary to compensate Lessor for all detriment
proximately caused by Lessee’s failure to perform its obligations under this
Lease.  The “worth at the time of the
award” of the amounts referred to in (a) and (b) above shall be
computed by allowing interest at the maximum rate permitted by law.  The “worth at the time of the award” of the
amount referred to in (c) above shall be computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San Francisco at the
time of award plus one (1%) percent.


 


Additional Remedies


 


Section 8.08.                             In addition to
the foregoing remedies, Lessor shall, so long as this Lease is not terminated,
have the right to remedy any default of Lessee, to maintain or improve the
Premises without terminating this Lease, to incur expenses on behalf of Lessee
in seeking a new sublessee, or to cause a receiver to be appointed to
administer the Premises and new or existing subleases, and to add to the Rent
payable hereunder all of Lessor’s reasonable costs in so doing, with interest
at the maximum rate permitted by law.


 


Other


 


Section 8.09.                             If Lessee causes
or threatens to cause a breach of any of the covenants, agreements, terms or
conditions contained in this Lease, Lessor shall be entitled to retain all sums
held by Lessor, by any trustee or in any account provided for herein, to enjoin
such breach or threatened breach, and to invoke any right and remedy allowed at
law or in equity or by statute or otherwise as though re-entry, summary
proceedings and other remedies were not provided for in this Lease.


 


Cumulative


 


Section 8.10.                             Each right and
remedy of Lessor provided for in this Lease shall be cumulative and shall be in
addition to every other right or remedy provided for in this Lease, or now or
hereafter existing at law or in equity or by statute or otherwise, and shall
not preclude the simultaneous or later exercise by Lessor of any or all other
rights or remedies provided for in this Lease or now or hereafter existing in
law or in equity or by statute or otherwise.


 


21

















 


No Waiver


 


Section 8.11.                             No failure by
Lessor or Lessee to insist upon the strict performance of any term hereof or to
exercise any right or remedy consequent upon a breach thereof, and no
acceptance of full or partial payment of Rent during the continuance of any
such breach shall constitute a waiver of any such breach or of any such
term.  Efforts by Lessor to mitigate the
damages caused by Lessee’s breach of this Lease shall not be construed to be a
waiver of Lessor’s right to recover damages under this Article.  Nothing in this Article affects the
right of Lessor to indemnification by Lessee for liability arising prior to the
termination of this Lease for personal injuries or property damage.


 


Written Action


 


Section 8.12.                             No act or thing
done by Lessor or its agents during the Term hereof shall be deemed an
acceptance of a surrender of the Premises, and no agreement to accept a
surrender of the premises shall be valid unless made in writing and signed by
Lessor.  Neither the reference in this
Lease to any particular remedy nor the pursuit of any particular remedy shall
preclude Lessor from any other remedy Lessor might have, either at law or in
equity.


 


Replacement of Statutory Notice Requirements


 


Section 8.13.                             When this Lease
requires service of a notice, that notice shall replace rather than supplement
any equivalent or similar statutory notice, including any notices required by
Code of Civil Procedure section 1161 or any similar or successor statute.  When a statute requires service of a notice in
a particular manner, service of that notice (or a similar notice required by
this Lease) in the manner required by Section 9.04 shall replace and
satisfy the statutory service-of-notice procedures, including those required by
Code of Civil Procedure section 1162 or any similar or successor statute.


 


Continuation of Lease in Effect


 


Section 8.14.                             Lessor shall
have the remedy described in Civil Code section 1951.4, which provides that,
when a Lessee has the right to sublet or assign (subject only to reasonable
limitations), the Lessor may continue the lease in effect after the Lessee’s
breach and abandonment and recover Rent as it becomes due.  Accordingly, if Lessor does not elect to
terminate this Lease on account of any default by Lessee, Lessor may enforce
all of Lessor’s rights and remedies under this Lease, including the night to
recover all Rent as it becomes due.


 


Efforts To Relet


 


Section 8.15.                             For purposes of
this Article 8, Lessee’s right to possession shall not be considered to
have been terminated by Lessor’s efforts to relet the Premises, by Lessor’s
acts of maintenance or preservation with respect to the Premises, or by
appointment of a receiver to protect Lessor’s interests under this Lease.  This list is merely illustrative of acts that
may be performed by Lessor without terminating Lessee’s right to possession.


 


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ARTICLE 9.  MISCELLANEOUS


 


Force Majeure - Unavoidable Delays


 


Section 9.01.                             Should the
performance of any act required by this Lease to be performed by either Lessor
or Lessee be prevented or delayed by reason of an act of God, strike, lockout,
labor troubles, inability to secure materials, restrictive governmental laws or
regulations, or any other cause except financial inability, not the fault of
the party required to perform the act, the time for performance of the act will
be extended for a period equivalent to the period of delay and performance of
the act during the period of delay will be excused; provided, however,
that nothing contained in this section shall excuse the prompt payment of rent
or other sums by Lessee as required by this Lease or the performance of any act
rendered difficult solely because of the financial condition of the party,
Lessor or Lessee, required to perform the act.


 


Attorney’s Fees


 


Section 9.02.                             (a) Should
any litigation be commenced between the parties to this Lease concerning the
Premises, this Lease, or the rights and duties of either in relation thereto,
the party, Lessor or Lessee, prevailing in such litigation shall be entitled,
in addition to such other relief as may be granted in the litigation, to a
reasonable sum as and for his attorney’s fees in such litigation which shall be
determined by the court in such litigation or in a separate action brought for
that purpose.


 


(b)                                 If Lessor is
made a party defendant to any litigation concerning this Lease or the leased
Premises or the occupancy thereof by Lessee, then Lessee shall hold Lessor
harmless from all liability by reason of said litigation, including reasonable
attorney’s fees and expenses incurred by Lessor in any such litigation, whether
or not any such litigation is prosecuted to judgment, provided  however,
it is agreed between Lessor and Lessee that if the litigation referred to in
this Section arises out of no act, fault, or negligence of the Lessee,
there shall be no obligation on the part of Lessee to hold harmless the Lessor
from said litigation.


 


(c)                                  If Lessee
breaches any term of this Lease, Lessor may employ an attorney or attorneys to
protect Lessor’s rights hereunder, and in the event of such employment
following any breach by Lessee, Lessee shall pay Lessor reasonable attorney’s
fees and expenses incurred by Lessor, whether or not an action is actually
commenced against Lessee by reason of said breach.


 


Arbitration of Disputes


 


Section 9.03                            IF ANY
DISPUTE ARISES BETWEEN LESSOR AND LESSEE CONCERNING THE PREMISES, ANY PROVISION
OF THIS LEASE OR THE RIGHTS AND DUTIES OF EITHER IN REGARD THERETO, THE DISPUTE
SHALL BE SETTLED BY ARBITRATION AS PROVIDED IN THIS SECTION.  EACH PARTY SHALL APPOINT AN ARBITRATOR AND
GIVE THE OTHER PARTY WRITTEN NOTICE OF THE NAME AND ADDRESS OF ARBITRATOR
WITHIN FIVE (5) DAYS AFTER WRITTEN DEMAND TO DO SO HAS BEEN SERVED ON THE
PARTY MAKING THE APPOINTMENT BY THE OTHER PARTY TO THIS LEASE.  THE TWO APPOINTED ARBITRATORS SHALL WITHIN
TEN (10) DAYS AFTER THEIR 


 


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APPOINTMENT,
APPOINT A THIRD ARBITRATOR.  THE WRITTEN
DECISION OF ANY TWO OF THE THREE ARBITRATORS SHALL BE BINDING AND CONCLUSIVE ON
BOTH PARTIES TO THIS LEASE.  THE
ARBITRATORS MAY APPORTION THE COSTS AND EXPENSES OF THE ARBITRATION
PROCEEDING, INCLUDING ATTORNEYS FEES AND ARBITRATION FEES, BETWEEN THE PARTIES
TO THIS AGREEMENT IN ANY MANNER DEEMED REASONABLE BY TWO OF THE THREE
ARBITRATORS.  THE ARBITRATION SHALL BE
CONDUCTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION.


 


NOTICE:  BY INITIALING IN THE SPACE BELOW YOU ARE
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION
OF DISPUTES” PROVISION ABOVE DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MAY HAVE TO HAVE THE
DISPUTE LITIGATED IN A COURT OR JURY TRIAL BY INITIALING IN THE SPACE BELOW YOU
ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE RIGHTS
ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION.  IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.  YOUR AGREEMENT TO THIS ARBITRATION PROVISION
IS VOLUNTARY.


 


WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION
TO NEUTRAL ARBITRATION.


 


	
  LESSOR’S
  INITIALS:

  	
  /s/

  	
   

  	
  LESSEE’S
  INITIALS:

  	
  /s/

  



 


Notices


 


Section 9.04.                             All notices to
be given to Lessee shall be given in writing personally or by depositing the
same in the United States mail, postage prepaid, and addressed to Lessee at the
Premises, whether or not Lessee has departed from, abandoned or vacated the
Premises.  All notices to be given to
Lessor shall be given in writing personally or by depositing the same in the
United States mail, postage prepaid, and addressed to the Lessor at 316 South
Stratford Avenue, Santa Maria, CA, 93454, or such other place or places as may
be designated from time to time by Lessor.


 


No Merger


 


Section 9.05.                             The voluntary
or other surrender of this Lease by Lessee, or a mutual cancellation thereof,
shall not work a merger, and shall, at the option of Lessor, terminate any
existing subleases or subtenancies or may, at the option of Lessor, operate as
an assignment to it of any of such subleases or subtenancies.


 


24

















 


Binding on Heirs and Successors


 


Section 9.06.                             This Lease
shall be binding on and shall inure to the benefit of the heirs, executors,
administrators, successors, and assigns of the parties hereto, Lessor and
Lessee, but nothing in this section contained shall be construed as a consent
by Lessor to any assignment of this Lease or any interest therein by Lessee
except as provided in Article 8 of this Lease.


 


Partial Invalidity


 


Section 9.07.                             Should any
provision of this Lease be held by a court of competent jurisdiction to be
either invalid, void, or unenforceable, the remaining provisions of this Lease
shall remain in full force and effect unimpaired by the holding.


 


Sole and Only Agreement


 


Section 9.08.                             This instrument
constitutes the sole and only agreement between Lessor and Lessee respecting
the Premises, the leasing of the Premises to Lessee, or the lease term herein
specified, and correctly sets for the obligations of Lessor and Lessee to each
other as of its date.  Any agreements or
representations respecting the Premises or their leasing by Lessor to Lessee
not expressly set forth in this instrument are null and void.


 


Waiver


 


Section 9.09.                             The waiver by
Lessor of any term, covenant or condition herein contained shall not be deemed
to be a waiver of such term, covenant or condition on any subsequent breach of
the same or any other term, covenant or condition herein contained.  The subsequent acceptance of rent hereunder
by Lessor shall not be deemed to be a waiver of any preceding breach by Lessee
of any term, covenant or condition of this Lease other than the failure of the
Lessee to pay the particular rental so accepted, regardless of Lessor’s
knowledge of such preceding breach at the time of the acceptance of such rent.


 


Subordination and Non-Disturbance


 


Section 9.10.                             (a) This
Lease is subject and subordinate to all mortgages and deeds of trust which may
hereafter be placed and recorded on the property of which the Premises are a
part and to all renewals, modifications, replacements, and extensions thereof.


 


(b)                                 The
subordination provided for above is conditioned on and subject to the
following:


 


(i)                  For each mortgage or deed of
trust, Lessor shall obtain from the mortgagee or beneficiary a non-disturbance
agreement in writing that, in the event of foreclosure, or any sale thereunder,
this Lease shall not be terminated and Lessee’s right to possession under this
Lease shall not be disturbed, provided Lessee is not then in default under this
Lease;


 


(ii)               In consideration of the
mortgagee’s or beneficiary’s agreement not to disturb Lessee’s possession as
above provided, Lessee hereby agrees to attorn to the purchaser at any
foreclosure, sale or other action or proceeding.


 


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(iii)            The subordination described
in this section shall be effective without the necessity of having any further
instruments executed by Lessee, but Lessee agrees to execute on demand any such
further instruments evidencing subordination that Lessor or any mortgagee or
beneficiary may reasonably request.


 


Time of Essence


 


Section 9.11.                             Time is
expressly declared to be the essence of this Lease.


 


Accord and Satisfaction


 


Section 9.12.                             No payment by
Lessee or receipt by Lessor of a lesser amount than the monthly rent stipulated
herein or any other sum due hereunder from Lessee to Lessor shall be deemed to
be anything other than a payment on account of the earliest sum then due and
owing to Lessor.  No endorsement or
statement on any check of any letter accompanying any check or payment or
payment of any sum(s) due from Lessee to Lessor hereunder shall be deemed
to be an accord and satisfaction, and Lessor may accept and negotiate any such
payment without prejudice to Lessor’s right to recover the balance of such rent
or other sum or to pursue any other remedy provided for in this Lease or by
law.


 


Right of First Refusal to Purchase Leased Premises


 


Section 9.13.                             (a) If at
any time during the term of this Lease Lessor receives from any third party a
bona fide offer to purchase the Premises at a price and on terms acceptable to
Lessor, Lessor shall give written notice of the offer to Lessee.  Within thirty (30) days after Lessor gives
Lessee written notice of the third-party offer, Lessee shall have the right to
purchase the Premises at the same price and on the same terms and conditions
set forth in the third-party offer.  To
exercise its right, Lessee must, within the same thirty (30) day period,
deposit in escrow with any title company in Monterey County, California, all
moneys and instruments required by the terms of the offer to be paid or delivered
to Lessor on close of escrow and shall also give Lessor written notice of the
deposit.  In the event Lessee fails to
exercise the option to purchase in accordance with the provisions of this
Section, Lessor may sell the Premises to the third party making the offer on
the same terms and conditions set forth in that offer.  If for any reason the Premises are not sold
to the party making the offer, Lessor shall give Lessee the same right to
purchase the Premises on receiving any subsequent offer from any third party
that is acceptable to Lessor.


 


(b)                                 Lessee may not
assign the rights granted under this section either separately or together with
a transfer of Lessee’s leasehold interest, and any purported assignment shall
be null and void.


 


(c)                                  If this property
is sold to any third party during the term of this Lease, then the provisions
of this section shall thereafter be of no further force or effect.


 


Bankruptcy


 


Section 9.14.                             Should a
petition in bankruptcy be filed by the Lessee, or should Lessee, during the
term hereof, become insolvent or make any assignment for the benefit of
creditors, or 


 


26

















 


be adjudicated bankrupt or insolvent by any Court,
or should a receiver or trustee in bankruptcy be appointed over the business,
property and assets of the Lessee, and the Premises herein lease, or take
charge of the Premises herein demised, or should this lease, by operation of
law, devolve upon or pass to any person or persons other than the Lessee, then
upon any of such events, the Lessor may, at its option, re-enter and take
possession of these Premises herein leased and remove all persons therefrom and
terminate the Lease.


 


Estoppel Certificate


 


Section 9.15.                             Within ten (10) days
following any written request which Lessor may make from time to time, Lessee
shall execute, acknowledge and deliver to Lessor a statement certifying:  (a) the date of commencement of this
Lease; (b) the fact that this Lease is unmodified and in full force and
effect, or, if there have been modifications hereto, that this Lease is in full
force and effect, and stating the date and nature of such modifications; (c) the
date to which the Rent and other sums payable under this Lease have been paid; (d) that
there are no current defaults under this Lease by either Lessor or Lessee
except as specified in Lessee’s statement; and (e) any other information
Lessor may reasonably require.  Lessor
and Lessee intend that any statement delivered pursuant to this Section may
be relied upon by any encumbrancer, ground Lessee, beneficiary, purchaser or
prospective purchaser of the Property or any interest therein, as well as any
of their assigns.


 


Transfer Of Lessor’s Interest


 


Section 9.16.                             Lessor has the
right to transfer all or part of its interest in the Building and Real Property
and in this Lease.  On such a transfer,
Lessor shall automatically be released from all liability accruing under this
Lease, and Lessee shall look solely to that transferee for the performance of
Lessor’s obligations under this Lease after the date of transfer.  Lessor may assign its interest in this Lease
to a mortgage lender as additional security. 
This assignment shall not release Lessor from its obligations under this
Lease, and Lessee shall continue to look to Lessor for the performance of its
obligations under this Lease.


 


Liability Of The Lessor


 


Section 9.17.                             Except as
otherwise provided in this Lease or applicable law, for any breach of this
Lease the liability of Lessor (including all persons and entities that comprise
Lessor, and any successor Lessor) and any recourse by Lessee against Lessor
shall be limited to the interest of Lessor and Lessor’s successors in interest
in and to the Building and Real Property. 
On behalf of itself and all persons claiming by, through, or under
Lessee, Lessee expressly waives and releases Lessor from any personal liability
for breach of this Lease.


 


27

















 


Executed
on the day and date first above written at Salinas, California.


 


	
  LESSEE:

  	
   

  
	
   

  	
   

  
	
  COASTAL
  RADIATION ONCOLOGY MEDICAL GROUP, INC.

  	
   

  
	
  a
  California corporation

  	
   

  
	
   

  	
   

  
	
  by:
  

  	
  /s/
  Thomas D. Fogel, M.D.

  	
   

  
	
   

  	
  THOMAS
  D. FOGEL, M.D., President

  	
   

  
	
   

  	
   

  
	
  by:
  

  	
  /s/
  Jonathan R. Stella, M.D.

  	
   

  
	
   

  	
  JONATHAN
  R. STELLA, M.D., Secretary

  	
   

  
	
   

  	
   

  
	
  LESSOR:

  	
   

  
	
   

  	
   

  
	
  CROMG
  PARTNERS

  	
   

  
	
  a
  California general partnership

  	
   

  
	
   

  	
   

  
	
  by:
  

  	
  /s/ Robert D. Hesselgesser, M.D.

  	
   

  
	
   

  	
  ROBERT D. HESSELGESSER, M.D., Managing
  Partner

  	
   

  



 


28

















 


EXHIBIT A


 


The
Company owns the following real property situated in the County of Monterey,
State of California, described as:


 


Parcel
1 as said Parcel, is shown and so designated on that certain Parcel Map, filed
for record June 9, 1975 in Volume 8 of Parcel Maps at Page 141,
Monterey County Records.


 


A.P.
No.: 002-721-023


 


More
commonly known as: 1069 Los Palos Drive, Salinas, California


 


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