Exhibit 10.43


 


LEASE AGREEMENT


 


BY
THIS LEASE dated February 1, 2001, TROC BUILDING PARTNERSHIP, 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 County of San
Luis Obispo, State of California, commonly known as 274 Heather Court,
Templeton, 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 Thirteen Thousand Two Hundred Eleven
Dollars ($13,211.00) 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.


 


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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 June 1, 2007.  Commencing on June 1, 2007 the Base Rent
shall be reduced to Nine Thousand Three Hundred Fifty Two Dollars ($9,352.00)
per month.  On June 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 County
of San Luis Obispo, 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 County of San Luis
Obispo 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 County of San Luis Obispo 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 Judicial District in which the property is located.  Each such realtor 


 


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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:


 


(i)                                     Breakage
repairs, replacements, or improvements;


 


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(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 A.M.  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:


 


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(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


 


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(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 statutes, 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.


 


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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 


 


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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;


 


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(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 San Luis Obispo 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.


 


12

















 


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, 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 San Luis Obispo 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.


 


13

















 


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
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 


 


14

















 


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.


 


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 


 


15

















 


Lessee has not elected before the date of damage or
destruction to extend the term of this Lease in accordance with Section 1.02).


 


(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 


 


16

















 


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.


 


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 


 


17

















 


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.


 


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;


 


18






 


 










 


(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;


 


(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 


 


19

















 


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.


 


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 


 


20

















 


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 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 


 


21

















 


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.


 


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.


 


22

















 


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 


 


23

















 


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 ATTORNEY’S
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/
  RIF

  	
   

  	
  LESSEE’S
  INITIALS:

  	
  /s/
  T.D. Fogel

  



 


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.


 


25

















 


(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 San Luis Obispo 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 Templeton, 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:

  
	
   

  
	
  TROC
  BUILDING PARTNERSHIP

  
	
  a
  California general partnership

  
	
   

  
	
  by:

  	
  /s/
  Robert I. Fishburn, M.D.

  	
   

  
	
   

  	
  ROBERT
  I. FISHBURN, M.D., Managing Partner

  	
   

  



 


28

















 


EXHIBIT A


 


PARCEL
1:


 


AN UNDIVIDED INTEREST IN AND TO LOT 3 OF TRACT 1212 IN THE COUNTY OF
SAN LUIS OBISPO, STATE OF CALIFORNIA, ACCORDING TO THE MAP RECORDED MARCH 21,
1986 IN BOOK 13, PAGE 15 OF MAPS.


 


29

















 


FIRST AMENDMENT TO LEASE AGREEMENT


 


This
Amendment to Lease Agreement is dated October 1, 2003.  TROC Building Partnership (now known as TROC,
LLC) “Lessor” and Coastal Radiation Oncology Medical Group, Inc.  “Lessee” entered into a Lease Agreement dated
February 1, 2001, for the real property commonly known as 274 Heather
Court, Templeton, California (“the Premises.”)


 


Whereas Lessee desires to add an additional vault to the
Premises for the purposes of adding a second linear accelerator and enhancing
its business.


 


Whereas Lessor approves of this addition to the Premises
and as provided for in Section 4.02(b) has indicated the desire to
pay for these changes.


 


Whereas Lessor and Lessee have met and have agreed to the
following changes to the Lease Agreement dated February 1, 2001:


 


1.                                      Effective
October 1, 2003, the Base Rent provided for in Section 2.01 will be
adjusted to Twenty-two Thousand Two Hundred Four Dollars and Twenty-two Cents
($22,204.22) per month.  All other terms
of Section 2.01 will remain the same.


 


2.                                      The anniversary
of the Lease Agreement shall be revised to October 1st for the purpose of
the three percent (3%) rent adjustment provided for in Section 2.02.


 


3.                                      The reduction
of Base Rent provided for in Section 2.02 will be changed to Fourteen
Thousand Eight Hundred Fifteen Dollars and Eighty-nine Cents ($14,815.89) per
month effective June 1, 2007.


 


All
other terms and conditions of the Lease Agreement will remain unchanged.


 


In
Agreement to the above, this Amendment is executed by the Parties upon the date
first written above.


 


	
  Lessor:

  	
   

  	
  Lessee:

  
	
  TROC,
  LLC

  	
   

  	
  COASTAL
  RADIATION ONCOLOGY

  
	
  A
  California Limited Liability Company

  	
   

  	
  MEDICAL
  GROUP, INC.

  
	
   

  	
   

  	
  A
  California Corporation

  
	
   

  	
   

  	
   

  
	
  by:

  	
  /s/ Robert I. Fishburn, M.D.

  	
   

  	
  by:

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

  
	
   

  	
  Robert
  I. Fishburn, M.D.

  	
   

  	
   

  	
  Jonathan
  R. Stella, M.D., President

  
	
   

  	
  Managing
  Member 10/28/03