Exhibit 10.42


 


LEASE AGREEMENT


 


BY
THIS LEASE dated February 1, 2001, SANTA MARIA 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 City
of Santa Maria, County of Santa Barbara, State of California, commonly known as
314 South Stratford Avenue, Santa Maria, 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 Twelve Thousand Six Hundred Sixty Nine Dollars
($12,669.00) 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.


 


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 Santa Maria, 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 Santa Maria 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 Santa Maria 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 shall submit their
respective determinations of Market Rent for the area in writing to both
parties and shall provide the basis for such determination.


 


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(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;


 


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


 


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(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.


 


Operating Expenses


 


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


 


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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.


 


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.


 


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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:


 


(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);


 


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(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


 


(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.


 


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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.


 


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


 


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


 


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


 


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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;


 


(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.


 


11

















 


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 Santa Barbara 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, 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


 


12






 










 


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 Santa Barbara 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


 


Section 5.09. 
Lessor expressly agrees to indemnify, protect, defend and hold Lessee
harmless from all claims arising from any breath 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 


 


13

















 


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.


 


14

















 


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).


 


15

















 


(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.


 


17

















 


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 


 


20

















 


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 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 


 


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/

  	
   

  	
  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.


 


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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 Santa Barbara 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 Santa Maria, 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:


 


	
  SANTA
  MARIA BUILDING PARTNERSHIP

  	
   

  
	
  a
  California general partnership

  	
   

  
	
   

  	
   

  
	
  by:

  	
  /s/ Peter K. Sien, M.D.

  	
   

  
	
   

  	
  PETER K. SIEN, M.D., Managing Partner

  	
   

  



 


28

















 


EXHIBIT A


 


PARCEL
1:


 


AN
UNDIVIDED INTEREST IN LOT 3 OF STRATFORD COURT NO 2, TRACT 5164, IN THE
CITY OF SANTA MARIA, COUNTY OF SANTA BARBARA, STATE OF CALIFORNIA, AS SHOWN ON
MAP FILED IN BOOK 92, PAGES 10 AND 11 OF MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.


 


29