Exhibit 10.45


 


FIRST AMENDMENT TO LEASE


 


This FIRST AMENDMENT TO
LEASE dated December 31, 2009 (this “Amendment”), is by and between PALM
SPRINGS RADIATION ENTERPRISES, LLC (“Landlord”), and CALIFORNIA RADIATION
THERAPY MANAGEMENT SERVICES, INC. (“Tenant”).


 


WITNESSETH:


 


WHEREAS, Landlord and Tenant
are parties to that certain Lease dated December 12, 2005 (the “Lease”),
for certain real property commonly known as 77 840 Flora Road, Palm Desert,
California; and


 


WHEREAS, Landlord and Tenant
desire to amend certain provisions of the Lease upon and subject to the terms
and conditions set forth herein.


 


NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant hereby agree as follows:


 


1.        Worker’s Compensation. The second
sentence of the second paragraph of Section 5.2 of the Lease is hereby
deleted in its entirety and replaced with the following:


 


The liability insurance
policy (other than any policy of worker’s compensation insurance) shall name
Landlord, any person, firms or corporations designated by Landlord, and Tenant
as insured, and shall contain a clause that the insurer will not cancel or
change the insurance without first giving the Landlord twenty (20) days’ prior
notice.


 


2.        Tenant’s Leasehold Improvements and
Trade Fixtures. Section 10.3 of the Lease is hereby amended by:


 


(a)                     in the third and fourth
lines of the second paragraph, deleting the phrase “provided Tenant shall not
at such time be in default of any terms or covenants of this Lease, and”; and


 


(b)                    in the fourth line of the
second paragraph, deleting the word “further.”


 


3.        Damage and Destruction. The third
paragraph of Section 15.1 of the Lease is hereby deleted in its entirety
and replaced with the following:


 


Tenant covenants and agrees
to (i) equip and furnish the Premises as Tenant reasonably deems necessary
to operate the business from the Premises and (ii) reopen for business in
the Premises within thirty (30) days after notice from Landlord that the
Premises are ready for re-occupancy.


 


4.        Defined Terms. Capitalized terms
used herein but not defined herein shall have the meanings ascribed to them in
the Lease.


 


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5.        Governing Law. This Amendment and
the Lease shall be governed by and construed in accordance with the laws of the
State of Florida.


 


6.        Amendment. Neither this Amendment
nor any terms hereof may be amended, supplemented or modified except by a
written instrument executed by the parties hereto. This Amendment shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns.


 


7.        Full Force and Effect. The Lease
shall continue in full force and effect except as modified by this Amendment,
and the Lease is hereby ratified and confirmed by Landlord and Tenant. In the
event of a conflict between the terms and conditions of the Lease and this
Amendment, the terms of this Amendment shall prevail.


 


8.        Counterparts. This Amendment may
be executed in counterparts, each of which shall be an original, but all of
which shall constitute one and the same Amendment.


 


[Remainder of page intentionally left blank;
  signatures on following page.]


 


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IN WITNESS WHEREOF, Landlord
and Tenant have caused this Amendment to be duly executed as of the day, month
and year first above written.


 


 


	
   

  	
  LANDLORD: 

   

  PALM SPRINGS RADIATION 

  ENTERPRISES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel E. Dosoretz

  
	
   

  	
  Name:

  	
  Daniel E. Dosoretz, MD

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT: 

   

  CALIFORNIA RADIATION
  THERAPY 

  MANAGEMENT
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bryan J. Carey

  
	
   

  	
  Name:

  	
  Bryan J. Carey

  
	
   

  	
  Its:

  	
  EVP & CFO

  



 


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LEASE


 


FEB 21 2006


 


THIS LEASE (“Lease”) is made
and entered into as of the 12th day of December, 2005, by and between, Palm
Springs Radiation Enterprises, LLC, whose business address is 2234 Colonial
Boulevard, Fort Myers, FL 33907 (“Landlord”), and California Radiation Therapy
Management Services, Inc. whose business address is 2234 Colonial
Boulevard, Fort Myers, FL 33907(“Tenant”).


 


WITNESSETH:


 


ARTICLE 1 

TERMS


 


1.1               Premises. Landlord hereby demises and leases to
Tenant and Tenant hereby hires and rents from Landlord the premises located at
77 840 Flora Road, Palm Desert, California,(“Premises”) upon the terms,
covenants and conditions set forth herein, which Premises has a floor area
containing the approximate square footage of 6,963 square feet.


 


1.2               Use. The Premises are to be used for a medical
office and radiation therapy center.


 


1.3               Commencement of Term. The commencement of the
Term of this Lease under which Tenant shall be obligated to commence payment of
Minimum Rent and Additional Rent shall be on or about the 1lth day of October,
2005 (“Commencement Date”).


 


1.4               Length of the Term. The term of this lease
period is for seven (7) years (“Term”). The starting date of this lease is
the Commencement Date and, unless this Lease is renewed in accordance with Article 4
below, the ending date is on or about the 1lth day of October, 2012 (“Expiration
Date”).


 


ARTICLE 2 

RENT


 


2.1               Rent. Minimum rent shall be four hundred ten
thousand, five hundred fourteen dollars ($410,514) per year (“Minimum Rent”).
Tenant shall pay to Landlord without previous demand thereof and without any
abatement, reduction, setoff or deduction whatsoever, the Minimum Rent
(together with any applicable sales tax and local taxes if the same are ever
required by law), payable in equal monthly installments, in advance, on the
first day of each and every calendar month throughout the Term of this Lease.
The Minimum Rent shall commence to accrue on the Commencement Date. The first
such monthly installments of Minimum Rent shall be due and payable to Landlord
no later than the Commencement Date and each subsequent monthly installment
shall be due and payable to Landlord on the first day of each and every month
following the Commencement Date during the Term hereof. If the Commencement
Date is a date other than the first day of the month, Minimum Rent and other
charges for the period commencing with and including the Commencement Date
through the first day of the following month shall be prorated at the rate of
one-thirtieth (1/30) of the monthly Minimum Rent per day.


 


In addition, Tenant shall
pay as Additional Rent monthly payments of applicable taxes, assessments and
insurance on the property. This amount will be of 1/12 of the bill for real
estate and assessment taxes and 1/12 of the bill on insurance. Estimated
figures for taxes and insurance


 

















 


monthly rate will be
produced within ten (10) days after the signing of this Lease. Each year
Landlord will produce any insurance, real estate tax and assessment bills to
the Tenant to show how the estimated taxes and insurance were computed as
Additional Rent.


 


2.1.1         There will be an increase in the
Minimum Rent starting on the first anniversary of the lease if the Consumer
Price Index increases. Minimum Rent specified in this lease shall be subject to
increase in accordance with changes in the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W) as promulgated by the Bureau of Labor
Statistics of the United States Department of Labor, using the year of the
Commencement Date as a base of 100. On each anniversary date there will be a
rent adjustment based on the percentage increase in the Consumer Price Index.
If the Consumer Price Index goes down the rent will not change for that year.
Consumer Price Index increases will apply on the anniversary date of each year
of the Commencement Date. The percentage increase in the Consumer Price Index
will increase the minimum rent for that year.


 


2.1.2         In the event that the Consumer Price
Index ceases to incorporate significant number of items, or if a substantial
change is made in the method of establishing such Consumer Price Index shall be
adjusted to the figure that would have resulted had no change occurred in the
manner of computing such Consumer Price Index, or a successor or substitute
index, is not available, a reliable governmental or other nonpartisan
publication, evaluating the information for use in determining the Consumer
Price Index, shall be used in lieu of such Consumer Price Index.


 


2.2               Late Charge. Tenant shall pay to Landlord a
late charge equal to five percent (5%) of the monthly payment of Minimum Rent,
Additional Rent and any other payment or charge due hereunder if any such
amount is received by Landlord more than five (5) days after the same
shall be due, such amount being the agreed upon liquidated damages solely to
defray the additional administrative expenses incurred by Landlord in
processing such payment.


 


2.3               Interest on Past Due Rent. If Tenant shall fail
to pay, when the same is due and payable, Minimum Rent, or Additional Rent,
such unpaid amounts shall bear interest from the due date thereof to the date
of payment, at the prime interest rate of the Chase Manhattan Bank, N.A. as of
such due date, plus Five percent (5%) (“Default Date”).


 


2.4               Definition of Rent. The term “Rent” shall refer
collectively to Minimum Rent and Additional Rent. The term “Additional Rent” is
sometimes used herein to refer to any and all other sums payable by Tenant
hereunder, including, but not limited to, parking charges and sums payable on
account of default by Tenant. All Rent shall be paid by Tenant without offset,
demand or other credit, and shall be payable only in lawful money of the United
States of America which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment. All sums payable by Tenant hereunder
by check shall be obtained against a financial institution located in the
United States of America. The rent shall be
paid by Tenant at 2234 Colonial Boulevard, Fort Myers, FL 33907.


 


2.5               Rent Taxes. In addition to Minimum Rent and
Additional Rent, Tenant shall and hereby agrees to pay to Landlord each month a
sum equal to any sales tax, tax on rentals and any other similar charges now
existing or hereafter imposed, based upon the privilege of leasing the space
leased hereunder or based upon the amount of rent collected therefore.


 


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ARTICLE 3

NET LEASE


 


3.1            Net Lease. This Lease shall
be deemed and construed to be a triple net lease and, except as herein
otherwise expressly provided, the Landlord shall receive the fixed Minimum Rent
and Additional Rent and all other payments hereunder to be made by the Tenant
absolutely free from any charges, assessments, imposition, expenses or
deductions of any kind and every kind or nature whatsoever. Tenant is to pay for
all real estate tax and assessments on any and all taxes of any We of nature.
Tenant is to pay for all insurance and any and all costs for repairs,
replacements, maintenance and improvements. Tenant will also pay any and all
expenses for common areas, utilities, and association fees, if any. Tenant also
is responsible for:


 


3.1.1                     Parking lot repairs,
maintenance and replacements.


 


3.1.2                     Installation of outside and
inside lighting for parking.


 


3.1.3                    Any security, pest control
or contrasts for air conditioner and cleaning services, etc.


 


ARTICLE 4 

OPTION TO RENEW


 


4.1            Option to renew. Provided
that Tenant is not, and at no time has been, in default during the Term under
any of the covenants, terms, conditions, and provisions of this Lease, then
Tenant shall have three (3) options to renew this Lease (each an “Option”)
for consecutive five (5) year option periods, provided that, in order to
exercise this Option, Tenant is required to give to Landlord written notice
thereof not less than six (6) months before the date of expiration of the
Term of this Lease or during any option period. Any renewal pursuant to this
Option shall be on the same terms and conditions as are contained in this
Lease.


 


ARTICLE 5 

INSURANCE AND INDEMNITY


 


5.1            Liability Insurance. Tenant
shall, during the entire term hereof, keep in full force and effect bodily
injury and public liability insurance in an amount not less than FIVE HUNDERED
THOUSAND DOLLARS ($500,000) / ONE MILLION DOLLARS ($1,000,000) per injury and
accident, respectively; property damage insurance in an amount not less than
ONE HUNDRED THOUSAND DOLLARS ($100,000).


 


5.2            Workers Compensation. Tenant
shall, during the entire term hereof, keep in full force worker’s compensation
insurance in the maximum amount permitted under California law.


 


Landlord may require such
insurance coverage to be increased after the first five years of the term of
this Lease, provided that such increase shall not cause the required limits of
coverage to exceed those then commonly prevailing in the marketplace for
similar situations. The policy(s) shall name Landlord, any person, firms
or corporations designated by Landlord, and Tenant as insured, and shall
contain a clause that the insurer will not cancel or change the insurance
without first giving the Landlord twenty (20) days prior notice. The insurance
shall be in an insurance company licensed by the State of California and a copy
of the policy or a certificate of insurance shall be delivered to Landlord
prior to the commencement of the term of


 


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this Lease. In no event
shall the limits of said insurance policies be considered as limiting the
liability of Tenant under this Lease. In the event that Tenant shall fail to
obtain or maintain in full force and effect any insurance coverage required to
be obtained by Tenant under this Lease, Landlord may procure same from
insurance carriers as Landlord may deem proper, irrespective that a lesser
premium for such insurance coverage may have been obtained from another
insurance carrier, and Tenant shall pay as additional rent, upon demand of
Landlord, any and all premiums, costs, charges and expenses incurred or
expended by Landlord in obtaining such insurance. Notwithstanding shall procure
insurance coverage required of Tenant hereunder, Landlord shall in no manner be
liable to Tenant for any insufficiency or failure of coverage with regard to
such insurance or any loss to Tenant occasioned thereby, and additionally, the
procurement of such insurance by Landlord shall not relieve Tenant of its
obligations under this Lease to maintain insurance coverage in the types and
amounts herein specified, and Tenant shall nevertheless hold Landlord harmless
from any loss or damage incurred or suffered by Landlord from Tenant’s failure
to maintain such insurance.


 


5.3            Plate Glass Insurance. The
replacement of any plate glass damaged or broken from any cause whatsoever in
and about the Premises shall be Tenant’s responsibility. Tenant shall, during
the entire term hereof, keep in full force and effect a policy of plate glass
insurance covering all the plate glass of the Premises, in amounts satisfactory
to Landlord. The policy shall name Landlord as additional insured and shall
contain a clause that the insurer will not cancel or change the insurance
without first giving the Landlord twenty (20) days prior notice. A copy of the
policy together with the declarations page therefore shall be delivered to
Landlord prior to the commencement of the term of this Lease.


 


5.4            Increases in Fire Insurance
Premium. Tenant agrees that it will not keep, use or sell in or upon the
Premises any article, machinery or equipment which may be prohibited by the
standard form of fire and extended risk insurance policy. Tenant agrees to pay
any increase in premiums for fire and extended coverage insurance that may be
charged during the term of this Lease on the amount of such insurance which may
be carried by Landlord on the Premises or the building of which it is a part,
resulting from the type of merchandise, machinery or equipment sold or kept by
Tenant in the Premises or resulting from Tenant’s use of the Premises, whether
or not Landlord has consented to the same.


 


5.5            Indemnification. Tenant shall
indemnify, defend and save Landlord harmless from and against any and all
claims, actions, damages, liability and expense in connection with loss of
life, personal injury and/or damage to or destruction of property arising from
or out of any occurrence in, upon or at the Premises, or any part thereof, or
the occupancy or use by Tenant of the Premises or any part thereof, or
occasioned wholly or in part by any act or omission of Tenant, its agents,
contractors, employees, servants, lessees or concessionaires. Landlord shall
indemnify, defend and save Tenant harmless from and against any and all claims,
actions, damages, liability and expense in connection with loss of life,
personal injury and/or damage to or destruction of property arising from or out
of any occurrence in, upon or at the Premises occasioned in whole or in part by
any negligent act or omission by Landlord, its agents, contractors, employees,
servants or concessionaires. In case the indemnifying party shall be made a
party to any litigation commenced by or against the other party, then such
other party shall protect and hold the indemnified party harmless and pay all
costs and attorney’s fees incurred by the indemnified party in connection with
such litigation, and any appeals thereof. The defaulting party shall also pay
all costs, expenses and reasonable attorney’s fees that may be incurred or paid
by the other party in enforcing the covenants and agreements in this Lease.


 


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ARTICLE 6 

UTILITIES


 


6.1            Utilities. Tenant shall be
solely responsible for and shall promptly pay all charges for water, gas,
electricity, garbage, and any other utility used and consumed in the Premises.
In the event that such utilities charges, or any portion thereof shall be
separately metered for the Premises, tenant shall pay such meter charges
directly to the utility company supplying such service. In the event, however,
that such utilities charges, or any portion thereof, shall not be separately
metered for the Premises, tenant shall pay to Landlord its pro rata share of
such non-metered charges. If any such charges are not paid when due, Landlord
may, at its option pay the same, and any amount so paid by Landlord shall
thereupon become due to Landlord from tenant as additional rent. In no event,
however, shall Landlord be liable for an interruption or failure in the supply
of any such utilities to the Premises.


 


ARTICLE 7 

SUBORDINATION AND ATTORNMENT


 


7.1            Subordination. Tenant hereby
subordinates its rights hereunder to the lien of any ground or underlying
leases, any mortgage or mortgages, or the lien resulting from any other method
of financing or refinancing, now or hereafter in force against the Premises and
to all advances made or hereafter to be made upon the security thereof. This Section shall
be self-operative and no further instrument of subordination shall be required
by any mortgagee, but Tenant agrees upon request of Landlord, from time to
time, to promptly execute and deliver any and all documents evidencing such
subordination, and failure to do so shall constitute a default under this
Lease.


 


7.2            Attornment. In the event any
proceedings are brought for the foreclosure of, or in the event of exercise of
the power of sale under, any mortgage covering the Premises or in the event a
deed is given in lieu of foreclosure of any such mortgage, Tenant shall attorn
to the purchaser, or grantee in lieu of foreclosure, upon any such foreclosure
or sale and recognize such purchaser, or grantee in lieu of foreclosure, as the
Landlord under this Lease.


 


7.3            Financing Agreements. Tenant
shall not enter into, execute or deliver any financing agreement that can be
considered as having priority to any mortgage or deed of trust that Landlord
may have placed upon the Premises.


 


ARTICLE 8

ASSIGNMENT AND SUBLETTING


 


Tenant may not assign this
lease in whole or in part, nor sublet all or any portion of the Premises,
without the prior written consent of Landlord in each instance. The consent by
Landlord to any assignment or subletting shall not constitute a waiver of the
necessity for such consent to any subsequent assignment or subletting. It is
understood that Landlord may refuse to grant consent to any assignment or
subletting by Tenant with or without cause and without stating in its refusal
to grant such consent the reasons for which it refuses to grant such consent
and may not, under any circumstances, be required or compelled to grant such
consent. No assignment, under letting, occupancy or collection shall be deemed
acceptance of the assignee, subtenant or occupant as Tenant, or a release of
Tenant from the further performance by Tenant of the covenants on the part of
Tenant herein contained. This prohibition against any assignment or subleasing
by operation of law, legal process, receivership, bankruptcy or otherwise, whether


 


5

















 


voluntary or involuntary and
a prohibition against any encumbrance of all and any part of Tenant’s leasehold
interest. Tenant shall remain fully liable on this Lease and shall not be
released from performing any of the terms, covenants and conditions hereof or
any rents or other sums to be paid hereunder. Tenant acknowledges and agrees
that any and all right and interest of the Landlord in and to the Premises, and
all right and interest of the Landlord in this Lease, may be conveyed, assigned
or encumbered at the sole discretion of the Landlord at any time.


 


ARTICLE 9 

FACILITIES


 


9.1            Control of Common Areas by
Landlord. All automobile parking areas, driveways, entrances and exits
thereto, and other facilities furnished by Landlord at or near the Premises,
including employee parking areas, the truck way or ways, loading docks, package
pick-up stations, pedestrian sidewalks and ramps, landscaped areas, exterior
stairways, and other areas and improvements provided by Landlord for the
general use, in common, of tenants, their officers, agents, employees and
customers, shall at all times be subject to the exclusive control and
management of Landlord, and Landlord shall have the right from time to time to
establish, modify and enforce reasonable rules and regulations with
respect to all facilities and areas mentioned in this Article. Landlord shall
have the right to construct, maintain and operate lighting facilities on all
said areas and improvements; from time to time to change the area, level,
location and arrangement of parking areas and other facilities hereinabove
referred to and to restrict parking by tenants, their officers, agents and
employees to employee parking areas. Landlord shall not have any duty to police
the traffic in the parking areas. Tenant is to maintain and repair parking and
at tenant’s expense.


 


ARTICLE 10 

TENANT’S FIXTURES AND IMPROVEMENTS


 


10.1          Alterations by Tenant. Tenant
shall not make any alterations, renovations, improvements or other
installations (collectively “Alterations”) in, on or to any part of the
Premises (including, without limitation, any alterations of the front, signs,
structural alterations, or any cutting or drilling into any part of the
Premises or any securing of any fixture, apparatus, or equipment of any kind to
any part of the Premises) unless and until Tenant shall have caused plans and
specifications therefore to have been prepared, at Tenant’s expense, by an
architect or other duly qualified person and shall have obtained Landlord’s
approval thereof. Tenant shall submit to Landlord detailed drawings and plans
of the proposed Alterations at the time Landlord’s approval is sought. If such
approval is granted, Tenant shall cause the work described in such plans and
specifications to be performed, at its expense, promptly, efficiently,
competently and in a good and workmanlike manner by duly qualified and licensed
persons or entities approved by Landlord, using first grade materials. All such
work shall comply with all applicable codes, rules, regulations and ordinances.
The Tenant shall at all times maintain fire insurance with extended coverage in
an amount adequate to cover the cost of replacement of all alterations,
decorations, additions or improvements to the Premises by Tenant in the event
of fire or extended coverage loss. Tenant shall deliver to the Landlord
certificates of such fire insurance policies, which shall contain a clause
requiring the insurer to give the Landlord ten (10) days notice of
cancellation of such policies.


 


10.2          Mechanic’s Liens. No work
performed by Tenant pursuant to this Lease, whether in the nature of erection,
construction, alteration or repair, shall be deemed to be for the


 


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immediate use and benefit of
Landlord so that no mechanic’s or other lien shall be allowed against the
estate of Landlord by reason of any consent given by Landlord to Tenant to
improve the Premises. Tenant shall place such contractual provisions as Landlord
may request in all contracts and subcontracts for Tenant’s improvements
assuring Landlord that no mechanic’s liens will be asserted against Landlord’s
interest in the Premises or the property of which the Premises are a part. Said
contracts and subcontracts shall provide, among other things, the following:
That notwithstanding anything in said contracts or subcontracts to the
contrary, Tenant’s contractors, subcontractors, suppliers and materialmen
(hereinafter collectively referred to as “Contractors”) will perform the work
and/or furnish the required materials on the sole credit of Tenant; that no
lien for labor or materials will be filed or claimed by the Contractors against
Landlord’s interest in the Premises or the property of which the Premises are a
part; that the Contractors will immediately discharge any such lien filed by
any of the Contractor’s suppliers, laborers, materialmen or subcontractors; and
that the Contractors will indemnify and save Landlord harmless from any and all
costs and expenses, including reasonable attorney’s fees, suffered or incurred
as a result of any such lien against Landlord’s interest that may be filed or
claimed in connection with or arising out of work undertaken by the
Contractors. Tenant shall pay promptly all persons furnishing labor or
materials with respect to any work performed by Tenant or its Contractors on or
about the Premises. If any mechanic’s or other liens shall at any time be filed
against the Premises or the property of which the Premises are a part by reason
of work, labor, services or materials performed of furnished, or alleged to
have been performed or furnished, to Tenant or to anyone holding the Premises
through or under Tenant, and regardless of whether any such lien is asserted
against the interest of Landlord or Tenant, Tenant shall cause the same to be
discharged of record or bonded to the satisfaction of Landlord within thirty
(30) days of notice of such lien. If Tenant shall fail to cause such lien to be
so discharged or bonded after being notified of the filing thereof, then, in
addition to being an Event of Default and any other right or remedy of
Landlord, Landlord may bond or discharge the same by paying the amount claimed
to be due, and the amount so paid by Landlord, including reasonable attorneys’
fees incurred by Landlord either in defending against such lien or in procuring
the bonding or discharge of such lien, together with interest thereon at the
Default Rate, shall be due and payable by Tenant to Landlord as Additional
Rent.


 


10.3         Tenant’s Leasehold Improvements and
Trade Fixtures. All leasehold improvements (as distinguished from trade
fixtures and apparatus) installed in the Premises at any time, whether by or on
behalf of Tenant or by or on behalf of Landlord, shall not be removed from the
Premises at any time, unless such removal is consented to in advance by
Landlord; and at the expiration of this Lease (either on the Expiration Date or
upon such earlier termination as provided in this Lease), all such leasehold
improvements shall be deemed to be part of the Premises, shall not be removed
by Tenant when it vacates the Premises, and title thereto shall vest solely in
Landlord without payment of any nature to Tenant.


 


All trade fixtures and
apparatus (as distinguished from leasehold improvements) owned by Tenant and
installed in the Premises shall remain the property of Tenant and shall be
removable at any time, including upon the expiration of the Term; provided
Tenant shall not at such time be in default of any terms or covenants of this
Lease, and provided further, that Tenant shall repair any damage to the
Premises caused by the removal of said trade fixtures and apparatus and shall
restore the Premises to substantially the same condition as existed prior to
the installation of said trade fixtures and apparatus and shall restore the
Premises to substantially the same condition as existed prior to the
installation of said trade fixtures and apparatus.


 


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ARTICLE 11 

MAINTENANCE AND REPAIR OF PREMISES


 


11.1         Maintenance by Tenant. Tenant
shall at all times keep in good order, condition and repair (which shall
include the providing of replacements where necessary) the entire Premises,
including, without limitation, the roof, the exterior and all glass and show
window moldings; and all partitions, doors, interior walls, fixtures, equipment
and appurtenances thereto, including lighting, heating and plumbing fixtures
and any air conditioning system and sprinkler system situated within and/or
servicing the Premises. Said maintenance by Tenant shall include, without
limitation, periodic painting as is reasonably necessary. All cutting and
patching of the roof area required for any reason whatsoever shall be performed
by the Landlord’s roofing subcontractor. In the event that Tenant causes such
work to be performed by anyone other than the Landlord’s roofing subcontractor,
Landlord will have the right, at Tenant’s sole cost and expense and without
notice to Tenant, to cause said work and the roof area affected thereby to be
inspected and/or repaired by Landlord’s roofing subcontractor. All repairs,
replacements, or maintenance of any item or any type of the Premises is the
responsibility of the Tenant and to be paid for by tenant.


 


ARTICLE 12

SIGNS


 


On or before the
Commencement Date, Tenant will at its sole cost and expense purchase and cause
to be installed upon the exterior of the Premises a sign which in all respects
conforms to the criteria established by Landlord. However, Tenant will not install
said sign without first obtaining Landlord’s written approval thereof.
Thereafter, Tenant will not place or suffer to be placed or maintain on any
portion of the exterior (including windows) of the Premises any sign, awning,
canopy or advertising matter or other thing of any kind, without first
obtaining Landlord’s written approval and consent. Without limitation as to the
foregoing, Landlord specifically reserves the right at any time during the term
of this Lease to require Tenant to remove from the Premises any sign(s) situated
thereon and to replace same with a sign or signs which in all respects conform
to a sign standard designated by Landlord, all of which will be performed at
Tenant’s sole cost and expense. Tenant agrees to maintain any such sign,
awning, canopy, decoration, lettering, advertising matter or other thing as may
be approved in good condition and repair at all times and to repaint or replace
such signs from time to time when reasonably necessary and to illuminate such
signs in accordance with standards established by Landlord from time to time,
including hours of illumination. All signs in addition must be conform to code
and local ordinances rules, laws and regulations.


 


ARTICLE 13 

WASTE AND GOVERNMENTAL REGULATIONS


 


13.1         Nuisance or Waste. Tenant shall
not commit or suffer to be committed any waste upon the Premises or any
nuisance or other act or thing which may disturb the quiet enjoyment of any
other tenant in the building in which the Premises may be located.


 


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13.2         Compliance with Laws. Tenant, at
its sole cost, will promptly comply with all applicable laws, guidelines,
rules, regulations and requirements, whether of federal, state, or local
origin, applicable to the Premises, including, but not limited to, the
Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., and those for the
correction, prevention and abatement of nuisance, unsafe conditions, or other
grievances arising from or pertaining to the use or occupancy of the Premises.
Tenant at its sole cost and expense shall be solely responsible for taking any
and all measures which are required to comply with the requirements of the ADA
within the Premises. Any Alterations to the Premises made by or on behalf of
Tenant for the purpose of complying with the ADA or which otherwise require
compliance with the ADA shall be done in accordance with this Lease; provided,
that Landlord’s consent to such Alterations shall not constitute either
Landlord’s assumption, in whole or in part, of Tenant’s responsibility for
compliance with the ADA, or representation or confirmation by Landlord that
such Alterations comply with the provisions of the ADA.


 


13.3         Governmental Regulations. Tenant
shall, at Tenant’s sole costs and expense, comply with all regulations of all
county, municipal, state, federal and other applicable governmental
authorities, not in force or which may hereafter be in force, pertaining to
Tenant or its use of the Premises, and shall faithfully observe in the use of the
Premises all municipal and county ordinances and state and federal statutes now
in force or which may hereinafter be in force. Tenant shall indemnify, defend
and save Landlord harmless from penalties, fines, costs, expenses suits,
claims, or damages resulting from Tenant’s failure to perform its obligations
in this Section.


 


13.4         Rules and Regulations.
Landlord reserves the right from time to time to make reasonable rules and
regulations, governing loading of supplies, trash collection, pest control, parking,
noise, electrical overloads and similar issues of general concern to all
tenants in the event that the need therefore should ever arise. Notice of such rules and
regulations and amendments and supplements thereto, if any, shall be given to
the Tenant.


 


ARTICLE 14 

HAZARDOUS MATERIALS


 


14.1         Hazardous Materials. Tenant
shall not use or allow the Premises to be used for the Release, storage, use,
treatment, disposal or other handling of any Hazardous Materials, without the
prior consent of Landlord. The term “Release” shall have the same meaning as is
ascribed to it in the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601 et seq., as amended, (“CERCLA”). The term “Hazardous
Materials” means (i) any substance defined as a “hazardous substance”
under CERCLA, (ii) petroleum, petroleum products, natural gas, natural gas
liquids, liquefied natural gas, and synthetic gas, and (iii) any other
substance or material deemed to be hazardous, dangerous, toxic, or a pollutant
under any federal, state, or local law, code, ordinance or regulation (“Hazardous
Materials Laws”).


 


Tenant shall: (a) give
prior notice to Landlord of any activity or operation to be conducted by Tenant
at the Premises which involves the Release, use, handling, generation,
treatment, storage, or disposal of any Hazardous Materials (“Tenant’s Hazardous
Materials Activity”), (b) comply with all federal, state, and local laws,
codes, ordinances, regulations, permits and licensing conditions governing the
Release, discharge, emission, or disposal of any Hazardous Materials and
prescribing methods for or other limitations on storing, handling, or otherwise
managing Hazardous Materials, (c) at its own expense, promptly contain and


 


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remediate any Release of
Hazardous Materials arising from or related to Tenant’s Hazardous Materials
Activity in the Premises and remediate and pay for any resultant damage to
properly, persons, and/or the environment, (d) give prompt notice to
Landlord, and all appropriate regulatory, authorities, of any Release of any
Hazardous Materials in the Premises arising from or related to, Tenant’s
Hazardous Materials Activity, which Release is not made pursuant to and in
conformance with the terms of any permit or license duly issued by appropriate
governmental authorities, any such notice to include a description of “measures
taken or proposed to be taken by Tenant to contain and remediate the Release
and any resultant damage to property, persons, or the environment, (e) at
Landlord’s request, which shall not be more frequent than once per calendar
year, retain an independent engineer or other qualified consultant or, expert
acceptable to Landlord, to conduct, at Tenant’s expense, an environmental audit
of the Premises and immediate surrounding areas, and the scope of work to be
performed by such engineer, consultant, or expert shall be approved in advance
by Landlord, and all of the engineer’s, consultant’s or expert’s work product
shall be made available to Landlord, (f) at Landlord’s request from time
to time, executed affidavits, representations and the like concerning Tenant’s
best knowledge, and belief regarding the presence of Hazardous Materials in the
Premises, (g) reimburse to Landlord, upon demand, the reasonable cost of
any testing for the purpose of ascertaining if there has been any Release of
Hazardous Materials in the Premises, if such testing is required by any
governmental agency or Landlord’s Mortgagee, (h) upon expiration or
termination of this Lease, surrender the Premises to Landlord free from the
presence and contamination of any Hazardous Materials. Tenant shall indemnify,
protect, defend (by counsel reasonably acceptable to Landlord), and hold
Landlord and free and harmless from and against any and all claims,
liabilities, penalties, forfeitures, losses and expenses (including attorneys’
fees) or death of or injury to any person or damage to any property whatsoever
arising from or caused in whole or in part, directly or indirectly, by the
presence in or about the Premises of any of Tenant’s Hazardous Materials
Activity or by Tenant’s failure to comply with any Hazardous Materials Law
regarding Tenant’s Hazardous Materials Activity or in connection with any
removal, remediation, clean up, restoration and materials required hereunder to
return the Premises and any other property of whatever nature to their
condition existing prior to Tenant’s Hazardous Materials Activity.


 


14.2         Disclosure Warning and Notice
Obligations. Tenant shall comply with all laws, ordinances and regulations
in the State of California regarding the disclosure of the presence or danger
of Tenant’s Hazardous Materials. Tenant acknowledges and agrees that all
reporting and warning obligations required under the Hazardous Materials Laws
with respect to Tenant’s Hazardous Materials Activity are the sole
responsibility of Tenant, whether or not such Hazardous Materials Laws permit
or require Landlord to provide such reporting or warnings, and Tenant shall be
solely responsible for complying with such Hazardous Materials Laws regarding
the disclosure of, the presence or danger of Tenant’s Hazardous Materials
Activity. Tenant shall immediately notify Landlord, in writing, of any
complaints, notices, warnings, reports or asserted violations of which Tenant
becomes aware relating to Hazardous Materials on or about the Premises. Tenant
shall also immediately notify Landlord if Tenant knows or has reason to believe
Tenant’s Hazardous Materials have or will be released in or about the Premises.


 


14.3         Environmental Tests and Audits.
Tenant shall not perform or cause to be performed, any Hazardous Materials
surveys, studies, reports or inspection, relating to the Premises without
obtaining Landlord’s advance written consent, which consent may be withheld in
Landlord’s sole discretion. At any time prior to the expiration of the Term,
Landlord shall have the right to enter upon the Premises in order to conduct
appropriate tests and to deliver to


 


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Tenant the results of such
tests to demonstrate that levels of any Hazardous Materials in excess of
permissible levels has occurred as a result of Tenant’s use of the Premises.


 


14.4         Survival/Tenant’s Obligations.
The respective rights and obligations of Landlord and Tenant under this Article shall
survive the expiration or termination of this Lease.


 


ARTICLE 15 

DESTRUCTION OF PREMISES


 


15.1         Damage and Destruction. If all
or any part of the Premises shall be damaged or destroyed by fire or other
casualty, this Lease shall continue in full force and effect, unless terminated
as hereinafter provided, and Landlord shall repair, restore or rebuild the
Premises to the condition existing at the time of the occurrence of the loss;
provided, however, Landlord shall not be obligated to commence such repair,
restoration or rebuilding until insurance proceeds are received by Landlord,
and Landlord’s obligation hereunder shall be limited to the proceeds actually
received by Landlord under any insurance policy or policies, if any, less those
amounts (i) which have been required to be applied towards the reduction
of any indebtedness secured by a mortgage covering the Premises or any portion
thereof, and (ii) which are used to reimburse Landlord for all costs and
expenses, including but not limited to attorneys’ fees, incurred by Landlord to
recover any such insurance proceeds.


 


Tenant agrees to notify
Landlord in writing not less than thirty (30) days prior, to the date Tenant
opens for business in the Premises of the actual cost of all permanent
leasehold improvements and betterments installed or to be installed by Tenant
in the Premises (whether same have been paid for entirely or partially by
Tenant), but exclusive of Tenant’s personal property, movable trade fixtures
and inventory. Similar notifications shall be given to Landlord not less than
thirty (30) days prior to the commencement of any proposed alterations,
additions or improvements to the Premises. If Tenant fails to comply, with the
foregoing provisions, any loss or damage Landlord shall sustain by reason
thereof shall be borne by Tenant and shall be paid immediately by Tenant upon
receipt of a bill therefore and evidence of such loss, and in addition to any
other rights or remedies reserved by Landlord under this Lease, Landlord’s
obligations under this Article to repair, replace and/or rebuild the
Premises shall be deemed inapplicable, and in lieu thereof, Landlord may, at
its election, either restore or require Tenant to restore the Premises to the
condition which existed prior to such loss, and in either case Tenant shall pay
the cost of such restoration.


 


Tenant covenants and agrees
to repair or replace Tenant’s fixtures, furniture, furnishings, floor
coverings, equipment and stock in trade and reopen for business in the Premises
within thirty (30) days after notice from Landlord that the Premises are ready
for re-occupancy.


 


No damage or destruction to
the Premises shall allow Tenant to surrender possession of the Premises nor
affect Tenant’s liability for the payment of rents or charges or any other
covenant herein contained, except as may be specifically provided in this
Lease.


 


Notwithstanding anything to
the contrary contained in this Section or elsewhere in this Lease,
Landlord, at its option, may terminate this Lease by giving Tenant notice
thereof within one hundred and eighty (180) days from the date of the casualty
if:


 


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(a)         The Premises or the building in which the Premises are
located shall be damaged or destroyed as a result of an occurrence which is not
covered by Landlord’s insurance; or


 


(b)        The Premises shall be damaged or destroyed during the last
two (2) years of the Term or any renewals thereof; or


 


(c)         The Premises are damaged or destroyed to the extent of
twenty five-percent (25%) or more of the replacement cost thereof, in which
event Landlord will have the option of terminating this Lease or any renewal
thereof by serving written notice upon Tenant and any prepaid Rent or Additional
Rent will be prorated as of the date of destruction and the unearned portion of
such Rent will be refunded to Tenant without interest.


 


If the Premises shall be
damaged or destroyed and in the event that Landlord has elected to continue
this Lease, Landlord and Tenant shall commence their respective obligations
under this Article as soon as is reasonably possible and prosecute the
same to completion with all due diligence.


 


Except where the damage or
destruction results from the wrongful or negligent act or omission of Tenant,
the Minimum Rent shall be abated proportionately with the degree to which
Tenant’s use of the Premises is impaired during the period of any damage,
repair or restoration provided for in this Article; provided further, that in
the event Landlord elects to repair any damages as herein contemplated, any
abatement of Minimum Rent shall end ten (10) days after notice by Landlord
to Tenant that the Premises have been repaired. Tenant shall continue the
operation of its business on the Premises during any such period to the extent
reasonably practicable from the standpoint of prudent business management, and
any obligation of Tenant under the Lease to apply charges reserved as
Additional Rent shall remain in full force and nothing in the Section shall
be construed to abate Additional Rent. Except for the abatement of Minimum Rent
hereinabove provided, Tenant shall not be entitled to any compensation or
damage for loss in the use of the whole or any part of the Premises and/or any
inconvenience or annoyance occasioned by any damage, destruction, repair or
restoration. If Minimum Rent is abated there shall be all corresponding and
appropriate reduction made to the Minimum Annual Volume.


 


Unless this Lease is
terminated by Landlord, Tenant shall repair, restore and re-fixture all parts
of the Premises not insured under any insurance policies insuring Landlord in a
manner and to a condition equal to that existing prior to its destruction or
damage, including, without limitation, all exterior signs, trade fixtures,
equipment, display cases, furniture, furnishings and other installations of
personality of Tenant. The proceeds of all insurance carried by Tenant on its
property and improvements shall be held in trust by Tenant for the purpose of
said repair and replacement. Tenant shall give to Landlord prompt written
notice of, any damage to or destruction of any portion of the Premises
resulting from fire or other casualty.


 


ARTICLE 16 

EMINENT DOMAIN


 


16.1         Total Condemnation of Premises.
If the whole of the Premises shall be acquired or condemned by eminent domain
for any public or quasi-public use or purpose, then the Term of this Lease
shall cease and terminate as of the date of title vesting in such proceeding
and all rentals shall be paid up to that date.


 


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16.2        Partial Condemnation of Premises.


 


16.2.1     If twenty (20%) percent or more of the
Premises shall be acquired or condemned by eminent domain for any public or
quasi-public use or purpose, then the Tenant shall have the option to cancel
and terminate this Lease upon notice thereof given to the Landlord within
ninety (90) days after the vesting of title in such proceeding.


 


16.2.2     In the event that less than ten (10%)
percent of the Premises shall be acquired or condemned by eminent domain for
any public or quasi-public use or purpose, or in the event ten (10%) percent or
more of the Premises shall have been so taken, and Tenant shall not elect to
terminate this Lease as set forth above, then the Landlord shall promptly
restore the Premises to a condition reasonably comparable under the
circumstances to its condition at the time of such condemnation, less the
portion lost in the taking; and this Lease shall thereafter continue in full
force and effect. In such event of a partial taking, described hereinabove,
from the effective date that physical possession is taken by the condemning
authority through the end of the term of this Lease, the annual Minimum Rent
payable by Tenant to Landlord under this Lease shall be reduced by a fraction,
the numerator of which shall be the gross area of the premises so taken by the
condemning authority and the denominator of which shall be the gross area of
the Premises on the date immediately prior to the effective date of such
taking.


 


16.3        Total Condemnation of Parking. If
the whole of the common parking areas at or near the Premises shall be acquired
or condemned by eminent domain for any public or quasi-public use or purpose,
then the term of this Lease shall cease and terminate as of the date of title
vesting in such proceeding.


 


16.4        Partial Condemnation of Parking Area.
If twenty (20%) percent or more of the common parking areas at or near the
Premises shall be acquired or condemned by eminent domain for any public or
quasi-public use or purpose, then the Tenant shall have the option to cancel
and terminate this Lease upon notice thereof given to the Landlord within
ninety (90) days after the vesting of title in such proceeding.


 


If
less than twenty (20%) percent of the parking areas at or near the Premises
shall be acquired or condemned by eminent domain for any public or quasi-public
use or purpose, or if more than twenty (20%) percent of the parking areas shall
be so acquired or condemned, but Tenant shall not elect to cancel and terminate
this Lease, then the Landlord shall restore the parking areas to a condition
reasonably comparable under the circumstances to its condition at the time of
such condemnation, less the portion lost in the taking. In such event, this
Lease shall be and remain in full force and effect and no reduction of Minimum
Rent or any Additional Rent payable by Tenant under this Lease shall be allowed
in such circumstances, but Tenant shall continue to pay the full Minimum Rent
or any Additional Rent payable under this Lease for the balance of the term
hereof.


 


ARTICLE 17 

DEFAULTS


 


17.1        Events of Default By Tenant. If (1) Tenant
vacates, abandons or surrenders all or any part of the Premises prior to the
expiration of the Term of the Lease or (2) Tenant fails to fulfill any of
the terms or conditions of this Lease or any other lease heretofore made by
Tenant


 


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for space in the Premises or
(3) the appointment of a trustee or a receiver to take possession of all
or substantially all of Tenant’s assets occurs, or if the attachment, execution
or other judicial seizure of all or substantially all of Tenant’s assets
located at the Premises, or of Tenant’s interest in this Lease, occurs, or (4) Tenant
or any of its successors or assigns or any guarantor of this Lease (“Guarantor”)
should file any voluntary petition in bankruptcy, reorganization or
arrangement, or an assignment for the benefit of creditors or for similar
relief under any present or future statute, law or regulation relating to
relief of debtors, or (5) Tenant or any of its successors or assigns or
any Guarantor should be adjudicated bankrupt or have an involuntary petition in
bankruptcy, reorganization or arrangement filed against it, or (6) Tenant
shall permit, allow or suffer to exist any lien, judgment, writ, assessment,
charge, attachment or execution upon Landlord’s or Tenant’s interest in this
Lease or to the Premises, and/or the fixtures, improvements and furnishings
located thereon; then, Tenant shall be in default hereunder.


 


17.2        Tenant’s Grace Periods. If (1) Tenant
fails to pay Rent or Additional Rent within five (5) days after notice
from Landlord of delinquency or (2) Tenant fails to cure any other default
within ten (10) days after notice faith), then Landlord shall have such
remedies as are provided under this Lease and/or under the laws of the State of
Arizona.


 


17.3        Repeated Late Payment. Regardless
of the number of times of Landlord’s prior acceptance of late payments and/or
late charges, (i) if Landlord notifies Tenant twice in any 6-month period
that Minimum Rent or any Additional Rent has not been paid when due, then any
other late payment within such 6-month period shall automatically constitute a
default hereunder without the necessity of notice and (ii) the mere
acceptance by Landlord of late payments in the past shall not, regardless of
any applicable laws to the contrary, thereafter be deemed to waive Landlord’s
right to strictly enforce this Lease, including Tenant’s obligation to make
payment of Rent on the exact day same is due, against Tenant.


 


17.4        Landlord’s Default. If Tenant
asserts that Landlord has failed to meet any of its obligations under this
Lease, Tenant shall provide written notice (“Notice of Default”) to Landlord
specifying the alleged failure to perform, and Tenant shall send by certified
mail, return receipt requested, a copy of such Notice of Default to any and all
mortgage holders, provided that Tenant has been previously advised of the addresses)
of such mortgage holder(s). Landlord shall have a thirty (30) day period after
receipt of the Notice of Default in which to commence curing any
non-performance by Landlord, and Landlord shall have as much time thereafter to
complete such cure as is necessary so long as Landlord’s cure efforts are
diligent and continuous, if Landlord has not begun the cure within thirty (30)
days of receipt of the Notice of Default, or Landlord does not thereafter
diligently and continuously attempt to cure, then Landlord shall be in default
under this Lease. If Landlord is in default under this Lease, then the mortgage
holder(s) shall have an additional thirty (30) days, after receipt of a
second written notice from Tenant, within which to cure such default or, if
such default cannot be cured within that time, then such additional time as may
be necessary so long as their efforts are diligent and continuous.


 


ARTICLE 18 

LANDLORD’S REMEDIES FOR TENANT’S DEFAULT


 


18.1        Landlord’s Options. If Tenant is
in default of this Lease, Landlord may, at its option, in addition to such
other remedies as may be available under the law of the State of Arizona:


 


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(a)           Terminate this Lease and Tenant’s
right of possession; or


 


(b)           Terminate Tenant’s right to possession but not the Lease
and/or proceed in accordance with any and all provisions of Section 18.2
below.


 


18.2        Landlord’s Remedies. Landlord may
without further notice reenter the Premises either by force or otherwise and
dispossess Tenant by summary proceedings or otherwise, as well as the legal
representatives) of Tenant and/or other occupants) of the Premises, and remove
their effects and hold the Premises as if this Lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end; and/or at Landlord’s option.


 


All
Rent for the balance of the Term will, at the election of Landlord, be
accelerated and the present worth of same for the balance of the Term, net of
amounts actually collected by Landlord, shall become immediately due thereupon
and be paid, together with all expenses of every nature which Landlord may
incur such as (by way of illustration and not limitation) those for attorneys’
fees, brokerage, advertising, and refurbishing the Premises in good order or
preparing them for re-rental. For purposes of this clause (2), “present worth”
shall be computed by discounting such amount to present worth at a discount
rate equal to one percentage point above the discount rate then in effect at
the Federal Reserve Bank nearest to the location of the Premises.


 


Landlord
may re-let the Premises or any part thereof, either in the name of Landlord or
otherwise, for a term or terms which may at Landlord’s option be less than or
exceed the period which would otherwise have constituted the balance of the
Term, and may grant concessions or free rent or charge a higher rental than
that reserved in this Lease; and/or at Landlord’s option, Tenant or its legal
representatives will also pay to Landlord as liquidated damages any deficiency
between the Rent and all Additional Rent hereby reserved and/or agreed to be
paid and the net amount, if any, of the rents collected on account of the lease
or leases of the Premises for each month of the period which would otherwise
have constituted the balance of the Term.


 


If
Landlord exercises the remedy above, and provided that Tenant has paid Landlord
the accelerated Rent as required by this Section, Landlord shall remit to
Tenant on a monthly basis until the Expiration Date any amounts actually
collected by Landlord as a result of are letting remaining after subtracting
therefrom all reasonable costs paid by Landlord to secure a replacement tenant
including reasonable marketing/leasing costs, fees and commissions, and costs
of preparing improvements and refurbishment to the Premises for the replacement
tenant. In no event shall the total amount paid to Tenant pursuant to the
preceding sentence exceed the accelerated Rent paid by Tenant to Landlord. If
this Lease is terminated, Landlord may re-let the Premises or any part thereof,
alone or together with other premises, for such term or terms (which may be
greater or less than the period which otherwise would have constituted the
balance of the Term) and on such terms and conditions (which may include
concessions or free rent and alterations of the Premises) as Landlord, in its
sole discretion, may determine, but Landlord shall not be liable for nor shall
Tenant’s obligations hereunder be diminished by reason of, any failure by
Landlord to re-let the Premises or any failure by Landlord to collect any rent
due upon such re-letting.


 


18.3        Waiver of Jury Trial. To the
extent permitted by law, Tenant hereby waives: (a) jury trial in any
action or proceeding regarding a monetary default by Tenant and/or Landlord’s


 


15

















 


right to possession of the
Premises, and (b) in any action or proceeding by Landlord for eviction
where Landlord has also filed a separate action for damages, Tenant waives the
right to interpose any counterclaim in such eviction action. Moreover, Tenant
agrees that it shall not interpose or maintain any counterclaim in such damages
action unless it pays and continues to pay all Rent, as and when due, into the
registry of the court in which the damages action is filed.


 


18.4        Waiver of Rights of Redemption.
Tenant hereby expressly waives any and all rights of redemption granted by or
under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord obtaining possession of
the Premises, by reason of the violation by Tenant of any of the covenants or
conditions of this Lease or otherwise.


 


ARTICLE 19 

BANKRUPTCY PROVISIONS


 


19.1        Event of Bankruptcy. If this
Lease is assigned to any person or entity pursuant to the provisions of the
United States Bankruptcy Code, 11 U.S.C. Section 101 et seq. (the “Bankruptcy
Code”), any and all monies or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Landlord, shall be and remain the exclusive property of Landlord, and shall not
constitute the property of Tenant or of the estate of Tenant within the meaning
of the Bankruptcy Code. Any and all monies or other considerations constituting
Landlord’s property under this Section not paid or delivered to Landlord
shall be held in trust for the benefit of Landlord and shall be promptly paid
or delivered to Landlord. Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code shall be deemed without
further act or deed to have assumed all of the obligations arising under this
Lease on and after the date of such assignment.


 


19.2        Additional Remedies. In addition
to any rights or remedies hereinbefore or hereinafter conferred upon Landlord
under the terms of this Lease, the following remedies and provisions shall
specifically apply in the event Tenant is in default of this Lease:


 


19.2.1       In all events, any receiver or trustee in
bankruptcy shall either expressly assume or reject this Lease within sixty (60)
days following the entry of an “Order for Relief” or within such earlier time
as may be provided by applicable law.


 


19.2.2       In the event of an assumption of this
Lease by a debtor or by a trustee, such debtor or trustee shall within fifteen
(15) days after such assumption (i) cure any default or provide adequate
assurance that defaults will be promptly cured; (ii) compensate Landlord
for actual pecuniary loss or provide adequate assurance that compensation will
be made for actual monetary loss, including, but not limited to, all attorneys’
fees and costs incurred by Landlord resulting from any such proceedings; and (iii) provide
adequate assurance of future performance.


 


19.2.3       Where a default exists under this Lease,
the trustee or debtor assuming this Lease may not require Landlord to provide
services or supplies incidental to this Lease before its assumption by such
trustee or debtor, unless Landlord is compensated under the terms of this Lease
for such services and supplies provided before the assumption of such Lease.


 


19.2.4       The debtor or trustee may only assign
this Lease if (i) it is assumed and the asignee agrees to be bound by this
Lease, (ii) adequate assurance of future performance by the assignee is
provided, whether or not there has been a default under this Lease, and (iii) the
debtor or trustee has


 


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received Landlord’s prior
written consent pursuant to the provisions of this Lease. Any consideration
paid by any assignee in excess of the rental reserved in this Lease shall be
the sole property of, and paid to Landlord.


 


19.2.5    Landlord
shall be entitled to the fair market value for the Premises and the services
provided by Landlord (but in no event less than the rental reserved in this
Lease) subsequent to the commencement of a bankruptcy event.


 


19.2.6    Any
security deposit given by Tenant to Landlord to secure the future performance
by Tenant of all or any of the terms and conditions of this Lease shall be
automatically transferred to Landlord upon the entry of an “Order of Relief.”


 


19.2.7    The
parties agree that Landlord is entitled to adequate assurance of future
performance of the terms and provisions of this Lease in the event of an
assignment under the provisions of the Bankruptcy Code. For purposes of any
such assumption or assignment of this Lease, the parties agree that the term “adequate
assurance” shall include, without limitation, at least the following: (i) any
proposed assignee must have, as demonstrated to Landlord’s satisfaction, a net
worth (as defined in accordance with generally accepted accounting principles
consistently applied) in an amount sufficient to assure that the proposed
assignee will have the resources to meet the financial responsibilities under
this Lease, including the payment of all Rent; the financial condition and
resources of Tenant are material inducements to Landlord entering into this
Lease; (ii) any proposed assignee must have engaged in the Use described
in Section 1.2 for at least five (5) years prior to any such proposed
assignment, the parties hereby acknowledging that in entering into this Lease,
Landlord considered extensively Tenant’s permitted use and determined that such
permitted business would add substantially to the tenant balance in the
Premises, and were it not for Tenant’s agreement to operate only Tenant’s
permitted business on the Premises, Landlord would not have entered into this
Lease, and that Landlord’s operation of the Premises will be materially
impaired if a trustee in bankruptcy or any assignee of this Lease operates any
business other than Tenant’s permitted business; (iii) any assumption of
this Lease by a proposed assignee shall not adversely affect Landlord’s
relationship with any of the remaining tenants in the building in which the
Premises are located, taking into consideration any and all other “use” clauses
and/or “exclusivity” clauses which may then exist under their leases with
Landlord; and (iv) any proposed assignee must not be engaged in any
business or activity which it will conduct on the Premises and which will
subject the Premises to contamination by any Hazardous Materials.


 


ARTICLE 20 

LIMITATIONS OF LANDLORD’S LIABILITY


 


The term “Landlord” as used
in this Lease, so far as covenants or obligations on the part of the Landlord
are concerned shall be limited to mean and include only a ground lessee if the
named Landlord herein is holding the premises under a ground lease for so long
as the named Landlord is the holder of such ground lease interest or the owner
or owners of the fee simple of the Premises; and in the event of transfer or
transfers of either the ground leasehold interest to any other person or the
transfer of title to the fee premises to any person, the Landlord herein named
(and in the case of subsequent transfers or conveyances the then grantor or
assignor), shall be automatically freed and relieved from and after the date of
such transfer or conveyance or assignment of all liability as respects the
performance of any covenant or obligation on the part of the Landlord contained
in this Lease thereafter to be performed, it being the intention of the parties
that the covenants and obligations to be observed and performed by the Landlord


 


17

















 


shall be binding upon the
Landlord only during and in respect of its period of ownership of either a
leasehold interest, or a fee interest as the case may be. Anything in this
Lease to the contrary notwithstanding, Tenant agrees that Tenant shall, subject
to prior rights of any mortgagee of the Premises, look solely to the estate and
property of Landlord in the Premises for the collection of any judgment (or
other judicial process) requiring the payment of money by Landlord in the event
of any default or breach by Landlord with respect to any of the terms,
covenants and conditions of this Lease to be observed and/or performed by
Landlord, and no other assets of Landlord or any principal of Landlord shall be
subject to levy, execution or other procedures for the satisfaction of Tenant’s
remedies.


 


ARTICLE 21 

ACCESS BY LANDLORD


 


Landlord or Landlord’s
agents shall have the right to enter the Premises at all times to examine the
same and to show them to prospective purchasers of the building, and to make
such repairs, alterations, improvements or additions as Landlord may deem
necessary or desirable, and Landlord shall be allowed to take all material into
and upon said premises that may be required therefore, without the same
constituting an eviction of Tenant in whole or in part and the Rent reserved
shall in no way abate while said repairs, alterations, improvements, or additions
are being made, by reason of loss or interruption of business of Tenant, or
otherwise. During the six (6) month period prior to the expiration of the
term of this Lease or any renewal term, Landlord may exhibit the Premises to
prospective tenants or purchasers, and place upon the premises the usual
notices “To Let” or “For Sale” which notices Tenant shall permit to remain
thereon without molestation. Nothing herein contained, however, shall be deemed
or construed to impose upon Landlord any obligation, responsibility or
liability whatsoever, for the care, maintenance, or repair of the Premises or
any part thereof, except as otherwise herein specifically provided. Landlord to
give Tenant reasonable notice during business hours prior to any entry.


 


ARTICLE 22 

QUIET ENJOYMENT


 


22.1    Landlord’s
Covenant. Upon payment by the Tenant of the rents and other charges herein
provided, and upon the observance and performance of all the covenants, terms
and conditions on Tenant’s part to be observed and performed, Tenant shall
peaceably and quietly hold and enjoy the Premises for the term hereby demised
without hindrance or interruption by Landlord or any other person or persons
lawfully or equitably claiming by, through or under the Landlord, subject,
nevertheless, to the terms and conditions of this Lease.


 


ARTICLE 23 

MISCELLANEOUS


 


23.1    Accord
and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser
amount than the rent herein stipulated to be paid shall be deemed to be other
than on account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
rent or pursue any other remedy provided herein or by law.


 


23.2    Entire
Agreement. This Lease constitutes all covenants, promises, agreements,
conditions and understandings between Landlord and Tenant concerning the
Premises and the


 


18

















 


Building and there are no
covenants, promises, conditions or understandings, either oral or written,
between them other than are herein set forth. Neither Landlord nor Landlord’s
agents have made nor shall be bound to any representations with respect to the
Premises or the Building except as herein expressly set forth, and all
representations, either oral or written, shall be deemed to be merged into this
Lease Agreement. Except as herein otherwise provided, no subsequent alteration
change or addition to this lease shall be binding upon Landlord or Tenant
unless reduced to writing and signed by them.


 


23.3       Notices.


 


23.3.1    Any notice by Tenant to Landlord must be
served by certified mail return requested, addressed to Landlord at the address
first hereinabove given or at such other address as Landlord may designate by
written notice. Tenant shall also provide copies of any notice given to
Landlord to such mortgagees, agents or attorneys of Landlord as Landlord may
direct.


 


23.3.2    After commencement of the term hereof any
notice by Landlord to Tenant shall be served by certified mail, return receipt
requested addressed to Tenant at the Premises or at such other address as
Tenant shall designate by written notice, or by delivery by Landlord to the
Premises or to such other address.


 


	
  Landlord:

  	
   

  	
  Tenant:

  
	
  Daniel Dosoretz

  	
   

  	
  David Koeninger

  
	
  2234 Colonial Blvd.

  	
   

  	
  2234 Colonial Blvd.

  
	
  Fort Myers, FL 33907

  	
   

  	
  Fort Myers, FL 33907

  



 


23.3.3    All notices given hereunder shall be in
writing, and shall be effective and deemed to have been given only upon receipt
by the party to which notice is being given, said receipt being deemed to have
occurred upon hand delivery or posting, or upon such date as the postal
authorities shall show the notice to have been delivered, refused, or
undeliverable, as evidenced by the return receipt. Notwithstanding any other
provision hereof, Landlord shall also have the right to give notice to Tenant
in any other manner provided by law.


 


23.4       Successors. All rights and
liabilities herein given to, or imposed upon, the respective parties hereto
shall extend to and bind the several respective heirs, legal representatives,
and permitted successors and assigns of the said parties; and if there shall be
more than one person or party constituting the Tenant, they shall be bound
jointly and severally by the terms, covenants and agreements herein. No rights,
however, shall inure to the benefit of any assignee of Tenant unless the
assignment to such has been approved by Landlord in writing as provided herein.
Nothing contained in this Lease shall in any manner restrict Landlord’s right
to assign or encumber this Lease and, in the event Landlord sells its interest
in the Building and the purchaser assumes Landlord’s obligations and covenant,
Landlord shall thereupon be relieved of all further obligations hereunder.


 


23.5       Captions and Section Numbers.
The captions, section numbers, and article numbers appearing in this Lease are
inserted only as a matter of convenience and in no way define, limit, construe,
or describe the scope or intent of such sections or articles of this Lease nor
in any way affect this Lease.


 


19

















 


23.6       Broker’s Commission. The Tenant
represents and warrants to Landlord that it has dealt with no real estate
broker, agent, salesperson or finder in connection with this Lease or the
Premises. Notwithstanding the foregoing, Tenant agrees to indemnify, defend and
save the Landlord harmless from all liabilities arising from claims by any real
estate broker or agent claiming through Tenant. Such indemnity of Tenant shall
include, without limitation, all of attorneys, fees incurred in connection
therewith.


 


23.7       Partial Invalidity. If any term,
covenant or condition of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the remainder
of this Lease the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Lease shall be valid and enforceable to the fullest extent permitted by law.


 


23.8       Estoppel Certificate. Landlord and
Tenant agree that each will, at any time and from time to time, within ten (10) days
following written notice by the other party hereto specifying that it is given
pursuant to this Section, execute, acknowledge and deliver to the party who
gave such notice, or its designate, a statement in writing certifying that this
Lease is unmodified and in full force
and effect (or if there have been modifications, that the same is in full force and effect and stating the
modifications), and the date to which the annual rent and any other payments
due hereunder from Tenant have been paid in advance, if any, and stating
whether or not there are defenses or offsets claimed by the maker of the
certificate and whether or not to the best of knowledge of the signer of such
certificate the other party is in default in performance of any covenant
agreement or condition contained in this Lease, and if so, Specifying each such
default of which the maker may have knowledge and if requested, such financial
information concerning Tenant and Tenant’s business operations (and the
Guarantor of this Lease, if this Lease be guaranteed) as may be reasonably
requested by any Mortgagee or prospective mortgagee or purchaser. The failure
of either party to execute, acknowledge and deliver to the other a statement in
accordance with the provisions of this Section within said ten (10) business
day period shall constitute an acknowledgment, by the party given such notice,
which may be relied on by any person holding or proposing to acquire an
interest in the Building or any party thereof or the Premises or this Lease
from or through the other party, that this Lease is unmodified and in full force and effect and that such rents
have been duly and fully paid to
an including the respective due dates immediately preceding the date of such
notice and shall constitute, as to any person entitled as aforesaid to rely
upon such statements, waiver of any defaults which may exist prior to the date
of such notice; provided, however that nothing contained in the provision of
this Section shall constitute waiver by Landlord of any default in payment
of rent or other charges existing as of the date of such notice and, unless
expressly consented to in writing by Landlord, and Tenant shall still remain
liable for the same.


 


23.9       Liability of Landlord. Tenant
shall look solely to the estate and property of the Landlord in the Premises
for the collection of any judgment, or in connection with any other judicial
process, requiring the payment of money by Landlord in the event of any default
by Landlord with respect to any of the terms, covenants and conditions of this
Lease to be observed and performed by Landlord, and no other property or
estates of Landlord shall be subject to levy, execution or other enforcement procedures
for the satisfaction of Tenant’s remedies and rights under this Lease. Both
parties waive a jury trial if any litigation arises.


 


20

















 


23.10     Recordings. Tenant shall not record
this Lease, or any memorandum or short form thereof, without the written
consent and joinder of Landlord.


 


23.11     Time of Essence. Time is of the
essence with respect to the performance of every provision of this Lease in
which time of performance is a factor.


 


ARTICLE 24

TENANT’S PROPERTY


 


24.1       Taxes on Leasehold. Tenant shall
be responsible for and shall pay before delinquency all municipal, county or
state taxes assessed during the term of this Lease against any leasehold
interest or personal property of any kind, owned by or placed in, upon or about
the Premises by the Tenant.


 


24.2       Personal Property. Landlord shall
not be liable for any damage to property of Tenant or of others located on the
Premises, nor for the loss of or damage to any property of Tenant or of others
by theft or otherwise. Landlord shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain, or snow or leaks from any part of the Premises
or from the pipes, appliances or plumbing works or from the roof, street or
subsurface or from any other place or by dampness or by any other cause of
whatsoever nature. Landlord shall not be liable for any such damage caused by
other tenants or persons in the Premises, occupants of adjacent property, or
caused by operation in construction of any private, public or quasi-public
work. All property of Tenant kept or stored on the Premises shall be so kept or
stored at the sole risk of Tenant only.


 


24.3       Notice by Tenant. Tenant shall give
immediate notice to Landlord in case of fire or accidents in the Premises or in
the building of which the Premises are a part or of defects therein or in any
fixtures or equipment.


 


ARTICLE 25 

HOLDING OVER SUCCESSORS


 


25.1       Surrender of Premises. At the
expiration of the tenancy hereby created, Tenant shall surrender the Premises
in the same condition as the Premises were in upon the Commencement Date,
reasonable wear and tear excepted, and damage by unavoidable casualty excepted,
and shall surrender all keys for the Premises to Landlord at the place then
fixed for the payment of rent and shall inform Landlord of all combinations on
locks, safes and vaults, if any, in the Premises. Tenant shall remove all its
trade fixtures before surrendering the premises as aforesaid and shall repair
any damage to the Premises caused thereby. Tenant’s obligation to observe or
perform this covenant shall survive the expiration or other termination of the
term of this Lease.


 


ARTICLE 26 

ATTORNEY FEES AND COSTS


 


26.1       Attorney Fees and Costs. In the
event of a lawsuit or litigation concerning this Lease or enforcement of this
Lease the prevailing party shall be entitled to reasonable attorney fees and
costs. This will also cover appellant fees and appellant costs.


 


21

















 


ARTICLE 27

VENUE


 


27.1       Venue. In the event of a lawsuit,
litigation or interpretation of this Lease Agreement parties shall be governed
by the laws of the State of Florida.


 


 


IN
WITNESS WHEREOF, the undersigned has hereunto set his hand and seal on 13 day
of FEB, 2006.


 


	
   

  	
  Palm Springs Radiation
  Enterprises, LLC

  
	
   

  	
  LANDLORD:

  	
  /s/ Daniel Dosoretz

  
	
   

  	
  Daniel Dosoretz 

  California Radiation Therapy Management 

  Services, Inc.

  
	
   

  	
  TENANT:

  	
  /s/ David Koeninger

  
	
   

  	
  David Koeninger

  



 


22

















 


21ST CENTURY ONCOLOGY

CONSULTING REPORT

MARKET RENT ANALYSIS OF

LEASEHOLD INTEREST IN A RADIATION ONCOLOGY CENTER 

PALM DESERT, CALIFORNIA


 


PREPARED
FOR:

California Radiation Therapy Services, Inc., 

21St Century Oncology Centers 

2234 Colonial Boulevard 

Fort Myers, FL 33907


 


Effective Date of the
Analysis:

January 27, 2006


 


INTEGRA
REALTY RESOURCES — SARASOTA, LLC

in conjunction with

INTEGRA REALTY RESOURCES — ORANGE COUNTY


 


File Number: 157-2006-0003


 


©
2006 by Integra Realty Resources


 

















 





 


January 31,2006


 


Dave Koeninger, CFO 

Radiation Therapy Services, Inc. 

2234 Colonial Blvd. 

Fort Myers, FL 33907


 


Subject: Market Rent Analysis, Radiation Oncology Center, Palm
Desert, CA


 


Dear Mr.Koeninger:


 


Pursuant to your request, we
have conducted a fair market rent analysis for the above referenced location.
This analysis and determination was made within the context of the scope of
this engagement, based on the definitions included in this report. The engagement
was completed by Larry Webb, MAI and Ralph Morrison of Integra Realty Resources
- Orange County, with oversight and review provided by Craig Smith, MAI of
Integra Realty Resources — Sarasota, LLC.


 


This analysis was conducted
in recognition of the Uniform Standards of Professional Appraisal Practice and
represents a consulting service as defined here in. The specific focus of our
engagement was to provide an analysis and determination of fair market rent
levels for the identified Palm Desert, California location.


 


The following report
presents the scope of analysis, project description, lease abstract, specific
analysis of Market Rent, and our conclusion regarding market rent. The
addendum, presents the information relied on in support of the conclusion. The
scope of this engagement and contingent and limiting conditions of this
analysis are contained in the report.


 


All data collected has been
retained in our files and is available for inspection upon request. We
appreciate the opportunity to be of service in the completion of this analysis.


 


	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Craig L. Smith

  	
   

  	
  /s/ Larry D. Webb

  
	
  Craig L. Smith, MAI

  	
   

  	
  Larry D. Webb, MAI

  
	
  Florida State Certified
  General Appraiser RZ786

  	
   

  	
  California General Real
  Estate Appraiser 

  License No. AG003076

  



 





 






 










 


21st Century Oncology 


Job
#157-2006-0003


 


Table of
Contents


 


	
   

  	
  PAGE NO.

  
	
  Scope of Analysis

  	
  1

  
	
  Project Description

  	
  1

  
	
  Lease Summary

  	
  7

  
	
  Market Rent
  Analysis-Comparison

  	
  8

  
	
  Return on Asset Analysis
  of Market Rent

  	
  10

  
	
  Final Opinion of Market
  Rent

  	
  11

  
	
  Certificate of Opinion

  	
  12

  



 


	
  Addenda

  	
   

  	
   

  
	
  Analyst
  Qualifications

  	
   

  	
  Addendum
  A

  
	
  Comparable
  Rentals

  	
   

  	
  Addendum
  B

  
	
  Definitions

  	
   

  	
  Addendum
  C

  
	
  Contingent
  and Limiting Conditions

  	
   

  	
  Addendum
  D

  



 

















 


	
  Palm
  Desert, CA

  	
   

  	
  Project Summary

  



 


21st Century Oncology

77840 Flora Road 

Palm Desert, CA 92211


 


Scope of
Analysis


 


Pursuant to this engagement,
we conducted an analysis of Market Rent of The 21st Century Oncology Center in Palm Desert,
California. The results of this analysis are summarized in this section of the
report. The intended use of this analysis is for internal decision making
purposes. The Client and intended user is California Radiation Therapy
Management Services, Inc.


 


The scope of this analysis
involved the estimation of market rent of the leased fee interest in the referenced
property, as of January 27th, 2006. The scope of research included
identification and review of comparable leases and rent indications involving
similar medical facilities within the primary market area of this facility.
Further analysis of rents based on return on asset methodology was also
conducted. These indications were reconciled into an opinion of the market rent
for this facility.


 


Property
Description


 


The 21st Century Oncology Center is located at 77840
Flora Road, Palm Desert, California 92211. The property consists of a one-story
medical office building constructed in 2004 containing 6,963 square feet net
rentable area. The subject is built on a 2.36 acre lot with 56 open parking
spaces. The property has been and remains 100% occupied and is identified as
assessors parcel number 626-420-048.


 


Summary


 


	
  Type of
  Construction

  	
   

  	
  EXTERIOR: Average
  Class C, quality wood frame & stucco building with four
  columns, built-up composition roofing, aluminum framed dual fixed glass
  storefront, concrete floor slab, open asphalt parking area, and 208/120V /
  1200 A / 4 wire electrical system.

   

  INTERIOR: Average to good
  quality improvements including Carpet, vinyl, and ceramic tile flooring,
  painted drywall

  



 





 


1

















 


	
   

  	
   

  	
  with variations to tenant
  specifications, florescent and incandescent lighting, wood based cabinets
  with adjustable shelves and laminated plastic finish, wet sprinkler system
  and HVAC with forced air.

  



 


Square Foot
by Occupancy


 


	
  Medical Office

  	
   

  	
  5,151 Square Feet

  
	
  CT/Similator

  	
   

  	
  575 Square Feet

  
	
  Vault Area

  	
   

  	
  1,237 Square Feet

  
	
  Total
  Building Square Feet

  	
   

  	
  6,963
  Square Feet

  
	
   

  	
   

  	
   

  
	
  Space identified in the
  lease

  	
   

  	
  6,963 Square Feet

  



 


Medical
Office Area — 5,151 square feet


 


·                  Offices: front desk/medical records, nurse
station, one manager office, two doctor’s offices, dosimetry office, physicist
office.


·                  Other: one radiation therapy control room,
four exam rooms, 4 dressing rooms, two waiting rooms, one employee lounge, one
block room, a lobby/reception area, one dark room, one holding room, and four
restrooms (1 men, 1 women, 2 men/women)


·                  Square footage varies for each office.


 


CT/Simulator
Area — 575 Square Feet


 


Structure


 


·                  Contains the CT/Simulator, control room and
one mens/womens restroom.


·                  1/16” to 1/8” lead-lined walls.


·                  36” X 48” X 2 mm equivalent lead glass and
leaded frame for console area.


·                  4’w X 7’h X 1/16 leaded door and leaded frame
with lead-lined hardware.


 


Electrical


 


·                  480 volt/3-phase/l00 amp or 400 amp/208 volt
with 112.5 kva transformer.


·                  3” X 12” recessed electrical trough required.


·                  Interlock switches, warning lights, emergency
buttons.


·                  Interconnection for LAP lasers.


 


2

















 


Vault Area —1,237
Square Feet


 


Structure


 


·                  Concrete structure with reinforced steel.


·                  Type of concrete= 4,000 psi weight, 152 pcf
minimum wet, and 147 pcf dry with no more than 2% air entrainment.


·                  5’-6” to 3’-6” thick concrete roof on 7’ to 4’
thick concrete walls as per radiation shielding calculations to house dual
energy linear accelerator over 8” thick reinforced concrete slab with 5’-6” X
13’9” X 12” deep reinforced concrete pit for accelerator steel base frame.


·                  4’ thick to 2’-6” thick maze wall to shield
neutron door.


·                  Neutron door 5” of polyboron 5%, 1” of steel,
and 3/8” lead with electrical operator.


 


Electrical


 


·                            Extensive underground
conduits.


·                            208 volt/3-phase/l 50 amp
main disconnect with UVR (under voltage release).


·                            Extensive interconnect
wiring diagram — interlock switches, warning lights, emergency off buttons,
CCTV cameras, intercom, in-room monitors, radiation detector, etc.


 


HVAC


 


·                            Dual dedicated HVAC system
with fresh air incorporated into design.


·                            Water supply and return from
chiller with city water as back-up system.


·                            Compressed air line with air
dryer to Linac.


 


3

















 


77840 Flora Road


 





 


4

















 


Site Plan


 





 


5

















 


Floor plan


 





 


6

















 


	
  Lease
  Summary

  	
   

  
	
   

  	
  77840
  Flora Road, Palm Desert,

  
	
  Premises:

  	
  California
  92211

  
	
  Use

  	
  Medical
  Office & Radiation

  
	
  Commencement

  	
  10/11/05

  
	
  Landlord

  	
  Palm
  Springs Radiation Enterprises

  
	
   

  	
  California
  Radiation Therapy

  
	
  Tenant

  	
  Management
  Services

  
	
  Square
  Footage

  	
  6,963

  
	
  Base
  Rent

  	
  $410,514.00
  per year

  
	
  Current
  Rent

  	
  $410,514.00
  per year

  
	
  Rent
  per SF

  	
  $58.96
  ($4.91 per month)

  
	
  CPI

  	
  Annual
  CPI increase

  
	
  Term

  	
  7
  Years

  
	
  Option
  to Renew

  	
  Three
  - 5 Year option periods

  
	
  Lease
  Type

  	
  NNN

  
	
   

  	
  Tenant
  pays all expenses including

  
	
   

  	
  taxes,
  insurance, utilities, property

  
	
   

  	
  maintenance,
  structural repairs, and

  
	
  Tenant
  Pays

  	
  CAM

  
	
   

  	
  Constructed
  building and restoration

  
	
  Landlord
  Pays

  	
  per
  insurance limits.

  



 


7

















 


Market Rent
Analysis- Comparison


 


To develop an opinion of
Fair Market Rent, we relied on five market rent comparables. These rents were
compared to the subject based on the price per square foot of the net rentable
area (NRA).


 


SUMMARY OF COMPARABLE RENTALS


 


	
  No.

  	
   

  	
  Name/Address

  	
   

  	
  Tenant

  	
   

  	
  Rentable

  Area (SF)

  	
   

  	
  Lease

  Start

  	
   

  	
  Lease

  Term

  (Yrs)

  	
   

  	
  Effective

  Rent/SF

  	
   

  	
  Lease

  Type

  
	
  1

  	
   

  	
  CA Vein
  Specialist

  	
   

  	
   

  	
   

  	
  2,947

  	
   

  	
  10/01/05

  	
   

  	
  10 yrs

  	
   

  	
  $

  	
  54.41

  	
   

  	
  NNN

  
	
   

  	
   

  	
  44530 San Pablo Ave #100 

  Palm Desert, CA

  Riverside,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comments:
  The lessor added an additional $117,000 in TI’s. The lease has a 3% annual
  escalation. Vacant space for general medical office is quoted at $27.00 NNN.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  Dental
  Office

  	
   

  	
   

  	
   

  	
  3,000

  	
   

  	
  04/16/05

  	
   

  	
  5 yrs

  	
   

  	
  $

  	
  30.00

  	
   

  	
  NNN

  
	
   

  	
   

  	
  72301
  Country Club Drive

  Rancho Mirage, CA

  Riverside,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comments: Total buildout was $117 per SF, of which $38.96
  in TI’s were covered by the tenant. The lease has a 4% annual escalation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  Physician
  Office

  	
   

  	
   

  	
   

  	
  1,959

  	
   

  	
  10/12/05

  	
   

  	
  5 yrs

  	
   

  	
  $

  	
  24.00

  	
   

  	
  NNN

  
	
   

  	
   

  	
  40710 California Oaks Rd

  Murrieta, CA 

  Riverside,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comments: This is a signed LOI and the lessor offered
  $20.00 per SF in TI’s. This lease has a 3% annual escalation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  Pacific
  Women’s Center

  	
   

  	
   

  	
   

  	
  3,900

  	
   

  	
  08/01/05

  	
   

  	
  10 yrs

  	
   

  	
  $

  	
  29.40

  	
   

  	
  NNN

  
	
   

  	
   

  	
  600
  Corporate Drive

  Ladera Ranch, CA

  Orange,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comments: Quality of construction is superior to the
  subject. The lessor offered the tenant $0.25 per SF in TI’s. This lease has a
  4% annual escalation. There are four other spaces on the market in the same
  building with a quoted rate of $29.40 NNN per rentable unit.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  Orthopedic Group

  	
   

  	
   

  	
   

  	
  1,251

  	
   

  	
  07/18/05

  	
   

  	
  5 yrs

  	
   

  	
  $

  	
  30.60

  	
   

  	
  NNN

  
	
   

  	
   

  	
  6885
  Alton Parkway

  Irvine, CA

  Orange,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Comments: Quality of construction is superior to the subject.
  The lessor offered $15.00 per SF in TI’s, and the lease has a 4% annual
  escalation. On 2/11/05 another unit in the same building was leased for the
  same rent, escalation, and term.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Subject

  	
   

  	
   

  	
   

  	
  6,963

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


RENTAL COMPARISON GRID


 


	
   

  	
   

  	
  Subject

  	
   

  	
  Comparable 1

  	
   

  	
  Comparable 2

  	
   

  	
  Comparable 3

  	
   

  	
  Comparable 4

  	
   

  	
  Comparable 5

  
	
  Tenant Name

  	
   

  	
  21st Century Oncology

  	
   

  	
  CA Vein Specialist

  	
   

  	
  Dental Office

  	
   

  	
  Physician Office

  	
   

  	
  Pacific Women’s

  	
   

  	
  Orthopedic Group

  
	
  Address

  	
   

  	
  77840 Flora Road

  	
   

  	
  44530 San Pablo Ave

  	
   

  	
  72301 Country Club

  	
   

  	
  40710 California

  	
   

  	
  600 Corporate Drive

  	
   

  	
  6885 Alton Parkway

  
	
  City, State

  	
   

  	
  Palm Desert, CA

  	
   

  	
  Palm Desert, Ca

  	
   

  	
  Rancho Mirage, Ca

  	
   

  	
  Murricta, Ca

  	
   

  	
  Ladera Ranch, Ca

  	
   

  	
  Irvine, Ca

  
	
  County

  	
   

  	
  Riverside

  	
   

  	
  Riverside

  	
   

  	
  Riverside

  	
   

  	
  Riverside

  	
   

  	
  Orange

  	
   

  	
  Orange

  
	
  Lease Start Date

  	
   

  	
  10/11/05

  	
   

  	
  10/01/05

  	
   

  	
  04/16/05

  	
   

  	
  10/12/05

  	
   

  	
  08/01/05

  	
   

  	
  07/18/05

  
	
  Term Of Lease

  	
   

  	
  7 yrs

  	
   

  	
  10 yrs

  	
   

  	
  5 yrs

  	
   

  	
  5 yrs

  	
   

  	
  10 yrs

  	
   

  	
  5 yrs

  
	
  Rentable Area

  	
   

  	
  6,963

  	
   

  	
  2,947

  	
   

  	
  3,000

  	
   

  	
  1,959

  	
   

  	
  3,900

  	
   

  	
  1,251

  
	
  Year Built

  	
   

  	
  2004

  	
   

  	
  2004

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2004

  	
   

  	
  2004

  
	
  New/Relet/Renewal

  	
   

  	
  New

  	
   

  	
  New

  	
   

  	
  New

  	
   

  	
  New

  	
   

  	
  New

  	
   

  	
  New

  
	
  Lease Type

  	
   

  	
  NNN

  	
   

  	
  NNN

  	
   

  	
  NNN

  	
   

  	
  NNN

  	
   

  	
  NNN

  	
   

  	
  NNN

  
	
  Base Rent $ Per Sf

  	
   

  	
  $58.96

  	
   

  	
  $54.41

  	
   

  	
  $30.00

  	
   

  	
  $24.00

  	
   

  	
  $29.40

  	
   

  	
  $30.60

  



 


8

















 


The market rents ranged from
$24.00 to $30.60 per square foot for standard medical office space. Based on
this sample we estimated the standard medical office building market rent to
fall between $27.00 and $30.60, per square foot. Given the age, construction,
condition of the subject, and location of the property we consider it to
identify most closely in the upper end of this range. We therefore, conclude
that the most probable market rent is indicated to be $30.00 per foot for
standard medical office rent.


 


We estimated market rent for
the specialty treatment space including the CT/Simulator to be $51.73, and for
radiation treatment vaults to be $82.85, thus indicating a weighted average
market rent of $44.73 per square foot. A summary of these market rental rates
as applied in the subject’s case is detailed in the following chart.


 


CONTRACT RENTAL INCOME


 


	
  Tenant

  	
   

  	
  Square

  Feet

  	
   

  	
  Rent Per SF/

  Year

  	
   

  	
  Annual Gross

  Rent for

  Forecast Year

  	
   

  
	
  Medical
  Office Rent

  	
   

  	
  4,447

  	
   

  	
  $

  	
  30.00

  	
   

  	
  $

  	
  133,410

  	
   

  
	
  CT/Similator

  	
   

  	
  977

  	
   

  	
  $

  	
  51.73

  	
   

  	
  $

  	
  50,540

  	
   

  
	
  Vault

  	
   

  	
  1,539

  	
   

  	
  $

  	
  82.85

  	
   

  	
  $

  	
  127,506

  	
   

  
	
  Market Rent Total

  	
   

  	
  6,963

  	
   

  	
  $

  	
  44.73

  	
   

  	
  $

  	
  311,456

  	
   

  
	
  Total Rentable Area =

  	
   

  	
  6,963 SF leased + 0 SF Vacant = 6,963 SF

  	
   

  



 


The current contract rent is
$58.96 per square foot per year. As previously noted market rent represents the
“most probable” rent which anticipates a variance around a measure of central
tendency.


 


Rental 1 at $54.41 is more
specialized medical office space with build-out cost and rent significantly
higher than standard medical office space. Applying this rate in place of the
standard medical office area results in an indicated weighted average market
rent of $60.32. A summary of this market rental rate as applied to the subject
is detailed below.


 


CONTRACT RENTAL INCOME


 


	
  Tenant

  	
   

  	
  Square

  Feet

  	
   

  	
  Rent Per SF/

  Year

  	
   

  	
  Annual Gross

  Rent for

  Forecast Year

  	
   

  
	
  Medical
  Office Rent

  	
   

  	
  4,447

  	
   

  	
  $

  	
  54.41

  	
   

  	
  $

  	
  241,961

  	
   

  
	
  CT/Similator

  	
   

  	
  977

  	
   

  	
  $

  	
  51.73

  	
   

  	
  $

  	
  50,540

  	
   

  
	
  Vault

  	
   

  	
  1,539

  	
   

  	
  $

  	
  82.85

  	
   

  	
  $

  	
  127,506

  	
   

  
	
  Market Rent Total

  	
   

  	
  6,963

  	
   

  	
  $

  	
  60.32

  	
   

  	
  $

  	
  420,008

  	
   

  
	
  Total Rentable Area =

  	
   

  	
  6,963 SF leased + 0 SF Vacant = 6,963 SF

  	
   

  



 


Given a 10% variation around
the mean in the specialized medical office rent, we anticipate market rent to
fall between $54.28 and $66.35 per square foot, with the most probable rent
being $60.00.


 


Based on these measures,
market rent would be expected to fall between $45.00 and $60.00 per square
foot.


 


9














 


Return on
Asset Analysis of Market Rent


 


A second method frequently
utilized in the leasing of special purpose properties, and particularly applied
to high cost, specialized facilities such as Radiation Oncology Centers, is the
establishment of the return on asset basis for determination of market rent.
This situation frequently occurs with a national or regional operator (such as
Radiation Therapy Services, US Oncology, etc.) who either acquire or
design and develop a facility which is then “sold” and leased back from a real
estate investment trust or real estate partnership. The range of asset returns
reportedly relied on in these leases is from about 8% to 13%, depending on the
negotiating capacity of the lessee operator, the age of the facility, recapture
of special purpose features and the strength of the local market. Because these
facilities often reflect a different mix of real estate components a cost based
approach will be applied in estimating an asset based market rent for the
subject.


 


A cost based estimate of
market rent for the real property will be determined based on an appropriate
return on and of the assets. In estimating market rent for the real property,
land and buildings were separated. Land, being a non-wasting asset, reflected
an 8.0% return on, but no recapture of, the asset.


 


The return on the
improvements also relies on a base rate of 8%. The return (recapture) of the
asset was based on our estimate of combined expected economic life for the
subject improvements. We note that oncology centers combine several types of
specialized space each of which has a high level of technological dependence.
The economic life of each segment of the structures was separately estimated,
along with an allowance for retro-fit every seven years. The weighted average
economic life for this building was thus estimated at 26 years. The required
return of and on improvements was therefore calculated at 12.01%.


 


	
  Market Rent Analysis - Return of and on Assets

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Real Property

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Land

  	
   

  	
   

  	
   

  	
  $

  	
  654,050

  	
   

  
	
  Return
  to Land

  	
   

  	
   

  	
   

  	
  8.00

  	
  %

  
	
  Land
  Rent

  	
   

  	
   

  	
   

  	
  $

  	
  52,324

  	
   

  
	
  Improvements

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Medical
  Office

  	
   

  	
  $

  	
  1,258,636

  	
   

  	
   

  	
   

  
	
  CT/Simulator

  	
   

  	
  $

  	
  244,375

  	
   

  	
   

  	
   

  
	
  Vault

  	
   

  	
  $

  	
  804,050

  	
   

  	
   

  	
   

  
	
  Soft/Misc
  Cost

  	
   

  	
  $

  	
  493,249

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  2,800,310

  	
   

  	
  $

  	
  2,800,000

  	
   

  
	
  8.0%/27
  year effective life

  	
   

  	
   

  	
   

  	
  12.01

  	
  %

  
	
  Asset
  Based Rent

  	
   

  	
   

  	
   

  	
  $

  	
  388,699

  	
   

  
	
  Combined Market Rent (Rounded)

  	
   

  	
   

  	
   

  	
  $

  	
  389,000

  	
   

  
	
  Market Rent Per Square Foot

  	
   

  	
  6,963

  	
   

  	
  $

  	
  55.87

  	
   

  



 


We utilized this methodology
as a benchmark in the market rent analysis. The indicated asset based
calculation of market rent is $379,000 ($55.87 per square foot).


 


10

















 


This asset-based calculation
of market rent, therefore, is considered within the expected ranges as derived
from the various benchmarks for comparison. While the market rent estimate
calculation proves a very “precise” market rent, the level of precision is not
intended to imply a high degree of accuracy. In other words, while this is
considered a reasonable estimate of market, rent is not considered sufficiently
market specific to prove the only measure of market rent. The costs are based
on costs that are subject to depreciation, therefore they are less reliable.


 


Final
Opinion of Market Rent


 


Most weight is given to the
comparable rental study. Based on the analyses and conclusions as stated and
subject to the definitions, assumptions, and limiting conditions relied on, it
is our opinion that the Market Rent of the leasehold interest in the subject
property, analyzed as of January 27, 2006 is: to be consistent with
contract rent at $58.96 per square foot or $34,211.54 per month.


 


$410,538.48 per Year


 


If you have any questions or
comments, please let us know. Thank you for the opportunity to be of service.


 


	
  Respectfully submitted,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Craig L. Smith

  	
   

  	
  /s/ Larry D. Webb

  
	
  Craig L. Smith, MAI

  Certified General Real Estate Appraiser

  Florida Certificate #RZ786

  	
   

  	
  Larry D. Webb, MAI

  Certified General Real Estate Appraiser 

  California Certificate #AG003076

  



 


11

















 





 


Certificate
of Opinion


 


The undersigned hereby
certifies that he has personally inspected, collected and analyzed data and
evaluated the interests as requested in this appraisal identified in the body
of this report.


 


Based on the data, analysis,
and conclusions, and subject to the limiting conditions included in this
report, the opinions accurately reflect the unbiased results of this appraisal
as described. The effective date of this engagement is January 27, 2006.


 


The undersigned further
certifies that, to the best of his knowledge and belief,


 


·                             the statements
of fact contained in this report are true and correct.


·                             all conclusions
and opinions set forth in this report are the sole opinions of the signatory
unless otherwise specified.


·                             Larry D Webb,
MAI, did not personally inspected the property. Ralph B. Morrison also
inspected the interior and exterior property on January 18, 2006.


·                             the reported
analyses, opinions, and conclusions are limited only by the reported
assumptions and contingent and limiting conditions, and are the personal,
unbiased professional analyses, opinions, and conclusions of the analyst.


·                             the use of this
report is subject to the requirements of the Appraisal Institute relating to
review by its duly authorized representatives.


·                             compensation for
conducting this assignment is in no manner contingent on an action or event
resulting from the analyses, opinions, or conclusions in, or the use of, this
report.


·                             the analyst has
no present or prospective interest in the property that is the subject of this
report, and no personal interest or bias with respect to the parties involved.


·                             Significant
appraisal assistance in this engagement, consisting of the selection of
comparables, collection and verification of data, and preliminary final
analysis, was provided by Ralph B. Morrison who has not signed this report.


 


The Appraisal Institute
conducts a program of continuing education for its designated members. MAIs and
SRAs who meet the minimum standards of this program are awarded periodic
educational certification. As of the date of this report, Craig L. Smith and
Larry D. Webb, has completed the requirements of the continuing education
program of the Appraisal Institute.


 


	
  Sincerely,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Craig L. Smith

  	
   

  	
  /s/ Larry D. Webb

  
	
  Craig L. Smith, MAI

  	
   

  	
  Larry D. Webb, MAI

  
	
  Florida State Certified
  General Appraiser RZ786

  	
   

  	
  California General Real
  Estate Appraiser

  
	
   

  	
   

  	
  License No. AG003076

  



 





 

















 


DEVELOPMENT AGREEMENT


 


THIS
DEVELOPMENT AGREEMENT (this “Agreement”)
is made and entered into as of this 10th day of
February, 2005 to be effective as of December 16, 2004 (the “Effective Date”) by and between Palm Springs Radiation Enterprises, LLC, a
California limited liability company (“Owner”)
and California Radiation Therapy
Management Services, Inc., a California corporation (“Management Services”).


 


RECITALS:


 


A.        Owner is the owner of all that certain
real property located in the City of Palm Desert, Riverside County (“County”), State of California, having a
street address of 77-840 Flora Road, Palm Desert, California, and more
particularly described on Exhibit “A” attached hereto and made a part
hereof (the “Property”).


 


B.         Management Services is a wholly owned
subsidiary of Radiation Therapy Services, Inc., a Florida corporation (“RTSI”), a developer and operator of
radiation therapy centers.


 


C.         Owner and Management Services have
previously agreed that Owner shall develop the Property as a radiation therapy
center meeting the standards and requirements of RTSI for a radiation therapy
center under its 21st Century Oncology flagship brand (the “Project”) and shall deliver the same to
Management Services on a turnkey basis for operation and/or leasing by
Management Services.


 


D.        The parties are mutually desirous of
entering into this Agreement in order set forth their understanding relative to
the development and delivery to Management Services of the Project.


 


NOW THEREFORE, in
consideration of the foregoing and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:


 


SECTION 1


PROJECT DESIGN


 


1.1       Project Architect. The parties
agree to the appointment of Architectronix, Inc., a California
Professional Corporation as the “Project
Architect”. The scope of services and total fees and costs for each
stage thereof is set forth in those certain agreements for architectural
services executed by and between Owner and Project Architect dated July 23,
2003 and December 7, 2004 (the “Architectural
Agreement”), copies of which are attached hereto as Exhibit “B”.


 


1.2       Previously Prepared Plans and
Specifications. The Project Architect has prepared certain plans and
specifications for the Project, a detailed listing of which is set


 

















 


forth on Exhibit “C”
attached hereto and made a part hereof (the “Plans”),
which Plans are sufficient to fully complete the Project on a “turnkey”
basis for delivery to Management Services as herein contemplated and which
existing Plans are acceptable to the parties.


 


1.3       Additional Plans and Specifications to
be Agreed Upon. To the extent that the Plans do not provide all necessary
elements for the full completion of the Project as herein contemplated or in
the event that additional plans are necessary for the completion of the
Project, additional plans and specifications for the balance of the Project
will be agreed upon by the parties in accordance with Section 2 of this
Agreement.


 


SECTION 2


PLANS


 


2.1       Subsequent Plan Approval. Upon
execution of this Agreement, the parties shall have each approved the Plans as
set forth on Exhibit “C”. To the extent Additional Plans are necessary as
herein provided, Management Services shall approve the Additional Plans within
fifteen (15) Business Days following receipt thereof from Owner. The failure of
Management Services to disapprove such Additional Plans within such Fifteen
(15) Business Day period shall constitute its approval thereof. If Management
Services reasonably disapproves the Additional Plans, then Management Services
shall notify Owner in writing of any reasonably required changes, and Owner
shall promptly incorporate any such changes into the Plans and redeliver them,
as revised, to Management Services for approval. In any case, the Plans and any
Additional Plans shall comply with all laws, rules, and regulations of all
governmental authorities having jurisdiction over the Property, as well as the
requirements of any such governmental authorities which must accept any
elements of the Project to be constructed pursuant to the terms hereof (herein,
“Governmental Requirements”) and in
accordance with all standards of RTSI relative to 21st Century
Oncology Centers.


 


2.2       Resolution of Disputes. Any
dispute with respect to the Plans or any Additional Plans shall be resolved by
the submission of such issue to an independent California licensed architect
jointly selected by the parties, which independent architect shall have at
least ten (10) years’ experience in the construction of improvements
similar to the Project and who shall not have worked for either of the parties
within three (3) years prior to the date of this Agreement. If the parties
cannot agree on the selection of an independent architect, then Management
Services shall select the same. Such selection and the decision rendered by
such selected independent architect shall in all events be accomplished within
fifteen (15) Business Days after the date either party notifies the other of
the dispute, and shall be binding upon the parties. The fees of the independent
architect engaged to resolve a dispute between the parties relative to the
Plans shall be split equally by the parties involved in the dispute.


 


2.3       Additional Plans and Specifications.
Additional Plans approved pursuant to the terms of this Section shall be
deemed to be included within the definition of Plans once approved.


 


2

















 


SECTION 3


DEVELOPMENT OF PROJECT


 


3.1       Development. Owner shall be solely
and exclusively responsible, subject to all approval rights of Management
Services hereunder, at its sole cost and expense to commence, diligently
prosecute and complete the Project in accordance with the Plans, all
Governmental Requirements and standards required by RTSI so as to deliver to
Management Services on a “turnkey” basis upon completion a first class
radiation therapy center and facility. Owner shall be solely responsible for
obtaining, at its sole cost and expense, any and all governmental permits,
licenses and approvals necessary for the construction, completion and equipping
of the Project. Owner hereby represents and warrants to Management Services
that all required permits and approvals necessary for the construction,
completion and equipping of the Project.


 


3.2       Financing. Owner acknowledges,
covenants and agrees that it is solely responsible for investment of all equity
investment in to the Project, as well as for obtaining financing for the
construction, completion and equipping of the Project. Owner represents and
warrants and covenants and agrees with Management Services that it shall obtain
all financing for the construction and completion of the Project and shall
disclose to Management Services the name of any institutional lender providing
such financing and the terms thereof. Owner agrees that it shall provide to
Management Services within ten (10) days from entering into any such
financing, true, complete and correct copies of all loan documents evidencing
and/or securing said financing.


 


3.3       Contract and Contractor.
Management Services has previously entered into a Standard Form of
Agreement Between Owner and Contractor (AIA Document A101— 1997) (the “General Contract”) with ACN Construction, Inc.
(“Contractor”) for construction
and completion of the Project, a true, correct and complete copy of which is
attached hereto as Exhibit “D”. Contemporaneously with the execution and
delivery hereof, Management Services and Owner shall enter into an Assignment
of Construction Contract pursuant to which Management Services shall assign to
Owner the General Contract and all of Management Services’ rights thereunder, and
Owner shall assume and agree to perform and indemnify Management Services from
all obligations, liabilities and performances required to be performed by
Management Services under the General Contract. The General Contract is an
unclassified, fixed price contract, providing for progress payments, retainage
of not less than ten percent (10%) of each such progress payment, and with
final payment to be conditioned upon the parties’ approval of the Project
(which approval shall not be unreasonably withheld or delayed), and
certification by the Project Architect that the Project has been completed in
accordance with the Plans.


 


3.4       Completion of Project. Owner shall
cause the Contractor to substantially complete the Project in accordance with
the construction schedule set forth on Schedule
1 hereto (the “Construction
Schedule”), including without limitation the Completion Date
provided therein, subject only to Punch List items (defined below), and in
accordance with the construction budget set forth on Schedule 2  hereto (the “Project Budget”).  The Project shall be performed in a good
and workmanlike manner using sound construction


 


3

















 


practices and so as to
comply with the Plans, all Governmental Requirements and all standards
established by RTSI for a radiation therapy center. Upon substantial completion
of the Project and issuance of a Certificate of Occupancy therefor, Owner shall
cause the Project Architect to provide a written certification to Management
Services that all work for the Project has been completed in accordance with
the Plans. Within fifteen (15) days following substantial completion of the
Project and issuance of a Certificate of Occupancy therefor, Owner and
Management Services shall meet and confer to prepare a written punch list
setting forth any incomplete or defective items of the Project that require
additional work by Owner (“Punch List”). To
the extent reasonably practicable, Owner shall perform or cause all items of
work disclosed in the Punch List to be fully performed and completed within
thirty (30) days following completion of the Punch List, provided that if such
work requires more than thirty (30) days to complete, Owner shall not be in
default hereunder if it commences to cure such Punch List items within such
thirty (30) day period and diligently pursues such cure to completion.


 


3.5       Equipping of Project. Owner
acknowledges and agrees that Devoto Construction of Southwest Florida, Inc.
(“Devoto”), an affiliate of RTSI,
shall serve as purchasing manager of certain of the equipment and other items
required to complete the equipping of the Project in accordance with the Plans
and the standards and requirements of RTSI. Owner acknowledges that Devoto is
able to achieve certain savings relative to the purchase of such equipment as a
result of its relationship with vendors providing the same. Owner agrees that
contemporaneously with the execution and delivery hereof, it shall enter into a
Purchasing Agreement with Devoto in the form attached hereto as Exhibit “E”,
to manage and arrange the purchase and installation of such equipment.


 


3.6       Change Orders. Any change order
and corresponding revisions to the Project or the Plans requested shall be
subject to the prior written approval of Owner, with major or material change
orders also subject to the prior approval of Management Services.


 


3.5       Indemnification. Owner shall and
does hereby indemnify Management Services and RTSI, and their general and
limited partners, officers, directors, members, managers, employees, agents,
shareholders, successors and assigns (collectively, the “Indemnified Parties”), and holds the
Indemnified Parties harmless from all loss, damage, cost, expense and attorneys’
fees that any of the Indemnified Parties may suffer at any time by reason of or
arising as a result of the activities performed by Owner, it’s agent, employees
and/or contractor(s) under this Agreement, including without limitation
the construction and completion of the Project. Owner hereby agrees to cause Management
Services and RTSI to be named as additional insureds under any and all
liability and builder’s risk insurance policies issued in connection with the
Project.


 


SECTION 4


COMPLETION OF PROJECT


 


4.1       Operating Agreement; Lease. Upon
completion of the Project as evidenced


 


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by the delivery of a
Certificate of Occupancy therefor and provided that the Project has been fully
equipped and otherwise accepted by Management Services, Owner and Management
Services shall enter into an Operating Agreement and/or Lease pursuant to which
Management Services shall manage and operate the completed Project generally
upon the business terms set forth on Exhibit “F” attached hereto and made
a part hereof.


 


SECTION 5


DEFAULT; SELF HELP


 


5.1       Owner Default. Owner shall be
deemed in default of this Agreement if it fails to provide due diligence to
Management Services to insure performance pursuant to the Construction
Contract.


 


SECTION 6


GENERAL PROVISIONS


 


6.1       Termination. Unless sooner
terminated for default or otherwise, this Agreement shall terminate upon
satisfaction of all the following conditions: (i) Owner’s full completion
of the Project; (ii) Management Services’ acceptance of the completed
Project; and (iii) Management Services’ and Owner’s entry into an
operating agreement or lease relative to the operation of the completed
Project.


 


6.2       Binding Effect. Subject to any
provision hereof restricting assignment, this Agreement shall be binding upon
and inure to the benefit of the executing parties and their respective
successors and assigns.


 


6.3       Costs and Attorneys’ Fees. If any
party to this Agreement brings or commences any legal action or proceeding to
enforce any of the terms of this Agreement (or for damages by reason of an
alleged breach of this Agreement), the prevailing party in such action shall be
entitled to recovery of all costs and expenses of litigation, including
reasonable attorneys’ fees and costs, as part of its judgment. The prevailing
party shall also be entitled to recovery of all costs and expenses, including
reasonable attorneys’ fees, in enforcing any judgment awarded to it.


 


6.4       Relationship of Parties. Nothing
contained in this Agreement shall be deemed or construed, either by the parties
hereto or by any third party, to create the relationship of principal and agent
or create any partnership, joint venture or other association between Owner and
Management Services.


 


6.5       Notices. All notices, including
deliveries of documentation (i.e., plans and contracts) for review and
approval herein shall be sent by either personal delivery, a reputable
overnight courier which keeps receipts of delivery (such as UPS or Federal
Express), or through the facilities of the United States Post Office, postage prepaid,
certified or registered mail, return receipt requested. Any such notice shall
be effective upon delivery, if delivered by personal delivery or overnight
courier, and seventy-two (72) hours after dispatch, if mailed in accordance
with the above. Notices to the respective


 


5

















 


parties shall be sent to the
following addresses unless written notice of a change of address has been
previously given pursuant hereto:


 


	
  To Owner:

  	
  Palm Springs Radiation
  Enterprises, LLC

  
	
   

  	
  2234 Colonial Boulevard

  
	
   

  	
  Fort Myers, FL 33907

  
	
   

  	
  Attention: Daniel E.
  Dosoretz, M.D.

  
	
   

  	
   

  
	
  To Management Services:

  	
  California Radiation
  Therapy Management

  
	
   

  	
  Services, Inc.

  
	
   

  	
  2234 Colonial Boulevard

  
	
   

  	
  Fort Myers, FL 33907

  
	
   

  	
  Attn: David M. Koeninger

  
	
   

  	
  Phone:(239) 931-7282

  
	
   

  	
  Fax:(239) 931-7380

  



 


6.6       Consents. Whenever in this
Agreement a party is, or may be, called upon to give its consent or approval to
any action, except as otherwise specifically provided herein, the consent or
approval shall not be unreasonably withheld or delayed.


 


6.7       Exhibits Incorporated. Each
exhibit and schedule attached hereto and referred to in this Agreement is
hereby incorporated by reference as though set forth in full where referred to
(by letter or description) herein.


 


6.8       Force Majeure. If Owner is delayed
in the performance of the Project for more than 90 days by reason of force
majeure such as fire, earthquake, hurricane or war, riots, strikes, lockouts,
insurrections, unusually severe, adverse weather conditions, or any other
condition beyond Owner’s reasonable control, then the Construction Schedule
shall be extended by the appropriate number of days to account for such delay.


 


6.9       Entire Agreement; Modification.
This Agreement (including the Recitals set forth at the beginning of this
Agreement, all of which are incorporated herein by this reference) embodies and
constitutes the entire understanding between the parties with respect to the
transaction contemplated herein. All prior or contemporaneous agreements, understandings,
representations and statements, oral or written, are merged into this
Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, discharged, or terminated except by an instrument in writing signed
by the party against which the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.


 


7.12     Applicable Law. This Agreement shall
be governed by, and construed in accordance with, the laws of Florida.


 


7.13     Headings. Descriptive headings are
for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.


 


6

















 


7.14     Interpretation. Whenever the context
hereof shall so require, the singular shall include the plural, the male gender
shall include the female gender and the neuter, and vice versa, and the use of
the terms “include,” “includes” and “including” shall be without limitation to
the items which follow.


 


7.15     Severability. In case any one or
more of the provisions hereof shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.


 


7.16     Joint Drafting. The parties
acknowledge that each has played an equal part in the negotiation and drafting
of this Agreement, and in the event any ambiguities should be realized in the
construction or interpretation of this Agreement, such ambiguities shall not be
construed against either party solely on account of authorship.


 


7.17     Time is of the Essence. The parties
acknowledge that time is of the essence for each time and date specifically set
forth in this Agreement.


 


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


 


 


	
   

  	
   

  	
  “Owner”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PALM SPRINGS RADIATION
  ENTERPRISES, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Howard M. Sheridan

  
	
   

  	
   

  	
  Name: Howard M. Sheridan

  
	
   

  	
   

  	
  Title: Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Management
  Services”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CALIFORNIA RADIATION
  THERAPY 

  MANAGEMENT SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Daniel E. Dosoretz

  
	
   

  	
   

  	
  Name: Daniel E. Dosoretz

  
	
   

  	
   

  	
  Title: President and CEO

  



 


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