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EXHIBIT 10.1
GROUND LEASE
BETWEEN
THE CITY OF SAN MARCOS,
a municipal corporation
AND
CINEMA STAR LUXURY THEATERS, INC.,
a California corporation
JUNE 25, 1996
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TABLE OF CONTENTS
1. LEASED PREMISES ........................................... 1
1.1 Premises ........................................... 1
1.2 Operating Documents ................................ 1
2. LEASE TERM ................................................ 2
2.1 Term ............................................... 2
2.2 Pre-Term Possession ................................ 2
2.3 Deposit ............................................ 4
2.4 Forfeiture of Deposit .............................. 4
2.5 Landlord's Covenant of Quiet Enjoyment ............. 5
3. RENTAL .................................................... 6
3.1 Base Rent .......................................... 6
3.2 Percentage Rent .................................... 7
3.3 Past Due Amounts ................................... 9
4. TAXES AND ASSESSMENTS; PRORATIONS ......................... 9
4.1 Taxes and Assessments .............................. 9
4.2 Payment of Taxes ................................... 10
4.3 Right to Contest ................................... 11
4.4 Separate Assessment ................................ 11
4.5 Personal Property Taxes ............................ 11
4.6 Other Taxes ........................................ 11
4.7 Exclusion From Taxes ............................... 12
4.8 Net Lease Recital .................................. 12
4.9 Prorations ......................................... 12
5. CONSTRUCTION AND MAINTENANCE .............................. 12
5.1 Construction and Ownership of Improvements ......... 12
5.2 Mechanic's Liens ................................... 13
5.3 Alteration of Improvements ......................... 14
5.4 Tenants Property ................................... 15
5.5 Landlord's Lien Waiver ............................. 15
5.6 Maintenance and Repair ............................. 15
5.7 Right of Entry ..................................... 16
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6. USE ............................................................ 16
6.1 Use ..................................................... 16
6.2 Signage ................................................. 18
6.3 Continuous Operation .................................... 19
6.4 Radius Restriction ...................................... 19
6.5 Food Service Restrictions ............................... 19
6.6 Compliance with Laws .................................... 20
7. REPRESENTATIONS AND WARRANTIES ................................. 20
7.1 No Violation ............................................ 20
7.2 Landlord's Representations and Warranties................ 20
7.3 Tenant's Representations and Warranties.................. 20
8. INDEMNIFICATION ................................................ 21
9. INSURANCE ...................................................... 21
9.1 General Liability ....................................... 21
9.2 Fire and Extended Coverage .............................. 21
9.3 Tenant's Personal Property .............................. 22
9.4 Other Coverage .......................................... 22
9.5 Policies and Certificate of Insurance ................... 22
10. DAMAGE OR DESTRUCTION .......................................... 22
10.1 Obligation to Restore ................................... 23
10.2 Reconstruction and Repair Requirements .................. 23
10.3 Tenant Improvements and Waiver of Termination ........... 24
10.4 Mutual Release .......................................... 24
10.5 No Rent Abatement During Reconstruction ................. 24
11. CONDEMNATION ................................................... 24
12. OCCUPANCY TRANSACTIONS ......................................... 25
12.1 Definitions ............................................. 25
12.2 Restrictions ............................................ 26
12.3 Condition Precedent ..................................... 26
12.4 Procedures .............................................. 26
12.5 Documentation and Expenses .............................. 27
12.6 Nullity ................................................. 27
12.7 Non-Transfers ........................................... 28
12.8 Leasehold Mortgages ..................................... 28
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13. TENANT'S DEFAULT ........................................ 29
13.1 Tenant's Default ................................. 29
13.2 Cumulative Remedies .............................. 30
13.3 Tenant's Right to Possession Not Terminated ...... 30
13.4 Termination of Tenant's Right to Possession ...... 31
14. LANDLORD'S DEFAULT ...................................... 32
15. HOLDING OVER ............................................ 32
16. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT ........... 32
17. UTILITIES AND SERVICES .................................. 33
18. ESTOPPEL CERTIFICATES ................................... 33
19. COMMON AREA ............................................. 34
20. MISCELLANEOUS PROVISIONS ................................ 35
20.1 Notices .......................................... 35
20.2 Headings ......................................... 36
20.3 Mortgagee Protection ............................. 36
20.4 Force Majeure .................................... 36
20.5 Binding Effect ................................... 36
20.6 Modifications .................................... 36
20.7 Applicable Law ................................... 36
20.8 Partial Invalidity ............................... 37
20.9 Brokerage Commission ............................. 37
20.10 Covenants Running with the Land .................. 37
20.11 Memorandum of Lease .............................. 37
20.12 Relationship of the Parties ...................... 37
20.13 Entire Agreement ................................. 38
20.14 Sale of Premises ................................. 38
20.15 Attorneys' Fees .................................. 38
20.16 Time ............................................. 38
20.17 Copies ........................................... 38
20.18 Waiver ........................................... 38
20.19 Accord and Satisfaction .......................... 39
20.20 Execution of Lease ............................... 39
20.21 Corporate Good Standing .......................... 39
20.22 Diligent Construction ............................ 39
20.23 Limitation on Liability .......................... 39
20.24 Identification of Tenant ......................... 40
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20.25 Landlord's Title ............................................ 40
20.26 Financial Statements ........................................ 40
20.27 Right to Lease .............................................. 40
20.28 Project Name and Signage .................................... 40
20.29 Land Use Decisions .......................................... 40
20.30 Easements Over Premises ..................................... 41
21. HAZARDOUS MATERIALS ............................................... 41
21.1 Use, Storage, Handling and Disposal of Hazardous Materials .. 41
21.2 Compliance with Laws ........................................ 41
21.3 Exculpation of Landlord ..................................... 42
21.4 Disclosure and Notification ................................. 42
21.5 Inspection of Premises ...................................... 42
21.6 Indemnification of Landlord ................................. 43
21.7 Remediation ................................................. 43
21.8 Surrender of Premises ....................................... 44
21.9 Definition of Hazardous Materials ........................... 44
21.10 Assignment and Subletting ................................... 44
EXHIBITS
"A" Legal Description
"B" Site Plan of Project
"C" Work Letter
"D" Provision Governing the Purchase and Delivery of Well Water for Irrigation
of Leased Premises
"E" Time Schedule
"F" Directory Sign Design
"G" Commencement Date Letter
"H" Parking Agreement
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GROUND LEASE
THIS GROUND LEASE ("Lease") is made as of the 25th day of June, 1996
between THE CITY OF SAN MARCOS, a municipal corporation (hereafter called
"Landlord"), and CINEMA STAR LUXURY THEATERS, INC., a California corporation
(hereinafter called "Tenant").
THE PARTIES HERETO HEREBY MUTUALLY COVENANT AND AGREE AS FOLLOWS:
1. LEASED PREMISES
1.1 PREMISES
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
that certain land located in the City of San Marcos, County of San Diego, State
of California, and legally described in Exhibit "A" attached hereto, as more
particularly outlined on the Site Plan attached hereto as Exhibit "B", together
with those easements appurtenant thereto (the "Premises"). Tenant agrees to
accept possession of the Premises from Landlord on the terms and conditions of
this Lease upon the full execution hereof by Landlord and Tenant, subject to the
Operating Documents (as defined in Section 1.2 below), to all matters of record
and to all applicable zoning, municipal, county, state and federal laws,
ordinances and regulations governing and regulating the use of the Premises.
Tenant acknowledges that neither Landlord nor Landlord's agents have made any
representation or warranty as to such matters of record, or as to such laws,
ordinances, zoning or regulations, or as to the condition of the Premises or the
suitability of the Premises for the conduct of Tenant's business. Subject to the
terms and conditions of this Lease, Tenant agrees to accept the Premises "as-is"
and "where-is."
1.2 OPERATING DOCUMENTS
Tenant hereby acknowledges that the Premises are a portion of that certain
mixed-use project commonly known as San Marcos Town Center ("Project"). The
Project and this Lease are subject to the Heart of the City Specific Plan, all
covenants, conditions and restrictions previously or hereafter recorded against
the Project or any portion thereof which includes the Premises, and all
amendments, modifications or supplements thereto (collectively, the "Operating
Documents"). The Operating Documents shall include a reciprocal parking
agreement ("Parking Agreement") between Landlord and Tenant regarding use of
parking spaces on the adjoining retail portion of the Project as described in
the Parking Agreement. The Parking Agreement will be agreed to between the
parties after the Execution Date and attached as Exhibit "H" to the Lease. The
Parking Agreement will provide for non-exclusive use of not more than one
hundred seventy-five (175) parking spaces in the City's parking structure on the
third and fourth levels. The Operating Documents (except for the Parking
Agreement) may be amended without the consent of Tenant, provided, however, that
this Lease shall not be subject to, nor shall Tenant be bound by, the provisions
of any Operating Document entered into or recorded against the Project or any
portion thereof which includes the Premises after the date of this Lease, or any
amendment, modification or supplement to any Operating Document, which: (i)
would materially interfere with Tenant's use of the Premises for purposes
permitted under
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Section 6. 1, below, or Tenant's occupancy of the Premises, or (ii) would
otherwise materially and adversely increase Tenant's obligations, or decrease
Tenants rights, under this Lease.
2. LEASE TERM
2.1 TERM
(a) This Lease shall be effective upon the date first above written (the
"Effective Date"). Subject to force majeure, as defined in Section 20.4 below,
the term of this Lease (the "Term") shall commence one hundred eighty (180) days
after Tenant has received its building permit ("Commencement Date"). There shall
be no extension of the Commencement Date for any reason whatsoever, subject to
force majeure, as defined in Section 20.4 below. Subject to force majeure, as
defined in Section 20.4 below, the Term shall expire on December 31, 2052
("Expiration Date"), unless this Lease shall sooner terminate or be extended
pursuant to the terms and conditions herein. For purposes of this Lease, the
term "Lease Year" shill mean each twelve (12) consecutive month period during
the Lease Term commencing on January 1 and ending December 31 of each calendar
year; provided, however, that the first Lease Year shall commence on the
Commencement Date and shall end on December 31 of the calendar year in which the
Term commenced; and further provided that the last Lease Year shall end on the
Expiration Date (unless the Lease is earlier terminated pursuant to the
provisions hereof). In the event of an initial partial Lease Year, Percentage
Rent (as defined below) will be determined within sixty (60) days after the end
of the partial Lease Year utilizing a prorated Base Rent.
2.2 PRE-TERM POSSESSION
(a) Tenant shall be entitled to enter and occupy the Premises at any time
following the Effective Date for purposes of construction of the Improvements
(defined in Section 5.1 below) in accordance with the Work Letter attached
hereto as Exhibit "C" ("Work Letter"). Such occupation of the Premises shall be
subject to all terms and conditions of this Lease. Notwithstanding anything to
the contrary contained in this Lease (including, but not limited to, the Work
Letter attached hereto), Tenant shall not perform or cause to be performed any
tests or studies affecting or relating to the soils or subsurface areas below
the Premises or any other portion of the Project without prior written notice to
and approval of Landlord, which approval shall not be unreasonably withheld.
Tenant hereby indemnifies and holds Landlord harmless from any and all costs,
losses, damages or expenses of any kind or nature arising out of or resulting
from such activities upon the Premises or Project by Tenant, or its agents,
employees or contractors.
(b) With respect to the delivery of the Premises to Tenant, Tenant will
(prior to the commencement of Tenants Work under the Work Letter) satisfy the
following requirements:
(i) Title, Survey, Soils. Promptly after execution of this Lease,
Landlord will provide to Tenant the following (except as otherwise waived
in writing by Tenant): (a) a current tide insurance report acceptable to
Tenant from First American Tide Insurance Company, or other tide insurance
company reasonably acceptable to Tenant ("Tide
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Company"), showing a good and merchantable leasehold estate in the Premises
vested in Tenant and showing Landlord as the fee owner of the Premises,
together with copies of all easements, covenants, restrictions, agreements
or other documents which affect the Premises; (b) a copy of the subdivision
map of the Project and a metes and bounds boundary survey that shows the
boundaries and location of the Premises as a portion of a legal lot by a
licensed surveyor or civil engineer licensed in the state in which the
Premises is located, in form reasonably acceptable to Tenant which shall
show the legal description of the Premises and (c) such soil tests and/or
environmental audits as are in Landlord's possession.
(ii) Approval by Tenant. Tenant shall have twenty (20) days after
receipt of the preliminary report and copies of all tide exceptions within
which to notify Landlord in writing of Tenant's disapproval of any
exceptions shown in the title report, other than an exception for current
property taxes. Tenant shall have twenty (20) days after receipt of the
survey, soils tests and environmental audit within which to notify Landlord
in writing of Tenant's disapproval of any aspect of the survey, tests or
audit or their results. Tenant shall have the same twenty (20) day period
to determine that sewer, water, storm drainage, gas, telephone and TV cable
connections (collectively, "utilities") are readily available and that the
costs to complete these connections are acceptable to Tenant. In the event
of such disapproval, Landlord shall have thirty (30) days after receipt of
Tenant's notice to eliminate any disapproved tide exception or to correct
any disapproved aspect of the tests, audit or utilities (or to satisfy
Tenant that the disapproved tide exception or the soil or environmental or
utility condition to which Tenant objected will be corrected by Landlord
within a time period approved by Tenant in writing, but not in any event
later than the date Landlord delivers possession of the leased Premises to
Tenant). If Landlord is unable or unwilling to eliminate a disapproved tide
exception or disapproved aspect of the soil tests or environmental audit or
cost of utilities to the Premises, either party may elect to rescind this
Least by notice to the other party. In such event, all obligations of the
parties under this Lease shall thereafter cease, unless Tenant notifies
Landlord (within ten (10) days after Tenant's receipt of any such
rescission notice from Landlord) that Tenant elects to waive its prior
disapproval.
(iii) Reports, Environmental Investigation. Prior to execution of
this Lease, Landlord shall provide a copy to Tenant of any environmental
assessments or investigatory reports in Landlord's possession concerning
hazardous materials in the Premises or Project or other reports or studies
(if any) in Landlord's possession concerning any violations of law with
respect to the Project (but without warranty or liability by Landlord as to
the accuracy, fitness or reliability of such assessments or reports and
without obligation by Landlord to perform any additional investigations).
Tenant will have thirty (30) days after the Effective Date to perform
such investigations concerning hazardous substances within the Demised
Premises or such "Level One" environmental assessments as Tenant may desire
(which shall not involve subsurface testing unless Landlord's prior
written. consent is given). Tenant may terminate this Lease by written
notice to Landlord within thirty (30) days after the Effective Date if
Tenant is not reasonably satisfied with the results thereof. If not so
terminated within such time period, this contingency shall conclusively be
deemed waived.
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(iv) Permit Contingency. This Lease is subject to Tenant's ability
to obtain the permit(s) required by the City of San Marcos for the
construction and operation of a forty thousand (40,000) square foot cinema
with no more than two thousand (2,000) seats. Tenant will diligently pursue
obtaining required permit(s) in accordance with the terms of this Lease,
will keep Landlord informed of the status of such matters and will notify
Landlord at such times as Tenant obtains (or is denied) such permit(s).
Tenant will promptly apply for such permits as soon as Tenant obtains
Landlord's written approval of Tenant's plans and specifications in
accordance with the project schedule attached hereto as Exhibit "E" and
incorporated herein. Notwithstanding the nature of the delaying cause
(including "force majeure" delays), in the event that such permits have not
been obtained on or before sixty (60) days from the date shown in Exhibit
"E" as the last date when permits will be obtained, ("Permit Period"), then
either Landlord or Tenant may elect to cancel this Lease upon written
notice to the other, in which event both parties will be released from any
further obligation to the other pursuant to this Lease. If at any time
prior to such date Tenant determines that the conditions relating to such
permit(s) cannot be satisfied, Tenant shall give Landlord not less than ten
(10) days' notice of termination of this Lease, specifying in reasonable
detail the condition(s) that cannot be satisfied. Tenant will turn over to
Landlord the written work product in its possession concerning the Premises
as Landlord may reasonably require, including any applications for
governmental approvals and related data.
(v) Financing. This Lease is also subject to Tenants ability to
obtain financing suitable to Tenant for its planned construction. Tenant
shall diligently pursue obtaining said financing, will keep Landlord
informed of the status of the financing and will notify Landlord at the
time it obtains or is denied said financing. Tenant will promptly apply for
such financing as soon as both patties have executed this Lease.
Notwithstanding the nature of the delaying cause, in the event that a
written commitment for financing has not been obtained by Tenant on or
before thirty (30) days after the Effective Date of this Lease, then either
Landlord or Tenant may elect to cancel this Lease upon written notice to
the other, in which event both parties will be released from any further
obligation to the other pursuant to this Lease. If at any time prior to
said date Tenant determines that the conditions relating to such financing
cannot be satisfied, Tenant shall give Landlord not less than ten (10) days
notice of termination of this Lease, specifying in reasonable detail the
condition(s) that cannot be satisfied. Tenant will turn over to Landlord
the written work product in its possession concerning the Premises as
Landlord may reasonably require.
2.3 DEPOSIT
Landlord and Tenant acknowledge that Tenant has deposited Ten Thousand
Dollars ($10,000.00) with Landlord as an earnest money deposit prior to
execution of this Lease. If the Lease commences in accordance with its terms on
the Commencement Date, the Deposit shall be applied as a credit against Rent due
under the Lease for the first month of the Term.
2.4 FORFEITURE OF DEPOSIT
IF TENANT DEFAULTS UNDER ThE TERMS OF THIS LEASE OR IF TENANT FAILS TO
OBTAIN ThE WRITTEN COMMITMENT FOR FINANCING DESCRIBED IN SECTION 2.2 ABOVE
WITHIN THE THIRTY (30) DAY TIME PERIOD
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DESCRIBED THEREIN, LANDLORD SHALL BE ENTITLED TO RETAIN THE DEPOSIT IN THE
AMOUNT OF TEN THOUSAND DOLLARS ($10,000.00) AS LIQUIDATED DAMAGES, WHICH THE
PARTIES AGREE IS A REASONABLE SUM CONSIDERING ALL OF THE CIRCUMSTANCES EXISTING
ON THE DATE OF THIS AGREEMENT, INCLUDING THE RELATIONSHIP OF THE SUM TO THE
RANGE OF HARM TO LANDLORD THAT REASONABLY COULD BE ANTICIPATED AND THE
ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR INCONVENIENT. IN
PLACING THEIR INITIALS BELOW, EACH PARTY SPECIALLY CONFIRMS THE ACCURACY OF THE
STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL
WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME
THAT THIS AGREEMENT WAS MADE.
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INITIALS OF LANDLORD INITIALS OF TENANT
2.5 LANDLORD'S COVENANT OF QUIET ENJOYMENT
Landlord covenants and warrants that, so long as Tenant shall perform the
obligations of Tenant contained herein and shall not be in default in the
performance of any of such terms, conditions, obligations, liabilities, or
covenants, Landlord shall not interfere with Tenant's, (and its permitted
subtenant's, successor's and assign's) free, peaceable, exclusive and quiet use
and enjoyment of the Premises, subject to the terms and conditions herein, and
subject to: (a) the rights of the parties as set forth in this Lease; (b)any
mortgage(s) or deed of trust(s) to which this Lease is subordinate; (c) any
agreements and encumbrances to which this Lease is subordinate, (d) all matters
of record; (e) the Operating Documents and the fights of all other owners,
occupants, tenants, licensees, and invitees of or in the Project pursuant to the
Operating Documents; and/or disturbances, odors and similar inconveniences which
are commonly associated with projects of the type and size of the Project and/or
with Tenant's location in such Project.
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3. RENTAL
3.1 BASE RENT
Commencing on the Commencement Date and thereafter throughout the Term,
Tenant shall pay to Landlord annual base rent ("Base Rent") for the Premises in
the amounts stated below.
Period Base Rent
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Year 1 $180,000.00
Year 2 $190,000.00
Year 3 $200,000.00
Year 4 $210,000.00
Year 5 $220,000.00
Years 6 - 10 $246,400.00
Years 11 - 15 $280,968.00
Years 16 - 20 $314,084.00
Years 21 - 25 $346,174.00
Years 26 - 30 $387,715.00
Years 31 - 35 $434,241.00
Years 36 - 39 $486,350.00
Years 40 - 45 $544,712.00
Years 46 - 50 $610,077.00
Years 51 - 55 $683,286.00
Base Rent shall be due and payable by Tenant to Landlord at the address set
forth herein in twelve (12) equal installments on the first (1st) day of each
month in then lawful currency of the United States of America, in advance,
without set off, demand or deduction whatsoever. Any and all charges and sums
(other than the payment of the Base Rent pursuant to this Section 3.1 and
Percentage Rent payable pursuant to Section 3.2 below) payable by Tenant under
this Lease (including, but not limited to, insurance premiums, utility expenses,
Taxes pursuant to Section 4.1 below and Tenant's share of Common Area expenses
pursuant to Article 19 below and Signage Rent payable pursuant to Section 6.2
below), shall constitute additional rent hereunder ("Additional Rent"). Base
Rent, Percentage Rent and Additional Rent are sometimes hereinafter collectively
referred to as "Rent." All Rent shall be absolutely net to Landlord so that this
Lease shall, except as expressly provided herein, yield net to Landlord, the
Rent to be paid each month during the Term of this Lease. Accordingly, except as
otherwise expressly provided herein, all costs, expenses, and obligations of
every kind or nature whatsoever relating to the Premises, or any improvements
thereon which may arise or become due during the Term of this Lease, shall be
paid by Tenant as set forth herein. Nothing herein contained shall be deemed to
require Tenant to pay or discharge any liens or mortgages of any character
whatsoever which may exist or hereafter be placed upon the Premises by an
affirmative act or omission of Landlord. Should a rental period commence and/or
end on a day other than the first (1st) or last day of a month, then the
installment of monthly rental for such
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partial month shall be computed on a daily basis at a rate per day equal to
1/30th of the applicable monthly Rent.
3.2 PERCENTAGE RENT
(a) Payment of Percentage Rent. rn addition to the Base Rent and other
sums specified herein, Tenant shall pay annually as percentage rent ("Percentage
Rent") the amount by which four percent (4%) of all Lease Year Gross Sales (as
that term is defined below) exceeds the Base Rent payable for such Lease Year.
(b) Quarterly Payments and Annual Adjustments. Payments of Percentage
Rent shall be made by the twentieth (20th) day following each quarter with an
adjustment to an annual basis at the end of each Lease Year as provided in this
Lease. Each quarterly payment shall be determined by applying the percentage to
the aggregate Gross Sales for the portion of the Lease Year to the preceding
quarter in excess of Base Rent payable for the same period, and deducting the
Percentage Rent previously paid for said Lease Year. Within ninety (90) days
after the close of each Lease Year, and within forty-five (45) days following
the expiration of the Term, Tenant shall deliver to Landlord the annual
statement described in subsection (c) showing the Gross Sales of Tenant during
said Lease Year and the amounts paid to Landlord as Percentage Rent for said
Lease Year, and thereupon an adjustment shall be made with respect to the
Percentage Rent as follows: If Tenant shall have paid to Landlord an amount
greater than Tenant is required to pay as Percentage Rent for such Lease Year,
Landlord shall credit such amount against the monthly installment(s) of Base
Rent next coming due. If Tenant shall have paid an amount less than the
Percentage Rent required to be paid hereunder, then Tenant shall pay such
difference to Landlord at the time of Tenant's delivery to Landlord of such
statement.
(c) Statement of Gross Sales. Tenant agrees to furnish, or cause to be
furnished, to Landlord a statement of Gross Sales (I) within fifteen (15) days
after the close of each calendar quarter falling within each Lease Year, (2) an
annual statement, including a monthly breakdown of Gross Sales, within ninety
(90) days after the close of each succeeding Lease Year, and (3) a final
statement within forty-five (45) days following the expiration of the Term. Such
statements shall be prepared in accordance with generally accepted accounting
principles and shall show the breakdown of Gross Sales. Such statements shall be
signed by Tenant. Gross Sales will include any income or revenue received by
Tenant from any subtenant, licensee or concessionaire; provided, that if any
such party occupies more than ten percent (10%) of the gross building area of
the Premises, then the Gross Sales of the subtenant, licensee or concessionaire
(and not the income or revenue received by Tenant from it) will be included in
Tenant's Gross Sales. Tenant shall maintain books, receipts and records showing
all Gross Sales from the Premises, including detailed original records of any
exclusions or deductions from Gross Sales (including any exclusions or
deductions from Gross Sales of any subtenant, licensee or concessionaire). Such
books, receipts and records shall be kept for a period of two (2) years after
the close of each calendar year and shall be available for inspection and audit
by Landlord or its representative after reasonable notice during regular
business hours either at the Premises or (at Tenant's option) at Tenant's main
corporate or accounting headquarters office, if said office is in San Diego
County. The receipt by Landlord of any statement or any payment of Percentage
Rent for any period shall not bind it as to the correctness of the statement or
the
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payment. Landlord shall, upon reasonable notice delivered within two (2) years
after the receipt of any such statement, be entitled to an audit or examination
of such Gross Sales (including the Gross Sales of any subtenant, licensee or
concessionaire). Such audit or examination shall be conducted by an independent
certified public accountant, to be reasonably designated by -Landlord, during
normal business hours after reasonable advance notice, either at the Premises or
(at Tenant's option) at Tenant's main corporate or accounting headquarters
office as long as said office is in San Diego County. On any examination or
audit, Tenant will receive a copy of the report showing in reasonable detail any
discrepancies discovered between Tenant's calculation and the examiner's or
auditor's calculation of Gross Sales and Percentage Rent, at the same time as
such report is given to Landlord. If it shall be determined as a result of such
audit that there has been a deficiency in the payment of Percentage Rent, then
such deficiency shall become immediately due and payable within twenty (20) days
after Tenant's receipt of a copy of the audit or examination report, and if not
so paid within such twenty (20) day time period, the amounts not paid shall bear
interest at the Interest Rate. In addition, if Tenant understates Gross Sales by
more than three percent (3%), and if Landlord is entitled to any additional
Percentage Rent as a result of said understatement, or if such audit shows that
Tenant has failed to maintain the books of account and records required by this
Section 3.3 so that Landlord is unable to verify the accuracy of Tenant's
statement, then Tenant shall pay to Landlord all reasonable costs and expenses
(including reasonable auditor and attorney fees) which may be incurred by
Landlord in conducting such audit and collecting such underpayment if any.
(d) Gross Sales. "Gross Sales" shall mean the entire amount of the sale
price, whether for cash or otherwise, of all sales of admission tickets, food,
beverages, merchandise and services and of all other receipts whatsoever, with
respect to all business conducted at, in, upon or from the Premises, and
including all sales by any sublessee, concessionaire, or licensee (subject to
the provisions of this Section and Section 3.2(c) above. No deduction shall be
allowed for uncollected or uncollectable credit accounts. Gross Sales shall not
include, however: (i) sums received by any user other than Tenant for use of
Tenant's facility for non-film use (such as lectures), provided however, any sum
received by Tenant (as a fee or rent) for use of Tenant's facility shall be
included; (ii) any sums (other than any commission or service fee to Tenant)
shown separately from the price, collected and paid out for any sales tax, use,
or excise tax or similar tax, imposition or assessment levied, imposed or
assessed by any governmental authority which Tenant is required to remit to such
authority, (iii) the amount of returns to shippers or suppliers; (iv) the amount
of merchandise sold which is thereafter returned by the purchaser and accepted
by Tenant; (v) sales of fixtures or other capital items owned and sold by Tenant
after use thereof in the conduct of Tenant's business in the Premises; (vi)
receipts from the furnishing of uniforms to Tenant's employees as an incident to
their employment. The transfer of merchandise by Tenant, or a subsidiary or
affiliate of Tenant, from the Premises to another place of business owned or
operated by Tenant or a subsidiary or affiliate of Tenant shall not constitute a
sale where such transfers are made solely for the convenient operation of the
business of Tenant and not for the purpose of consummation a sale which has
theretofore been made in or from the Premises. Each sale upon an installment or
credit basis shall be included and treated as a sale for the full price in the
month in which such sale is made regardless of whether (or the time when) Tenant
shall receive payment.
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(e) Violation of Radius Restriction. In addition to Landlord's remedies
set forth in Section 6.4 and elsewhere in the Lease, in the event Tenant should
violate the covenant set forth in said Section 6.4, Landlord may, without
limiting Landlord's remedies, at its option and for so long as Tenant is
operating said other business, include "Gross Sales" of such other business in
the "Gross Sales" transacted from the Premises for the purpose of computing the
Percentage Rent due hereunder.
3.3 PAST DUE AMOUNTS
Except as provided below, if Tenant shall neglect or fail to pay, within
ten (10) days after the date the same is due arid payable, any monthly
installment of Rent or other amount required to be paid under this Lease by
Tenant, Tenant promises to pay to Landlord, in addition to such unpaid amounts,
interest upon such unpaid amounts from the date due until the date Landlord
receives payment at the lesser of (i) the maximum lawful rate, or (ii) the prime
rate announced by Bank of America (or its successor) from time to time plus four
(4) percentage points (the "Interest Rate"). In addition to such interest,
Tenant acknowledges that the late payment by Tenant of any monthly installment
of Rent or other amount due hereunder will cause Landlord to incur certain costs
and expenses not contemplated under this Lease. The exact amount of such costs
and expenses is hereby acknowledged to be difficult and impractical to set. Such
costs and expenses include, without limitation, administrative and collection
costs, and processing and accounting expenses and other costs and expenses
necessary and incidental thereto. Therefore, if any such instalment or payment
is not received by Landlord from Tenant within ten (10) days after the date that
such installment or payment is due, Tenant shall immediately pay to Landlord a
late charge equal to ten percent (10%) of such amount. Landlord and Tenant agree
that this late charge represents a reasonable estimate of such costs and
expenses to be incurred by Landlord in the event of Tenant's failure to timely
pay Rent or other amounts due hereunder, and is fair compensation to Landlord
for its loss suffered by such nonpayment by Tenant. The interest and late
charges contained in this Section 3.4 are in addition to, and in no way
represent a diminution or substitution for any or all of Landlord's other rights
or remedies contained in this Lease or at law or in equity.
4. TAXES AND ASSESSMENTS: PRORATIONS
4.1 TAXES AND ASSESSMENTS
Tenant agrees to pay or cause to be paid, as Additional Rent, from the
Effective Date and thereafter during the Term, before delinquency, any and all
Taxes applicable to the Premises. Tenant acknowledges that Tenant's leasehold
interest is subject to taxation notwithstanding the ownership of the Premises by
a public entity. As used herein, "Taxes" shall mean any form of tax, assessment,
lien, bond obligation, license fee, license tax, tax or excise on rent, or any
other levy, charge or expense, together with any statutory interest thereon,
imposed or required at any time by any federal, state, county or city authority
having jurisdiction, or any political subdivision thereof, or any school,
agricultural, lighting, drainage or other improvement or special assessment
district thereof (hereinafter individually and collectively referred to as
"Governmental Agencies"), on any interest of Landlord or Tenant or both
(including any legal or equitable interest of Landlord or its mortgagee, if any)
in the Premises, including, without limitation: (a) any impositions by
Governmental Agencies (whether or not such impositions
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constitute tax receipts) or any other payments to Governmental Agencies (whether
involuntarily imposed by any such Governmental Agencies or voluntarily agreed to
by Landlord) in substitution, partially or totally, of any impositions now or
previously included within the definition of real property taxes, it being
acknowledged by Landlord and Tenant that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election ("Proposition 13")
and that assessments, taxes, fees, levies and charges may be imposed by
Governmental Agencies for such services as fire protection, street, sidewalk and
road maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and in further
recognition of the decrease of quality of governmental services and amenities as
a result of Proposition 13, Taxes shall also include any governmental or private
assessments or the Project's contribution towards a governmental private
cost/sharing agreement for the purpose of augmenting or improving the quality of
services and amenities normally provided by governmental agencies, and it is the
intention of Landlord and Tenant that all such increased assessments, taxes,
fees, levies and charges and all similar assessments, taxes, fees, levies and
charges be included within the definition of Taxes; including without
limitation, those calculated to increase tax increments to Governmental Agencies
or to pay for such services as fire protection, street, sidewalk and road
maintenance, refuse removal or other governmental services which may have been
formerly provided without charge to property owners or occupants; (b) any
impositions allocable to or measured by the area of the Premises, or the realty
underlying the Premises, or upon or with respect to the possession, leasing,
operating, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises, or any portion thereof; (c) any impositions upon this
Lease or any document to which Tenant is a party, creating or transferring an
interest or an estate in the Premises; and (d) any and all costs (including,
without limitation, the fees of experts, tax consultants and attorneys)
reasonably incurred by Landlord should Landlord reasonably elect to negotiate or
contest the amount of said Taxes in formal or informal proceedings before the
taxing Governmental Agency.
Tenant's liability to pay such Taxes shall be prorated on the basis of a
365-day year to account for any fractional portion of the Premises and
improvements constructed or placed thereon.
Landlord agrees to use Landlord's reasonable efforts to cause the Premises
(including the improvements thereon and the realty underlying such improvements)
to be separately assessed.
4.2 PAYMENT OF TAXES
To facilitate the timely payment of all Taxes and to protect Landlord's and
Tenant's property interests in and upon the Premises, Tenant agrees to pay to
the appropriate governmental entity entitled thereto the total Taxes due. Any of
said payments to be made directly to the appropriate governmental authority
shall be made prior to the delinquency date established by the applicable taxing
authority, and Tenant shall, upon written request of Landlord, deliver evidence
of such payment to Landlord. Failure of Tenant to pay said Taxes as and when
herein specified shall, in addition to all other rights and remedies of Landlord
hereunder, subject Tenant to any fine, penalty, interest, or cost which Landlord
may incur as a result thereof. Tenant shall, within thirty (30) days after
demand, reimburse Landlord for any such fine, penalty, interest, or cost.
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4.3 RIGHT TO CONTEST
Tenant shall have the right to contest the amount or validity of any Taxes
payable with respect to the Premises, in whole or in part, by appropriate
administrative and legal proceedings, either in its own name, Landlord's name or
jointly with Landlord (but Landlord shall have no obligation under this Section
4.3), without any cost or expense to Landlord (and Tenant hereby agrees to
indemnify and hold Landlord harmless from any and all cost, liabilities, claims
or expenses in connection with any such contest), and Tenant may postpone
payment of any such contested Taxes pending the prosecution of such proceedings
and any appeals so long as Landlord's property interest is not jeopardized, and
Tenant, upon the reasonable request of Landlord, shall furnish a bond to the
Landlord sufficient to secure the payment of all contested Taxes, costs and
expenses in connection therewith as a pre-condition to undertaking any such
contest. In lieu of such bond, Tenant may elect to pay such Taxes under protest.
Landlord shall execute and deliver to the Tenant whatever documents may be
reasonably necessary or proper to permit Tenant to so contest any such Taxes or
which may be necessary to secure payment of any refund (with respect to a tax
year or portion thereof during the Term of this Lease) which may result from any
such proceedings.
4.4 SEPARATE ASSESSMENT
During any period in which the Premises and the underlying realty are not
separately assessed, Tenant shall pay, as its share of Taxes, an amount equal to
all Taxes payable with respect to all improvements on the Premises, plus
Tenant's share of Taxes on the realty underlying the Premises (determined as
provided below). For purposes of this Section 4.4, Tenant's share of Taxes on
the realty underlying the Premises shall equal the land square footage of the
Premises divided by the total land square footage of the parcel of which the
Premises comprises a part. Landlord shall deliver to Tenant, contemporaneously
with the delivery of the bill therefor, the calculations and assumptions made by
Landlord in determining Tenant's share of such Taxes and assessments. With
respect to any assessments which may be levied against or upon the Premises and
the underlying realty, or which under the laws then in force may be evidenced by
improvement or other bonds, or may be paid in semi-annual installments, only the
amount of such semi-annual installment (with appropriate proration for any
partial year) and statutory interest shall be included within the computation of
the annual Taxes and assessments levied against the Premises. Landlord shall
furnish Tenant with copies of any appropriate tax bills and statements promptly
following Landlord's receipt thereof and Tenant shall pay to Landlord, as
Additional Rent, such Taxes within thirty (30) days following Tenant's receipt
thereof.
4.5 PERSONAL PROPERTY TAXES
Tenant shall also pay before delinquency all taxes (including sales and use
taxes), assessments, license fees and public charges levied, assessed or imposed
upon its business operation as well as upon its merchandise, furniture,
fixtures, equipment and other personal property. In the event any such items of
property are assessed with property of Landlord, such assessment shall be
equitably divided between Landlord and Tenant by Landlord.
4.6 OTHER TAXES
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If at any time during the Term of this Lease the methods of taxation
prevailing at the execution hereof shall be altered so that in lieu of or as a
supplement to, or a substitution for, the whole or any part of the Taxes now
levied, assessed or imposed on the Premises, there shall be levied, assessed or
imposed a tax, assessment, levy, imposition or charge, wholly or partially as a
capital levy or otherwise, on the rents received therefrom, or a tax,
assessment, levy (including but not limited to any municipal, state or federal
levy), imposition or charges measured by or based in whole or in part upon the
Premises and imposed upon Landlord, or a license fee measured by the Rent
payable under this Lease, then all such taxes, assessments, levies, impositions,
charges or the part thereof so measured or based, shall be deemed to be included
within the term "Taxes" as defined in Section 4.1, and Tenant shall pay and
discharge the same as herein provided in respect of the payment of Taxes, to the
extent that any of the foregoing taxes or excises are in lieu of or in
substitution (in whole or in part) for ordinary property Taxes, and the amount
of such tax or excise on rents that Tenant is required to pay as "Taxes" under
this Section 4.6 will be computed as if the Premises and the buildings and
improvements thereon were the only property subject to such taxes and excises.
4.7 EXCLUSION FROM TAXES
Nothing contained in this Lease shall require Tenant to pay any franchise,
estate, gift, corporate, inheritance, or succession tax of Landlord or any
income, value added, or excess profits tax of Landlord.
4.8 NET LEASE RECITAL
Except as otherwise expressly set forth in this Lease, all Rent shall be
paid to Landlord absolutely net, without deduction of any nature whatsoever,
foreseeable or unforeseeable.
4.9 PRORATIONS
In the event of commencement or termination of this Lease at a time other
than the beginning or end of one of the specified rental periods, Base Rent,
Percentage Rent, Additional Rent, Signage Rent (as defined in Section 6.2) and
the CAM Contribution shall be prorated as of the date of commencement or
termination, and in the event of termination for reasons other than default, all
prepaid rent shall be refunded to Tenant.
5. CONSTRUCTION AND MAINTENANCE
5.1 CONSTRUCTION AND OWNERSHIP OF IMPROVEMENTS
Tenant shall, at Tenant's sole cost and expense, cause to be constructed
upon the Premises a one story cinema building consisting of no more than two
thousand (2,000) seats and related improvements (including, but not limited to,
Tenant's loading dock and ramp, perimeter sidewalks, parking areas, landscaping,
trash enclosure and signage) containing approximately forty thousand (40,000)
square feet of floor area (the "Improvements"), in the time and manner, and in
accordance with the terms and conditions set forth in the Work Letter attached
hereto as Exhibit "C". The Improvements shall be maintained at the sole cost and
expense of Tenant in
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accordance with Section 5.6 below. All such Improvements shall be owned by
Tenant during the Term and shall be surrendered at the expiration or earlier
termination of this Lease, at which time the same shall become the property of
Landlord, subject to Tenant's right to remove Tenant's Property as provided in
Section 5.4 below.
5.2 MECHANIC'S LIENS
Tenant agrees that it will pay or cause to be paid all costs for work done
by it or caused to be done by it on the Premises, and will keep the Premises,
the Improvements, and Tenant's leasehold interest free and clear of all
mechanic's liens, and other liens on account of work done for Tenant or persons
claiming under it. Tenant agrees to and shall indemnify, defend and save
Landlord free and harmless against all liability, loss, damage, costs and
attorneys' fees, and all other expenses on account of claims of lien of laborers
or materialmen or others for work performed or materials or supplies furnished
for Tenant or persons validly claiming under it.
(a) In the event a lien shall be recorded against the Premises on
account of work done or caused to be done by Tenant, Tenant shall have the
right to contest the same by appropriate action so long as Landlord's
property interest is not jeopardized. If the lien claimant commences
foreclosure of the lien, Tenant will have twenty (20) days after
commencement of such action in which to (i) cause said lien to be removed
or (ii) post a bond or cash deposit equal to one hundred fifty percent
(150%) of the amount of the disputed claim with a company or companies
reasonably satisfactory to Landlord and thereafter diligently contest the
validity of the lien. If Tenant shall fail to cause said lien to be removed
or post the bond within said 25-day period, Landlord may (but shall not be
so required to), upon an additional five (5) day notice to Tenant, pay the
claim giving rise to such lien and any costs associated therewith, and the
amounts so paid by Landlord, together with reasonable attorneys' fees
incurred in connection therewith, shall be immediately due and owing from
Tenant to Landlord, as Additional Rent, and Tenant shall pay the same to
Landlord within twenty (20) days after receipt of an invoice showing the
costs incurred, and if not paid within such time period, such costs will
bear interest from the dates of Landlord's payments at the Interest Rate.
(b) Should Tenant receive notice of any claims of lien filed against
the Premises or of any action affecting the title to the Premises, Tenant
shall immediately give Landlord written notice thereof.
(c) Tenant shall, before the commencement of any work which might
result in any such lien, give Landlord written notice of its intention to
do so in sufficient time to enable the posting of notices of
non-responsibility, but in any event not less than ten (10) business days.
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5.3 ALTERATION OF IMPROVEMENTS
Landlord agrees that Tenant may, in accordance with the procedure
hereinafter set forth, at its own expense and upon prior written notice to
Landlord of its intention to do so, from time to time during the term hereof,
make alterations, additions and changes in and to the interior of the Premises
(except those of a structural nature) as it may find necessary or convenient for
its purposes provided that the value of the Premises are not thereby diminished,
and provided further that no alterations, additions or change costing, in the
aggregate, in excess of Twenty-Five Thousand Dollars ($25,000) may be made
without first procuring the approval in writing of Landlord, such approval not
to be unreasonably withheld or delayed. Landlord's approval of such alterations,
additions or changes shall create no responsibility or liability on the part of
Landlord for the sufficiency of the design of the same or their compliance with
applicable law. Tenant acknowledges that any approvals by Landlord hereunder
shall be done in Landlord's capacity as landlord and not in its capacity as
public entity. In addition, no alterations, additions or changes (including
print color) shall be made to die exterior walls, roof or structural components
of the Premises, nor shall Tenant erect any mezzanine, unless and until the
prior written consent and approval of Landlord shall first have been obtained,
which approval shall not be unreasonably withheld or delayed. Tenant shall be
responsible for any and all damages resulting from any violations of the
provisions of this Section 5.3. All alterations, additions, or changes to be
made to the Premises which require the approval of Landlord (except
non-structural interior alterations), shall be under the supervision of a
licensed architect or licensed structural engineer and made in accordance with
detailed plans and specifications with respect thereto, and the Operating
Documents, approved in writing by Landlord before the commencement of work,
which approval shall not be unreasonably withheld or delayed. No work of any
kind shall be commenced and no building or other materials shall be delivered
for said building project until at least ten (10) business days after written
notice has been given by Tenant to Landlord of the commencement of such work or
the delivery of such materials. Landlord shall, at any and all times during tile
term of this Lease, have the right to post and maintain on the Premises and to
record as required by law, any notice or notices of non- responsibility provided
for by the mechanic's lien law of the State of California. All work performed by
Tenant, including any site preparation work, landscape work, utility
installation work, as well as actual construction work on the building project,
shall be performed only by competent contractors duly licensed as such under the
laws of the State of California. Tenant hereby agrees to defend and hold
Landlord harmless from and against any and all claims, demands, actions or
obligations arising under the construction contract. Tenant shall deliver
evidence of insurance reasonably required by Landlord to Landlord prior to the
commencement of any construction. All work with respect to any alterations,
additions and changes must be done in a good and workmanlike manner and
diligently prosecuted to completion to the end that the Premises shall at all
times be a complete unit except during the period of work. Upon completion of
such work, Tenant shall file for record in the office of the local County
Recorder, a Notice of Completion as permitted by law, and Tenant shall deliver
to Landlord, upon Landlord's reasonable request, "as built" plans with respect
to such work. Such alterations, additions or changes shall be considered as
Improvements, shall not be removed by Tenant and shall become a part of the
Premises subject to Tenant's right to remove Tenant's Property as provided
below. Any such changes, alterations and improvements shall be performed and
done strictly in accordance with the laws and ordinances relating thereto. In
performing the work of
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any such alterations, additions or changes, Tenant shall have the work performed
in such a manner as not to impede access to the premises of any other tenant or
occupant at the Project.
5.4 TENANT'S PROPERTY
Notwithstanding the provisions of Section 5.1 above, all trade fixtures,
furnishings, furniture, fixtures and equipment ("FF&E"), inventory, signs and
other personal property installed by Tenant or any Transferee (collectively,
"Tenant's Property") shall be and remain the property of the person, firm, or
corporation installing the same and shall be removable at any time during the
Tenn of this Lease. The removal of any suck Tenant's Property shall be at the
sole risk, cost and expense of the person, firm, or corporation removing the
same and Tenant shall repair any damage or injury to the Premises and all
Improvements occasioned by the removal thereof.
5.5 LANDLORD'S LIEN WAIVES
Landlord, within thirty (30) days after written request from Tenant, shall
execute and deliver any document reasonably required by any supplier, lessor, or
lender in connection with the granting, creating, or perfecting by Tenant of a
security interest in and to Tenant's Property and any proceeds therefrom,
pursuant to which Landlord shall waive, or subordinate, as the case may be, any
rights It may have or acquire with respect to Tenant's Property, and any
proceeds therefrom, if the supplier, lessor, or leader agrees in writing that:
(i) it will remove such Tenant's Property from ale Premises before the
expiration of the Term or within ten (10) days after termination of this Lease
and (ii) it will, at its sole cost and expense, make whatever restoration to the
Premises or the Improvements that is necessitated by such removal.
5.6 MAINTENANCE AND REPAIR
Tenant agrees at all times from and after the Effective Date, and at
Tenant's sole cost and expense, to repair, replace and maintain the Improvements
located on the Premises (aria any utility lines located on or under or
exclusively serving the Premises), in good, first-class condition arid repair,
and in accordance with the requirements of the Operating Documents and any
governmental authority or agency having jurisdiction thereof. Repair and
maintenance shall include, but not be limited to, painting the exterior of the
building no less often than every five (5) years, keeping the landscape watered
and trimmed in a neat and attractive fashion and in keeping with the rest of the
Town Center Project, keeping the Premises free of debris and clean and
attractive. All glass, both exterior and interior is to be installed and
maintained at the sole risk of Tenant, and any glass broken shall be promptly
replaced by Tenant with glass of the same kind, size and quality, or as required
by then applicable law.
Upon any surrender of the Premises, Tenant shall redeliver the Premises to
Landlord broom clean, ordinary wear and tear and casualty excepted. If Tenant
refuses or neglects to make repairs and/or maintain the Premises, or any part
thereof, as required by this Section 5.6, Landlord shall have the right but not
the obligation), upon giving Tenant thirty (30) days written notice of its
election to do so (or without notice in aft emergency), to make such repairs or
perform such maintenance on behalf of and for the account of Tenant unless
Tenant commences such repairs within said 30-day period and diligently completes
the same. In such
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event, the cost of such work shall be paid by Tenant to Landlord, as Additional
Rent, within thirty (30) days after Tenant's receipt of a bill therefor.
5.7 RIGHT OF ENTRY
Landlord reserves the fight at all reasonable times and upon not less than
48 hours prior written notice to Tenant (except in the case of an emergency) to
enter the Premises to (i) inspect them; (ii) show the Premises to prospective
purchasers, mortgagees or to the ground or underlying lessors; (ill) show the
Premises to prospective tenants during the last eighteen (18) months of the
Term; (iv) post notices of non-responsibility, (v) perform services required of
Landlord; and (vi) perform any covenants of Tenant which Tenant fails to perform
(subject to any notice and/or grace periods contained in this Lease). Landlord
may make any such entries without the abatement of Rent and may take such
reasonable steps as required to accomplish the stated purposes: provided,
however, each such entry shall be made in reasonable manner which, to the
maximum extent reasonably possible, does not interfere with Tenant's business
operations or security systems. Further, Tenant shall have the right to
accompany Landlord during any such entry (except in the case of an emergency).
Nothing herein contained shall imply any duty on the part of Landlord to do any
such work which under any pro vision of this Lease Tenant may be required to do,
nor shall it constitute a waiver of Tenant's default in failing to do the same.
6. USE
6.1 USE
Tenant shall have the right to use the Premises solely for the construction
and operation thereon of a cinema move theater consisting or no more than two
thousand (2,000) seats (with ancillary on premises sales of non-alcoholic
beverages and snack-type or fast food customarily sold at theaters in the
community for consumption within the Premises, under the trade name "Cinema Star
Luxury Theaters" ("Permitted Use"), and no other purpose whatsoever without
Landlord's prior written consent. The Permitted Use shall exclude the showing of
X-rated, nonrated or pornographic films, if the rate system is modified so that
the x-rating is changed, this prohibition shall include those films which are
included in the x-rating category on films as of the date of this Lease.
Tenant acknowledges that Landlord has agreed or may agree in the future to
certain exclusive use requirements for tenants of the Project. Tenant agrees
that Tenant shall not use the Premises for the operation of a restaurant with a
pasta based menu, nor will Tenant use the Premises for the operation of a buffet
style restaurant or cafeteria or cafeteria style restaurant (which shall include
the concept of a so-called "home meal replacement" business such as, by way of
example and not in limitation, the type of food operation presently operated by
Boston Chicken, Hearth Express and/or Kenny Rogers Roaster) or a family style
restaurant (a restaurant in which food is served in the middle of the table and
shared by patrons). Notwithstanding the foregoing, Landlord shall not
unreasonably withhold its consent to a change in Tenant's Permitted Use,
provided, however, the parties agree that it shall be reasonable under this
Lease and under any applicable law for Landlord to withhold its consent to any
such proposed change in Permitted Use wherein one or more or the following
apply: (i) in Landlord's reasonable judgment the proposed change in Permitted
Use is not a use consistent with the character of the Project as a high quality,
mixed-use project, or (ii) the proposed use would cause
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a violation of another lease within the Project or would give an occupant of the
Project a right to cancel its lease or bring an action against Landlord, or
(iii) in Landlord's reasonable judgment the proposed change in Permitted Use
will not generate at least the same amount of Percentage Rent as the current
use, or (iv) in Landlord's reasonable judgment the proposed use would create an
unreasonable burden on parking or create operational difficulties for other
tenants of the Project or the City. Further, Tenant's use and occupancy of the
Premises shall comply with the Operating Documents and all present and future
laws and local ordinances. rules and regulations of governmental authorities
having jurisdiction over the Premises. In addition, Tenant shall not change
Tenants trade name without Landlord's consent, which consent shall not be
unreasonably withheld, provided. however, Tenant shall have the right, without
the consent of Landlord, but upon written notice to Landlord, to change Tenant's
trade name to any trade name under which Tenant or any of its affiliates or
subsidiaries operates the Permitted Use.
Tenant shall not permit any display or sale of merchandise, or any storage
or placement of merchandise, signs (except such signs that are approved by
Landlord in accordance with this Lease and the Work Letter) or other objects
outside the defined exterior walls, roof and permanent doorways of Tenants
building.
In order to provide for the orderly development and operation of the
Project:
(a) Tenant shall not carry any merchandise or substance or perform
any activity in relation to the use of the Premises which would (i) cause
or threaten the cancellation of any insurance covering any portion of the
Premises, or (ii) increase the insurance rates applicable to the Project
over the rates which would otherwise apply to the Project unless Tenant
shall pay the increased insurance cost on demand; and
(b) Tenant agrees to abide by all reasonable rules and regulations
of the Project as may be reasonably adopted from time to time by Landlord
or under the Operating Documents (the "Rules and Regulations"), provided,
however, in no event shall such Rules and Regulations be modified or
enforced in any way by Landlord so as to materially interfere with Tenant's
Permitted Use or discriminately enforced against Tenant,
(c) Tenant shall either provide security or pay for security which
the Landlord shall provide if the city manager so requests. The city
manager's request will be made only after consultation with the Sheriffs
Department and/or Police Chief or if the incident history at the Project
warrants due to incidents involving theater patrons.
(d) Tenant shall perform reasonable activities to discourage its
patrons from loitering in the Premises or in areas surrounding the
Premises. If, in the reasonable opinion of the city manager, security
personnel are necessary to assist Landlord in discouraging loitering,
Tenant shall either hire said security personnel, or pay Landlord's cost of
hiring same.
(e) Tenant shall monitor and clean up the Premises and the areas
surrounding the Premises and the pedestrian sidewalks and parking garage to
remove trash discarded by its patrons.
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(f) In order to reasonably manage parking requirements of the
Project, the Tenant shall not hold special events or promotions which have
the effect of attracting large numbers of patrons to the Premises on the
evenings when the City Council or Planning Commission meets (currently
Monday and Tuesday evenings). Landlord shall provide Tenant with at least
thirty (30) days notice of any change in the days of the week the Council
or Commission meet so that Tenant may schedule its events appropriately.
6.2 SIGNAGE
(a) Subject to Landlord's prior approval and Tenant's compliance with
applicable codes, zoning ordinances and any other governmental requirements,
Tenant may affix and maintain upon the glass panes and supports of the windows
and upon the exterior walls of the Premises and in the parking areas on the
Premises such signs, advertising placards, names, insignia, trademarks and
descriptive materials as shall be used in the ordinary course of Tenant's
business and consistent with the operation of the Premises as a first-class
facility.
(b) Tenant acknowledges that the entire cost of installation, maintenance
and removal of all Tenant's signage permitted hereunder shall be borne solely by
Tenant and Tenant shall maintain all such signage in good and proper condition
in accordance with the Rules and Regulations and the Operating Documents, All
Tenant signs shall at all times be and remain the property of Tenant and may he
removed at Tenant's election, cost and expense at any time on or prior to the
expiration or earlier termination of ute Term of this Lease.
(c) Landlord shall place, construct and maintain Project directory(ies)
in such location(s), as Landlord, in its sole discretion may determine, which
directory(ies) shall be for the display of the business names of tenants in the
Project. Tenant shall have the right to place a listing on the directory(ies) at
a location and size and at such rates as Landlord may designate. Tenant shall
pay the cost of fabricating and installing the listing(s) identifying Tenant and
its pro rata share of the cost of constructing and operating and maintaining
tile sign. Landlord shall have the sole right to determine and change from time
to time the Type and number of such directory(ies) and the contents thereof
including, but not limited to, size of letters, style, color and placement.
(d) Landlord agrees to construct a twenty-five foot (25) high, multi-
panel tenant directory sign (the "Directory") located as shown on the site plan
attached as Exhibit "B". This directory sign shall be designated as shown on
Exhibit "F" attached hereto.
(e) Subject to the provisions of Subparagraph (f) below, Landlord agrees
to make available, and Tenant agrees to rent, one pair of internally illuminated
sign cabinets located at the top of the Directory, one on each side, for the
Term of this Lease, Rent for the sign ("Signage Rent") shall be Seven Hundred
Fifty Dollars ($750.00) per year, due and payable on the first day of each Lease
Year, commencing on the Commencement Date.
(f) Landlord shall have the right to determine the useful life of the
Director and to remove it or deactivate it at Landlord's sole cost and
discretion when the physical condition of the Director (Including damage) or the
cost of its maintenance and repair
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warrants. Landlord shall provide Tenant ninety (90) days' written notice of its
intent to remove or deactivate the Directory. In the event of removal or
deactivation, Tenant shall be relieved of its obligation to pay Signage Rent,
commencing with the first day that tile Directory is permanently taken out of
service and shall be entitled to receive a prorated reimbursement of any Signage
Rent paid for the unexpired balance of the Lease Year in which the Directory is
removed from service.
(g) Landlord agrees to maintain insurance coverage on the Directory' as
long as it remains in service. In the event of damage due to a non-covered
event, if Landlord agrees to reconstruct the Directory, Tenant shall bear the
cost of repairing and/or replacing its individual sign face plates and copy
only.
(h) Tenant agrees that the nature of the materials used in the
construction of its individual cabinet face plates and copy is such that they
will periodically require refinishing, refurbishment or replacement to maintain
the high quality appearance of the Directory. Accordingly, Tenant agrees to bear
the cost of refinishing, refurbishing or replacing (at Landlord's option)
Tenant's cabinet face places and copy at intervals no greater than eight (8)
years, if in the opinion of Landlord, the condition of them warrant.
6.3 CONTINUOUS OPERATION
Commencing on the Commencement Date, Tenant agrees to be open to the public
for business for the Permitted Use at least seven (7) days a week during the
hours of operation generally utilized for theaters in Southern California,
except while the Premises are untenantable by reason of casualty or condemnation
and Tenant is performing its restoration obligations in accordance with this
Lease.
6.4 RADIUS RESTRICTION
Tenant covenants and warrants that it will not, nor will any entity that
controls, is controlled by or under common control with Tenant, during the Term,
directly or indirectly, operate or own any type of theater business similar to
the type of business then being operated by Tenant from the Premises within a
one mile radius of the boundaries of the Project. The covenant shall not apply
to any theaters existing at the Effective Date purchased by Tenant as part of
Tenants business plan. This covenant shall be specifically enforceable by
mandatory or prohibitory injunction by Landlord and Landlord shall be entitled
to any of its other rights and remedies under this Lease (including, but not
limited to, the remedy set forth in Section 3.2(e)) and all other remedies
available to Landlord at law or in equity.
6.5 FOOD SERVICE RESTRICTIONS
Subject to compliance with all applicable laws and Tenant's Permitted Use
of the Premises, Tenant shall be entitled to prepare food items within the
Premises, utilizing equipment and ventilation systems or such other equipment
and systems to be constructed and installed pursuant to the provisions of the
Work Letter and this Lease. In any event, Tenant shall use all reasonable
efforts to minimize the emission of obnoxious or objectionable odors and noises
from the Premises. In addition, Tenant shall, at its sole cost and expense,
cause all trash contained
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within the Premises to be emptied on a regular basis, and disposed of in trash
container(s) approved by Landlord.
6.6 COMPLIANCE WITH LAWS
Tenant shall comply with all governmental laws, ordinances and regulations
now in force, or which may hereafter be in force, applicable to the Premises and
with any order, directive, or certificate of occupancy properly issued, all at
Tenant's sole expense. In the event of any changes in laws, ordinances or
regulations, Tenant shall be obligated to comply with such changes when and if
such compliance is required under the applicable laws, ordinances and
regulations. Without limiting the foregoing, Tenant shall be responsible for
compliance with all requirements of the Americans With Disabilities Act of 1990
as it may be amended and as supplemented by further laws from time to time.
7. REPRESENTATIONS AND WARRANTIES
7.1 NO VIOLATION
Landlord and Tenant hereby each represent and warrant to the other that
their respective performance and compliance with the terms, provisions and
conditions of this Lease do not and will not conflict with or result in any
violation of any of the terms, conditions, or revisions of an agreement,
obligation, judgment, decree, order, statute, rule or regulation applicable to
Landlord or to Tenant.
7.2 LANDLORD'S REPRESENTATIONS AND WARRANTIES
Landlord hereby represents and warrants to Tenant that:
(a) Landlord is the owner in fee of the Premises,
(b) Landlord has the full power) right and authority to enter into
and execute this Lease, and
(c) Those persons whose signatures are hereinafter evidenced on this
Lease on behalf of Landlord are duly authorized signatories of Landlord,
fully empowered to commit and bind Landlord to those certain terms,
covenants and conditions set forth herein for die Term of this Lease.
7.3 TENANT'S REPRESENTATIONS AND WARRANTIES
Tenant hereby represents and warrants to Landlord that:
(a) Tenant has the full power, right and authority to enter into and
execute this Lease; and
(b) Those persons whose signatures are hereinafter evidenced on this
Lease on behalf of Tenant are duly authorized signatories of Tenant, fully
empowered to commit
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and bind Tenant to those certain terms, covenants and conditions set forth
herein for the Term of this Lease.
8. INDEMNIFICATION
Tenant agrees to protect, defend, indemnify and save harmless Landlord and
Landlord's interest in the Project from and against any and all loss, damage and
liability arising from (i) Tenant's failure to perform and observe its covenants
hereunder, (ii) any act or omission of Tenant or its officers, agents, servants,
employees, independent contractors, patrons, customers, licensees, subtenants,
concessionaires or assignees (collectively, "Tenant Parties") respecting the
Premises or the Project, (iii) the occupation, use, possession, conduct or
management of the Premises by Tenant or the Tenant Parties, or (iv) any work or
thing whatsoever done in or on the Premises by Tenant or the Tenant Parties;
provided that the terms of the foregoing indemnity shall not apply to the
negligence or willful misconduct of Landlord or its officers, agents, servants,
employees, independent contractors or assignees (collectively; "Landlord
Parties"). The provisions of this Article 8 shall survive the expiration or
sooner termination of this Lease with respect to any claims or liability
occurring prior to such expiration or termination.
9. INSURANCE
9.1 GENERAL LIABILITY
Commencing upon Tenant's entry upon the Premises and thereafter during the
Term of this Lease, Tenant shall carry and maintain commercial general
public-liability insurance against claims for personal injury, death or property
damage upon of about the Premises and the Improvements thereon. The amount of
coverage shall be not less than Three Million Dollars ($3,000,000.00) combined
single limit. During any construction, Tenant shall obtain a "course of
construction" endorsement to such policies. The policies shall also insure
Tenant's contractual liability under the indemnity provisions of this Lease and
contain a cross- liability endorsement Tenant shall carry and maintain during
the entire Term, at Tenant's sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 9, and such
other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant's operations therein, as may be reasonably
requested by Landlord, but in no event shall such increased amounts of insurance
or such other types of insurance t)e in excess of that reasonably required by
prudent landlords of comparable operations.
9.2 FIRE AND EXTENDED COVERAGE
Upon the commencement of construction of the Improvements and continuing
thereafter during the Term of this Lease, Tenant shall carry and maintain fire
and extended coverage ("All-Risk") insurance on the Premises and Improvements
located thereon, in an amount not less than the full replacement costs of the
Improvements. Any policy proceeds shall be used for the repair or replacement of
the property damaged or destroyed unless this Lease shall cease and terminate
under the provisions of Article 11.
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9.3 TENANT'S PERSONAL PROPERTY
During the Term of this Lease, Tenant shall maintain in full force and
effect on all Tenant's Property from time to time in, on or upon the Premises,
fire and extended coverage ("All-Risks") insurance in the amount of the full
replacement value thereof. Any policy proceeds shall be used for the repair or
replacement of Tenant's Property damaged or destroyed unless this Lease shall
cease and terminate under the provisions of Article 11.
9.4 OTHER COVERAGE
Tenant shall also carry (i) workers' compensation insurance in compliance
with all applicable laws and employer's liability insurance in the amount of at
least One Hundred Thousand Dollars ($100,000) or such greater amount as may be
required by law, (ii) insurance covering the full replacement cost of all plate
glass located on the Premises (provided, however, that Tenant may self-insure
this risk.
9.5 POLICIES AND CERTIFICATE OF INSURANCE
Evidence of all such insurance shall be promptly provided and all such
policies shall provide that no cancellation shall be effective until at least
thirty (30) days after receipt by Landlord and by Tenant of written notice
thereof. The policies of insurance required under this Article 9 shall be issued
by good, responsible companies, qualified to do business in the State of
California, with a general policy holders' rating of at lease A and a financial
rating of at least Class VIII as rated in the most currently available "Best's
Key Rating. Guide". All policies shall name, as additional insureds, Landlord
and such persons arid affiliated entities and lenders of Landlord as Landlord
may reasonably request. Executed copies of certificates of such insurance shall
be delivered to Landlord within ten (10) days after such policies are required
to be obtained hereunder, and thereafter executed copies of renewal certificates
of such Insurance shall be delivered to Landlord within twenty (20) days prior
to the expiration of the term of each such policy. As often as any such policy
shall expire or terminate, renewal of additional policies shall be procured and
maintained by Tenant in like manner and to like extent. All policies required
under this Lease shall be written as primary coverage nor contributing with or
being in excess of any other coverage carried by Landlord. Tenant's coverage
hereunder may be part of a blanket or umbrella policy if the same meets the
requirements set forth, above. All policies of casualty insurance required
hereunder shall include a clause or endorsement denying the insurer any rights
of subrogation against the other party to the extent rights have been waived by
the insured before the occurrence of injury or loss. Each party waives any
rights of recovery against the other for injury or loss to property arising from
any peril to the extent insured against under any casualty insurance policy
carried by it, or required to be carried hereunder. Tenant shall cause the
insurance companies issuing properly damage insurance waive any rights of
subrogation that such companies may have against Landlord. Landlord will not
unreasonably withhold approval, in Landlord's reasonable judgment (based on
whether Tenant has the reasonable financial capability of meeting its financial
obligations), of reasonable deductibles, which are reasonable in light of
Tenant's net worth. Landlord may, in connection its approval, impose reasonable
conditions and reporting requirements in connection with same.
10. DAMAGE OR DESTRUCTION
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10.1 OBLIGATION TO RESTORE
In case of damage to or destruction of the Improvements constructed by
Tenant on the Premises, whether or not by a risk required to be covered by
insurance as set forth in Article 9 of this Lease, this Lease shall not
terminate and Tenant shall promptly restore, rebuild, replace or repair
Improvements of comparable value as existed immediately prior to such damage or
destruction. Such restoration, repair or rebuilding shall be commenced promptly
butt in no event later than ninety (90) days after the casualty and shall
thereafter be prosecuted with due diligence. Notwithstanding the foregoing,
however, in the case 0L. damage to or destruction of the Improvements
constructed by Tenant on the Premises during the last two (2) years of the Lease
Term or during any renewal term that renders the Premises inaccessible or
unusable for purposes of conducting Tenant's business, Tenant may elect to
terminate this Lease by giving Landlord written notice of such election within
sixty (60) days following the casualty, in which event Tenant shall have no
obligation to restore, rebuild, replace or repair the Improvements, provided,
however, Tenant shall, at its cost, (or with the proceeds of casualty insurance)
clear the Premises of debris and return the same to a safe and dean condition,
and deliver any insurance proceeds to Landlord in accordance with Section 10.5
below.
Notwithstanding the foregoing, the proceeds of insurance payable on account
of the casualty required to be carried under this Lease, whether actually
carried or not (plus the amount of any deductible or self-insured retention
level, which will be paid by Tenant) will be the "Restoration Fund." The
Restoration Fund will be made available to pay the costs of such work, in the
same manner as proceeds of a construction loan are subject to disbursement. Upon
completion of ate work, any balance remaining shall belong Landlord.
Tenant will not be required to incur costs for the restoration in excess of
the Restoration Fund proceeds, but will cause the Improvements, to the extent
feasible, to be restored: (i) to a complete architectural unit, (ii) in
condition appropriate to permit continuation of Tenant's business operation, and
(iii) substantially the same value and utility as immediately before the
casualty, to the extent feasible (taking into consideration. among other
matters, the amount of the Restoration Fund).
10.2 RECONSTRUCTION AND REPAIR REQUIREMENTS
Tenant shall obtain Landlord's prior approval of all plans for
reconstruction or repair work performed by Tenant which approval sh all not be
unreasonably withheld or delayed, provided, however, such plans must comply with
the requirements of the Operating Documents and otherwise satisfy the
requirements set forth in the Work Letter.
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10.3 TENANT IMPROVEMENTS AND WAIVER OF TERMINATION
The agreements contained in this Article 10 provide a material part of the
consideration for this Lease and in bargaining for and obtaining its rights
under this Article 10, Tenant waives any right to terminate this Lease under
Section 1932 and/or 1933(4) of We Civil Code of California.
10.4 MUTUAL RELEASE
Upon any termination of this Lease under any of the provisions of this
Article 107 the parties shall be released thereby without further obligations to
the other party coincident with the surrender of possession of the Premises by
Tenant to Landlord, except for items which have accrued prior to the surrender
and remain unpaid, and except as expressly provided herein. Furthermore, in the
event of termination, all proceeds from insurance policies maintained under
Sections 9.2 shall be disbursed and paid to Landlord, less such amounts that are
used by Tenant in clearing any debris from the Premises and returning the
Premises to a safe and dean condition as required by Section 10.1 above.
10.5 NO RENT ABATEMENT DURING RECONSTRUCTION
There shall be no Rent abatement during repair or reconstruction of the
Improvements or during that period after any casualty and prior to commencement
of repair or reconstruction (unless the casualty was caused solely by the
negligent or intentional act of Landlord); provided, that to the extent covered
by airy loss of rents coverage that Tenant may elect to maintain for Landlord's
benefit, Rent will be abated to the extent and during the period the Premises is
not reasonably usable for the conduct of Tenant's business (but such abatement
will be applicable only to the extent of loss of rents proceeds received by
Landlord).
11. CONDEMNATION
(a) In case all of the Premises, or such part thereof as shall materially
and substantially interfere with Tenant's ability to conduct its business upon
the Premises, shall be taken for any public or quasi-public purpose by any
lawful power or authority by exercise of the right of appropriation,
condemnation or eminent domain, or sold to prevent such taking, Tenant shall
have the right to terminate this Lease effective as of the date possession is
required to be surrendered to said authority. Tenant shrill not assert any claim
against Landlord or the taking authority for any compensation because of such
taking, and Landlord shall be entitled to receive the entire amount of any award
without deductions for any estate or interest of Tenant (except the Improvements
as described above); provided, however, in the event of such a taking, Tenant
shall be entitled to such portion of the award as shall be attributable to the
loss of the Improvements, and for damage to, or the costs of removal of,
Tenant's Property. In the event he amount of property or the type of estate
taken shall not materially and substantially interfere with the ability of
Tenant to conduct its business upon the Premises, Landlord shall be entitled to
the entire amount of the award without deduction for any estate or interest of
Tenant, Landlord shall restore the Premises to substantially their same
condition prior to such partial taking to the extent of any award proceeds
received by Landlord, and a fair and equitable abatement shall be
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made to Tenant for the Base Rent corresponding to the time during which, and to
the part of the Premises of which, Tenant shall be so deprived on account of
such taking and restoration.
(b) In the event of taking of the Premises or any part thereof for
temporary use, (i) this lease shall be and remain unaffected thereby and Rent
shall not abate, and (ii) Tenant shall be entitled to receive for itself such
portion or portions of any award made for such use with respect to the period of
the taking which is within the Term. For purposes of this Section 11(b), a
temporary taking shall be defined as a taking for a period of one (1) year or
less.
12. OCCUPANCY TRANSACTIONS
12.1 DEFINITIONS
As used in this Article 12, the following definitions shall apply:
"TRANSFER" means any voluntary, unconditional and present (i)
assignment of some or all of Tenant's interest, rights and duties in the
Lease and/ox the Premises. including Tenant's right to use, occupy and
possess the Premises, or (ii) sublease of Ten ant's right to use, occupy
and possess the Premises, in whole or in part, including a sub-sublease
thereof or any assignment of a sublease or sub-sublease:
"ENCUMBRANCE" means any conditional, contingent or deferred
assignment, or conveyance voluntarily made by Tenant of some or all of
Tenant's interest rights or duties in the Lease or the Premises, including
Tenant's right to use, occupy or possess the Premises, in whole or in pan,
including, without limitation, any mortgage, deed of trust, pledge,
hypothecation, lien, or other security arrangement;
"CHANGE OF CONTROL" means the transfer by sale, assignment, death,
incompetency, trust, operation of law, or otherwise of any shares, voting
rights or ownership interest which will result in a change in persons
exercising, or who may exercise, effective control of Tenant, unless such
change results from the trading of shares listed on a recognized public
stock exchange. If Tenant is a private corporation whose stock becomes
publicly held, the transfers of such stock from private to public ownership
shall not be deemed a Change of Control;
"OCCUPANCY TRANSACTION" means any Transfer, Encumbrance or Change of
Control, or other arrangement whereby the identity of the person or persons
using, occupying or possessing the Premises changes or may change, whether
such change be of an immediate, deferred, conditional, exclusive,
non-exclusive, permanent or temporary nature; and
"TRANSFEREE" means the proposed assignee, sublessee, mortgagee,
beneficiary, pledgee or other recipient of Tenant's interests, rights or
duties in this Lease or the Premises in the Occupancy Transaction.
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12.2 RESTRICTIONS
(a) Encumbrances. Except as provided in this Section 12.8 below. Tenant
shall not make or consent to any Encumbrance.
(b) Occupancy Transactions Other Than Encumbrances. Tenant shall not
enter into, or consent to, an Occupancy Transaction, other than an Encumbrance,
without first procuring Landlord's written consent, which Landlord shall not
withhold unreasonably. The parties agree, however, that the manner of operation
of the Premises and conduct of business thereon by Tenant will have an impact on
the quality and reputation of the Project. Accordingly, the parties agree that
in approving or disapproving of any proposed Occupancy Transaction, Landlord
shall be entitled to take into consideration, by way of example and not
limitation, any or all of the criteria set forth below and that it shall not be
unreasonable for Landlord to withhold its consent if any of the following
situations exist or may exist:
(i) Use. The Transferee's contemplated use of the Premises
following the proposed Occupancy Transaction is not the Permitted Use or
change in use approved by Landlord pursuant to Article 6 above or Article
21.10 below;
(ii) Business Experience. In Landlord's reasonable business
judgment, the transferee lacks sufficient business reputation or experience
to operate a successful business of the type and quality permitted under
this Lease;
(iii) Amendment to Lease. The Transferee requests an amendment of
the Lease other than the identity of Tenant's, or
(iv) Breach of Agreements. The proposed Occupancy Transaction would
involve a change from the Permitted Use that would breach any covenant of
Landlord respecting radius, location, use or exclusivity in any other
lease, financing agreement or other agreement relating to the Project,
including the Operating Documents; or
(v) Financial Strength. The proposed Transferee does not have the
financial strength, in the reasonable judgment of Landlord, to be able to
operate the proposed business and pay the Rent required hereunder.
12.3 CONDITION PRECEDENT
Tenant shall not have the right or power to request Landlord's consent to,
or to enter into, an Occupancy Transaction if there exists an uncured Event of
Default (after expiration of any applicable notice and/or grace period) at the
time of such request.
12.4 PROCEDURES
(a) Request for Consent. Should Tenant desire to enter into an Occupancy
Transaction, Tenant shall give notice thereof to Landlord by requesting in
writing Landlord's consent to such Occupancy Transaction at least forty-five
(45) working days before the proposed effective date of any such Occupancy
transaction and shall provide Landlord with the following:
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(i) Description of Transaction. The full particulars of the
proposed Occupancy Transaction including its nature, effective date, terms
and conditions;
(ii) Description of Transferee. A description of the identity, net
worth and previous business experience of the Transferee, including,
without limitation, copies of Transferee's latest income statement, balance
sheet and change-of-financial-position statements (with accompanying notes
and disclosures of all material changes thereto) in audited form, if
available, and certified as accurate by the Transferee;
(iii) Hazardous Materials. A description of the types and
quantities of hazardous materials, if any, which the Transferee intends to
bring onto the Premises;
(iv) Additional Information. Any further information relevant to
the transaction which Landlord shall have requested within fifteen (15)
days after receipt of Tenant's request for consent; and
(v) Tenant's Statement. A statement that Tenant intends to
consummate the proposed Occupancy Transaction if Landlord consents thereto.
(b) Period for Review. Within thirty (30) days after receipt of Tenant's
request for consent, Landlord shall respond as follows:
(i) Consent 10 the Occupancy Transaction; or
(ii) Refuse to consent to the Occupancy Transaction.
Landlord's failure to respond to Tenant within such thirty (30) day period
shall be deemed Landlord's consent to the Occupancy Transaction.
12.5 DOCUMENTATION AND EXPENSES
Each Occupancy Transaction to which Landlord has consented shall be
evidenced by an instrument made in such written form as is reasonably
satisfactory to Landlord and executed by Tenant and Transferee. By such
instrument, Transferee shall assume and promise to perform all the terms,
covenants and conditions of this Lease which are obligations of Tenant. Tenant
shall remain fully liable to perform its duties under the Lease following the
Occupancy Transaction.
12.6 NULLITY
Any purported Occupancy Transaction consummated in violation of the
provisions of the Article 12 shall be null and void and of no force or effect.
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12.7 NON-TRANSFERS
Notwithstanding anything to the contrary contained in this Lease, neither
(i) an assignment to a single transferee of all or substantially all of the
theaters of Tenant located within California, (ii) an assignment of the Premises
to a transferee which is the resulting entity of a merger or consolidation of
Tenant with another entity, nor (iii) an assignment or subletting of all or a
portion of the Premises to an affiliate of Tenant (i.e., an entity which is
controlled by, controls, or is under common control with, Tenant), shall be
deemed a Transfer under this Article 12, provided that Tenant notifies Landlord
of any such assignment or sublease and promptly supplies Landlord with any
documents or information reasonably requested by Landlord regarding such
transfer or transferee as set forth in items (i) through (iii) above, that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. "Control," as used in this Section 12,7, shall mean the
ownership, directly or indirectly, of at least fifty-one percent (53%) of the
voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of at least fifty-one pet cent (51%) of the voting
interest in, any person or entity.
12.8 LEASEHOLD MORTGAGES
(a) Notwithstanding anything to the contrary contained in the Lease,
Tenant may at any time and from time to time without Landlord's consent,
encumber. hypothecate, mortgage, pledge or alienate Tenant's leasehold estate
and Tights hereunder as security for payment of any indebtedness of Tenant to an
institutional lender, provided, however, such encumbrance, hypothecation,
mortgage, pledge or alienation shall not encumber Landlord's fee title or
reversionary inter test in or to the Premises and Landlord's right to receive
Rent hereunder shall have priority over the rights of any Leasehold Mortgagee
(as defined below). Any such encumbrance, hypothecation, mortgage, pledge or
alienation shall be referred to herein as a "Leasehold Mortgage," and the holder
of it Leasehold Mortgage shall be referred to herein as "Leasehold Mortgagees."
A Leasehold Mortgagee may enforce its Leasehold Mortgage and acquire title to
the leasehold estate in any lawful way and, pending foreclosure of such
Leasehold Mortgage, such Leasehold Mortgagee may take possession of and operate
the Premises, performing all obligations of Tenant under this Lease capable of
being performed by such Leasehold Mortgagee, and upon foreclosure of such
Leasehold Mortgage by power of sale, judicial foreclosure, or upon acquisition
of the leasehold estate by deed in lieu of foreclosure, the Leasehold Mortgagee
may, upon notice to Landlord, sell and assign the leasehold estate hereby
created subject to the requirements of this Lease (including subsection (d)
below). Notwithstanding any such Leasehold Mortgage, in no event shall Tenant he
released from any of its obligations under this Lease (even in the event any
Leasehold Mortgagee or any successor acquires title to such leasehold estate).
(b) Landlord, concurrently with the delivery to Tenant of any notice of a
default or breach under this Lease, shall provide a copy of such notice to any
Leasehold Mortgagee, so long as Landlord has. previously been informed of the
name and address of such Leasehold Mortgagee in the manner and by the means
provided for in Section 20.14 of this Lease and Tenant has previously delivered
a copy of such Leasehold Mortgage to Landlord. There shall be only one such
Leasehold Mortgage at a given time. No such notice by Landlord to Tenant shall
be deemed to have been duly given unless and until a copy thereof has been so
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provided to any Leasehold Mortgagee of which Landlord has notice, Landlord may
not terminate this Lease because of Tenant's default or breach if, within the
Cure Period (as provided below), any such Leasehold Mortgagee shall have (i)
cured all defaults or breaches described in said notice which can be cured by
die payment of money; or (ii) if any such defaults or breaches are not curable
by the payment of money and require possession of the Premises, commenced to
cure such defaults or breaches and continue diligently to prosecute the same
towards completion (including foreclosure if necessary to gain possession of
Premises). If the Leasehold Mortgagee ceases its effort to cure any such
default, fails to keep all Rent current, or discontinues the foreclosure
proceedings without effecting the cure of such default, then Landlord shall have
no further obligation hereunder to forebear the termination of this Lease. The
"Cure Period" under this Section 12.8(b) will commence on receipt of written
notice by the Leasehold Mortgagee as to the default or breach by Tenant and end
twenty (20) days after the running of any notice or grace period permitted to
Tenant in this Lease.
(c) Upon a Leasehold Mortgagee's request to Landlord within thirty (30)
days after such Leasehold Mortgagee's acquisition of such leasehold, Landlord
shall enter into a new lease with such Leasehold Mortgagee covering the Premises
covered by the foreclosed Lease if suck Leasehold Mortgagee (i) gives notice of
request prior to or concurrently with such termination or foreclosure, (ii) pays
all costs resulting from default and termination and associated with such new
lease (including Landlord's attorneys' fees and costs), and (iii) remedies all
defaults construed as though the Lease had not been terminated (including, but
not limited to, the payment of all Rent and other charges that, but for such
termination, would have become due under this Lease up to and including the
commencement of the term of such new lease). The new lease shall be for the
remainder of the Term of lids Lease, effective at the date of termination or
foreclosure, and in the form of this Lease, including, but not limited to, at
the Rent and on all of the covenants, agreements, conditions, provisions,
restrictions and limitations contained in this Lease (including the restrictions
on use contained in Article 6).
(d) No Leasehold Mortgagee or purchaser at foreclosure shall be entitled
to become the owner of Tenant's interest in this Lease unless such Leasehold
Mortgagee or purchaser shall first have delivered to Landlord and agreement
reasonably acceptable to Landlord, executed in recordable form, wherein and
whereby such Leasehold Mortgagee or purchaser (i) assumes the performance or all
of the terms, covenants and conditions of this Lease, and expressly confirms
that the same are in full force and effect, (ii) agrees to use the Premises 35 a
theater (or such other use as may be reasonably approved by Landlord in
accordance with Article 6 hereof) in accordance with all of the requirements of
this Lease (including Article 6) and (iii) otherwise satisfies the requirements
of this Article 12 concerning an assignment of this Lease.
13. TENANT'S DEFAULT
13.1 TENANT'S DEFAULT
Each of the following shall constitute an "Event of Default" by Tenant
hereunder:
(a) If Tenant shall fall to make payment of Rent or any other
amount due and owing hereunder when and as the same shall become due
and payable, and such failure
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shall continue for a period of ten (10) days following written notice of
such default by Landlord to Tenant. Such written notice shall be in lieu of
and not in addition to any notice required under Section 1161 of the Civil
Code of Procedure of California or any similar or superseding statute; or
(b) If Tenant shall fail in the performance of or compliance with
ally of the covenants, agreements, terms, or conditions contained in this
Lease other than that referred to in the foregoing subsection 13.1(a), and
such failure shall continue for a period of thirty (30) days following
written notice of such failure by Landlord to Tenant, provided that if the
nature of such default is such that the same cannot reasonably be cured
within a 30-day period, Tenant shall not be deemed to be in default if it
diligently commences such cure within such 30-day period and thereafter
diligently proceeds to rectify and cure said default as soon as possible.
Such written notice shall be in lieu of and not in addition to any notice
required under Section 1161 of the Civil Code of Procedure of California or
an similar or superseding statute; or
(c) To the extent permitted by law, if a general assignment has been
made by Tenant or any guarantor of the Lease for the benefit of creditors,
or if there is a filing by or against Tenant or any guarantor of any
proceeding under an insolvency or bankruptcy law, unless in the case of a
proceeding filed against Tenant or any guarantor the same is dismissed
within sixty (60) days, or the appointment of a trustee a: receiver to take
possession of all or substantially all of the assets of Tenant or any
guarantor, unless possession is restored to Tenant or such guarantor within
sixty (60) days, or in the event of arty execution or other judicially
authorized seizure of all or substantially all of Tenant's assets located
upon the Premises or of Tenant's interest in this Lease, unless such
seizure is discharged within sixty (60) days.
13.2 CUMULATIVE REMEDIES
Upon the occurrence of an Event of Default, Landlord shall have all the
remedies set forth in this Article 13 and as provided under California law,
including, without limitation, California Civil Code Sections 1951.2, 1951.4
(lessor may continue lease in effect after lessee's breach and abandonment and
recover Rent as it becomes due, if lessee has the fight to sublet or assign,
subject only to reasonable limitations) and 1951.5, These remedies are not
exclusive; they are cumulative and in addition to any and all remedies now or
later allowed by law or in equity.
13.3 TENANT'S RIGHT TO POSSESSION NOT TERMINATED
Upon the occurrence of an Event of Default, Landlord shall have the remedy
described in California Civil Code Section 1951.4 (lessor may continue lease in
effect after lessee's breach and abandonment and recover Rent as it becomes due,
if lessee has right to sublet or assign. subject only to reasonable
limitations). Landlord can continue this Lease in full force and effect, and the
Lease will continue in effect as long as Landlord does not terminate Tenant's
right to possession by written notice thereof to Tenant, and Landlord shall have
the right to enforce Tenant's obligations hereunder amid to collect Rent and all
other amounts hereunder when due. During the existence of an Event of Default,
Landlord can enter the Premises and relet them, or any part of them, to third
parties for Tenant's account. In such event, Tenant shall be liable immediately
to Landlord for all costs Landlord incurs in reletting the Premises, including,
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without limitation, broker's commissions and like costs. Reletting can be for a
period shorter or longer than the remaining Term of this Lease, but Tenant shall
only be responsible for broker's commissions attributable to the remaining Term
of this Lease. No act by Landlord allowed by this Section 13.3 shall terminate
this Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease, If Landlord elects to relet the Premises as provided in
this Section 13.3, the Rent that Landlord receives from reletting shall be
applied to the payment of first, any indebtedness or other costs and expenses
hereunder owing from Tenant to Landlord other then Rent due from Tenant; second,
all costs, including for maintenance, incurred by Landlord in resetting, and
third, Rent due and unpaid under this Lease. After deducting the payments
referred to in this Section 13.3, any sum remaining from the rent Landlord
receives from reletting shall be held by Landlord (without interest thereon or
liability therefor) and applied in payment of future Rent as Rent becomes due
under this Lease. In no event shall Tenant be entitled to any excess rent
received by Landlord. If, on the date Rent is due under the Lease, the rent
received from the reletting is less than the Rent due on that date, Tenant shall
pay. to Landlord, in addition to the remaining Rent due, all costs, including
for maintenance, incurred by Landlord in reletting that remain after applying
the Rent received from the reletting as provided in this Section 13.3.
13.4 TERMINATION OR TENANT'S RIGHT TO POSSESSION
Upon the occurrence of an Event of a Default, Landlord can terminate this
Lease and Tenant's right to possession of the Premises at any time. No act by
Landlord tither than giving written notice to Tenant shall terminate this Lease.
Acts of maintenance, efforts to relet the Premises, or the appointment of a
receiver on Landlord's initiative to protect Landlord's interest under this
Lease shall not constitute a termination of this Lease or of Tenant's right to
possession. On termination, Landlord has the right, in addition to any and all
other rights of Landlord hereunder, in equity, or at law, to recover from
Tenant the following:
(a) The worth at the time of the award, of the unpaid Rent that had
been earned at the time of termination of this Lease;
(b) The worth, at the time of the award, of the amount by which the
unpaid Rent that would have been earned after the date of termination of
this Lease until tile time of award exceeds the amount of the loss of Rent
that Tenant proves could have been reasonably avoided;
(c) The worth, at tile time of the award, of the amount by which the
unpaid Rent for the balance of the Term after the time of award exceeds the
amount of the loss of Rent that Tenant proves could have been reasonably
avoided, and
(d) Any other amount, and court costs, necessary to compensate
Landlord for all detriment proximately caused by Tenant's default.
"The worth, at the time of the award," as used in (a) and (b) of this
Section 13.4, is to be computed by allowing interest at the Interest Rate. "The
worth at the time of the award," as referred to in (c) of this Section 13.4, is
to be computed by discounting the amount at the
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discount rate of the Federal Reserve Bank of San Francisco at the time of the
award plus one percent (1%).
14. LANDLORD'S DEFAULT
Should Landlord default in the payment of any obligation under any
mortgage, trust deed, judgment, assessment, tax or other encumbrance affecting
die Premises, or fail to perform any obligation specified under this Lease, and
if such default is not cured by Landlord within thirty (30) days after Tenant
has specifically notified Landlord in writing of such default (excepting there
from the event when Landlord may be in default but has undertaken to cure the
default and thereafter diligently pursues the cure to completion), Tenant shall
have the right, but not be obligated, to pay or discharge any such obligation
following delivery to Landlord of an additional written notice of Tenant's
election to do so. Should Tenant elect to pay or discharge any such obligation,
Landlord shall, within thirty (30) calendar days from the date of Tenant's
written demand, reimburse Tenant for the reasonable costs incurred by Tenant in
connection therewith, including, but not limited to, reasonable attorneys' fees.
Tenant's written demand shall specify and breakdown in reasonable derail the
nature of all sums expended. Nothing herein contained shall be interpreted to
mean that Tenant is excused from paying Rent due hereunder as a result of any
default by Landlord. Tenant will not have the right to terminate this Lease for
such default. in the event of such default, Tenant shall have all remedies
available under law for breach of contract, including (without limitation) the
right. of specific performance; provided, however, that in no event shall
Landlord be liable under any circumstances to Tenant for any loss of profits
arising in connection with such default by Landlord. In addition, Landlord will
be liable for a late charge and interest at the Interest Rate, on the same basis
as provided above for nonpayment or Rent.
Any mortgagee of Landlord which has notified Tenant of its address in the
manner provided for notices in this Lease will have the sight to cure Landlord's
defaults under this Section. The cure period will commence on notice of such
mortgagee of the default and extend for a period ending twenty (20) days after
the end of the time period for Landlord to cure a default.
16. HOLDING OVER
Any holding over by Tenant after this Lease has expired shall, at
Landlord's option, be considered an extension of this Lease on a month to month
basis only, on the same terms and conditions set forth herein except for monthly
Rent which shall thereafter be at the rate of one hundred fifty percent (150%)
of the Base Rent due during the last furl month of the Term.
16. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
This Lease shall (subject to Landlord's obligation to deliver to Tenant tie
nondisturbance agreement as provided below) be subject arid subordinate to all
present and future around or underlying leases of the Premises or the Project
and to the lien of any mortgage or trust deed, now or hereafter in force against
the Premises or the Project, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all
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advances made or hereafter to be made upon the security of such mortgages or
trust deeds, unless the holders of such mortgages or trust deeds, or the lessors
under such ground lease or underlying leases, require in writing tat this Lease
be superior thereto. Tenant covenants and agrees in the event any proceedings
are brought for the foreclosure of any such mortgage or deed in lieu thereof, to
attorn, without any deductions or set-offs whatsoever, to the purchaser or an
successors thereto upon any such foreclosure sale or deed in lieu thereof if so
requested to do so by such purchaser, and to recognize such purchaser as the
lessor under this Lease. provided that such purchaser shall not be disturbed so
tong as Tenant faithfully performs all of the duties and obligations of Tenant
hereunder. Tenant shall, within fifteen (15) days of request by Landlord,
execute and deliver to Landlord such further instruments or assurances as
Landlord may reasonably deem necessary to evidence or confirm the subordination
or superiority of this Lease to any such mortgages, trust deeds, ground leases
or underlying leases and Tenant's agreement to attorn, subject to Tenant's
obtaining from such mortgagee or beneficiary a non-disturbance agreement
executed by such mortgagee or beneficiary, providing, anions other things, that,
as long as Tenant is not in default hereunder, this Lease shall remain in effect
for the tall Lease Term.
17. UTILITIES AND SERVICES
Tenant agrees to pay all charges for utilities and services used by it at
the Premises, including, but not limited to, gas, electricity, telephone,
sanitary sewer, storm drainage, domestic water, fire protection, water and trash
collection. Landlord shall not be liable in damages or otherwise for any
failure, interruption or lack of availability of any utility or other service.
No such failure, interruption or lack of availability shall entitle Tenant to
terminate this I ease or withhold or abate Rent or other sums due hereunder.
Tenant agrees to purchase from Landlord irrigation water for the Premises
in accordance with the requirements set forth on Exhibit "D" attached hereto.
The price for suet water shall be at rates established by Landlord from time to
time, but in no event greater than the then-existing rate charged by Vallecitos
Water District for potable water.
18. ESTOPPEL CERTIFICATES
Tenant agrees at any time and from time to time upon not lens than twenty
(20) days' notice by Landlord to execute, acknowledge and deliver to Landlord a
statement in writing certifying (i) 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 as modified and stating the modifications), (ii) whether or not
there are then existing any offsets or defenses against the enforcement of any
of the terms, covenants or conditions hereof upon the part of Tenant to be
performed (and if so specifying the same); (iii) the dates to which the Rent
arid other charges have been paid, and (iv) such other matters as may reasonably
be requested, it being intended that any such statement delivered pursuant to
this Section may be relied upon by Landlord, its lenders, and any prospective
purchaser of the fee or proposed lender on the security of the fee of the real
property comprising the Premises. The provisions of this Article 18 are hereby
deemed to be reciprocal to the extent contextually applicable.
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19. COMMON AREA
(a) As used herein, the term "Common Area" shall mean landscape areas,
access routes and areas designed for pedestrian traffic or use and all realty
and improvements in or at the Project (including any Common Area located on the
Premises) now or hereafter designated by Landlord for the general benefit of the
Project. Each tenant, including Tenant, will be responsible for maintaining the
Common Area located on each tenant's portion of the Project. Landlord agrees to
maintain and operate, or cause to he maintained and operated, the portion of the
Common Area shown highlighted in yellow on the Site Plan attached as Exhibit "B"
at all times following completion thereof. Tenant shall pay to Landlord, during
the Term of this Lease as Additional Rent, the sum of Five Thousand Seven
Hundred Sixty-Eight Dollars ($5,768.00), as Tenant's annual share of Common Area
expenses (the "CAM Contribution"). The CAM Contribution sum shall be due and
payable on the first day of each Lease Year, commencing on the Commencement
Date.
Commencing with the second Lease Year and continuing with each succeeding
Lease Year, if the CAM costs have increased over the previous year, the CAM
Contribution will be adjusted by a fraction, the numerator of which is the
Current Index Number and the denominator of which is the Base Index Number;
provided, however, the increase shall not exceed five percent (5%) per year over
the previous year's CAM Contribution. The "Base Index Number" shall be the level
of the Index most recently published prior to the Commencement Date; the
"Current Index Number" shall be the level of the Index most recently published
prior to the date which the adjustment is to take place, and the "Index" shall
be the Consumer Price Index - Urban Wage Earners and Clerical Workers (San
Diego, California, All Items Base 1982- 84=100) or any successor index thereto
as hereinafter provided. If publication of the Index is discontinued, or if the
basis of calculating the Index is materially changed, then Landlord shall
substitute for the Index comparable statistics as computed by an agency of the
United States Government or, if none, by a substantial and responsible
periodical or publication of recognized authority closely approximating the
result which would have been achieved by the Index.
(b) The Common Areas, whether presently existing or subsequently
developed, in the Project will be available for the use in common by tenants of
the Project (subject to Tenant's right of exclusive use of the loading docks,
entry and circulation space and parking within the Premises) (which parking
shall be subject to the Parking Agreement defined in Section 1.2 above).
Landlord may construct additional parking structures or facilities within the
Common Areas in the Project but outside of the Premises, and may make other
additions and enhancements to the Common Areas outside of the Premises.
(c) Landlord may make and enforce reasonable rules and regulations
consistent with this Lease for the purpose of regulating the use of access,
parking and other Common Areas outside of the Premises. Each party will cause
its tenant and their respective customers, employees, independent contractors
and invitees to comply with such reasonable rules and regulations.
(d) In the event Tenant fails to maintain and repair its common access
ways or Common Areas within the Premises, Landlord may, at its option, provide
Tenant with notice of Tenant's failure and an opportunity for Tenant to correct
the maintenance failure within thirty
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(30) days from said notice. If Tenant fails to cure the failure within said
thirty (30) days, (i) notify Tenant in writing that Landlord intends to perform
the maintenance responsibilities itself at Tenant's cost at least sixty (60)
days before the effective date of the transfer of responsibility, and (ii)
thereafter assume the responsibilities of Tenant under this Section as to Common
Areas within the Premises as Landlord's Common Area Maintenance responsibility.
In such event Tenant shall pay Landlord's actual cost of maintenance within
twenty (20) days of receipt of Landlord's invoice for same.
(e) Both Landlord and Tenant recognize that the maintenance of die
quality and utility of the parking, access and improvements in the Common Areas
is essential for the use and enjoyment of Tenant and other tenants of the
Project. Landlord agrees that it will require the tenants of the Project to
provide parking which meets City code requirements subject to reasonable
credit for reciprocal parking arrangements. Landlord or Tenant may temporarily
close the. Common Areas) or portions thereof, as appropriate) on their
respective properties to make repairs or changes, or to prevent the acquisition
of public rights, and may do such other acts in and to the Common Areas as are
(in such parties' reasonable judgment) necessary to improve their utility and
value to tenants of the Project.
20. MISCELLANEOUS PROVISIONS
20.1 NOTICES
All notices, approvals, requests, demands and other communications
permitted or required to be given under this Least shall be writing and shall be
deemed and duly served or given when actually delivered, if personally delivered
(including delivery by Federal Express. Express Mail or other similar overnight
courier which confirms delivery in writing), or if sent by certified mail,
postage prepaid, return receipt requested, then (a) when delivered to the
address of the party by the U.S. Postal Service, or (b) in the case of refusal
to accept delivery or inability to deliver the notice, the date of the
attempted delivery or refusal to accept delivery. Any notice under this Lease
may also be given by facsimile or other telecommunication device capable of
transmitting and creating a written record, effective on receipt. Such notices
shall be addressed to the addresses of the parties set forth below Landlord and
Tenant may, from time to time by notice to the other, designate another place
for receipt for future notices. The foregoing methods of Service shall be
exclusive and Tenant hereby, waives, to the fullest extent permitted by law,
the right to any other method of service required by any statute or law now or
hereinafter in effect.
To Landlord: City of San Marcos
One Civic Center Drive
San Marcos, California 92069
Attn: City Manager
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To Tenant: Cinema Star Luxury Theaters, Inc.
431 College Blvd.
Oceanside, California 92057
Attn: John Ellison, Jr.
Fax: 619-630-8593
20.2 HEADINGS
The headings of the Articles and Sections of this Lease are for convenience
only and do not in any way limit, amplify or otherwise affect the covenants and
agreements contained in this instrument.
20.3 MORTGAGEE PROTECTION
In the event of any default on the part of Landlord hereunder, Tenant will
give notice in compliance with the requirements of Section 20.1 to any
beneficiary of a deed of trust or to any mortgagee under a mortgage covering the
Premises whose address shall have been furnished to Tenant, and shall permit
such beneficiary or mortgagee the period of time to cure tile default as
provided in Section 12.8(1)) for cures by the Leasehold Mortgagee in Section
12.8(b).
20.4 FORCE MAJEURE
Except as expressly provided herein, in the event that Landlord or Tenant
shall be delayed, hindered in or prevented from the performance of any act
required hereunder (excluding Tenant's obligations to pay Rent or any other
amounts due hereunder) by reason of strikes, lockouts, labor troubles, inability
to procure materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war or other reason beyond their control
(financial ability excepted), then performance of such act shall be excused for
the period of the delay and the period for the performance of any such act shall
be extended for a period equivalent to the period of such delay.
20.5 BINDING EFFECT
The provisions of this instrument shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns, subject to Article 12.
20.6 MODIFICATIONS
Any alteration, change or modification of or to this Lease, in order to
become effective, shall be made by written instrument or endorsement thereon and
in each such instance executed on behalf of each party hereto.
20.7 APPLICABLE LAW
This Lease shall be governed by, and construed in accordance with, the laws
of the State of California.
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20.8 PARTIAL INVALIDITY
If any term, provision, condition or covenant of this Lease or the
application thereof to any party or circumstances shall, to any extent, be held
invalid or unenforceable, the remainder of this Lease, or the application of
such term, provision, condition or covenant to persons or circumstances under
those as to whom or which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
20.9 BROKERAGE COMMISSION
Landlord and Tenant each warrants to the other that it has had no dealings
with any person that will be entitled to a broker's or finder's fee in
connection with this Lease, however a facilitation fee shall be due to Koll Real
Estate Group from Landlord in accordance with Landlord's separate agreement.
Each party hereto shall indemnify and hold harmless the other party hereto from
and against any and all losses, damages, liabilities, losses, costs and expenses
(including, but not limited to, reasonable attorneys' fees and related costs)
resulting from any claims that may be asserted against such other party by any
real estate broker, finder or intermediary arising from any act of the
indemnifying party in connection with this Lease.
20.10 COVENANTS RUNNING WITH THE LAND
All of the covenants, agreements, conditions and restrictions set forth in
this Lease are intended to be and shall be construed as covenants running with
The land, binding upon, inuring to the benefit of and enforceable by and against
the parties hereto and their successors-in-interest.
20.11 MEMORANDUM OF LEASE
This Lease shall not be recorded; however, at Tenant's request, Landlord
will execute and acknowledge a memorandum of this Lease ("Memorandum of Lease")
in a form reasonably acceptable to Landlord. Tenant shall pay any recording
charges or other costs incurred in connection with or as a result of the
recordation of the Memorandum of Lease. Tenant shall not record any other
instrument affecting the Premises or the Project without the prior written
consent of Landlord, which consent shall not be reason ably withheld. Tenant
shall, upon the expiration or earlier termination of this Lease, execute,
acknowledge and deliver to Landlord a quit-claim deed to the Premises.
20.12 RELATIONSHIP OF THE PARTIES
The relationship of the parties hereto is that of Landlord and Tenant, and
it is expressly understood and agreed that Landlord does not in any way, nor for
any purpose, become a partner of Tenant or a joint venturer with Tenant in the
conduct of Tenant's business, or otherwise, and that the provisions of any
agreement between Landlord and Tenant relating to Rent, are made solely for the
purpose of providing a method whereby rental payments are to be measured and
ascertained.
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20.13 ENTIRE AGREEMENT
This Lease contains the entire agreement of the parties hereto with respect
to the matters covered hereby. and no other agreement, statement or promise made
by any party hereto, or to any employee, officer, or agent of any party hereto,
which is not contained herein, shall be binding or valid.
20.14 SALE OF PREMISES
In the event Landlord shall sell, convey, transfer or exchange its fee
title to the Premises, Tenant agrees to recognize and attorn to the purchaser or
transferee as the Landlord hereunder (provided that this Lease and all its terms
and conditions are recognized by such purchaser or assignee and provided the
transaction is a bona tide sale, not a transfer to avoid liability by Landlord
to Tenant) and Landlord shall be and is hereby relieved and released from any
liability, under any and all of its covenants and obligations hereunder arising
out of any act, occurrence or event arising after such sale, conveyance,
transfer or exchange.
20.15 ATTORNEYS' FEES
In the event of a bringing of an action or suit by a party hereto against
another party or parties hereunder or an agreed arbitration arising out of or
related to this Lease, the party in whose favor final award or judgment is
entered shall be entitled to have and recover from the other party or parties
all costs and expenses of suit or arbitration, including reason able attorneys'
fees ("Costs"), all of which shall be deemed to have accrued upon the
commencement of such action. Any judgment or order entered in such action shall
contain a specific provision providing for the recovery of all Costs incurred in
enforcing, perfecting and executing such judgment. For the purposes of this
Section, Costs shall include, without limitation, attorneys' fees, costs and
expenses incurred in the following: (i) postjudgment motions; (ii) contempt
proceedings; (iii) garnishment, levy and debtor and third party examinations;
(iv) discovery; and (v) bankruptcy litigation.
20.16 TIME
Time is of the essence With respect to the performance of every provision
of this Lease.
20.17 COPIES
At the option of either party, this Lease may be executed in multiple
copies, all of which shall be deemed originals.
20.18 WAIVER
No covenant, term or condition of this Lease shall be deemed to have been
waived by Landlord unless such waiver be in writing and signed by Landlord.
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20.19 ACCORD AND SATISFACTION
No payment by Tenant or receipt by Landlord of a lesser amount than the
full amount of Rent shall be deemed to be other than on account due under this
Lease, Nor shall any endorsement or statement on any check or any letter
accompanying any check or payment of 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 in this
Lease provided.
20.20 EXECUTION OF LEASE
The submission of this Lease for execution does not constitute a
reservation of or option for the Premises and this Lease becomes effective as a
lease only upon execution and delivery thereof by Landlord and Tenant.
20.21 CORPORATE GOOD STANDING
Tenant hereby covenants and warrants that (i) Tenant is in good standing as
of the date hereof, (ii) Tenant is a duly qualified corporation and all steps
have been taken prior to the date hereof to qualify Tenant to do business in
California, and (iii) all future forms, reports and/or other documents or fees
necessary to comply with that laws applicable to Tenant's corporate status will
be filed or paid when due, and such corporation shall remain in good standing
with the Secretary of State of California and of the state in which Tenant is
incorporated during the Term here of.
20.22 DILIGENT CONSTRUCTION
Tenant shall use reasonable efforts to perform or cause Tenant's contractor
to perform all work in the making and/or installation of any repairs,
alterations or Improvements in a manner so as to avoid any labor disputes
which causes or is likely to cause stoppage or impairment of work or delivery
services or any other services in the Project. In the event there shall be any
such stoppage or impairment as the result of any such labor dispute or potential
labor dispute, Tenant shall use reasonable efforts to immediately undertake such
action as may be necessary to eliminate such dispute or potential dispute,
including, but not limited to, (i) removing all disputants from the job site
until such time as the labor dispute no longer exists, (ii) seeking an
injunction in the event of a breach of contract between Tenant and Tenant's
contractor, and (iii) filing appropriate unfair labor practice charges in the
event of a union jurisdictional dispute.
20.23 LIMITATION ON LIABILITY
In consideration of the benefits accrued hereunder, Tenant covenants and
agrees that, in the event of any actual or alleged failure, breach or default
hereunder by Landlord, Tenant's sole and exclusive remedy shall be against
Landlord's interest in the Project (excluding the Civic Center), and the
obligations of Landlord under this Lease do not constitute personal obligations
of the individual partners, directors, trustees, officers, staff, council
persons or shareholders of Landlord or the Redevelopment Agency of The City of
San Marcos, and Tenant
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shall not seek recourse against the individual partners, directors, trustees,
officers, staff, council persons or shareholders of Landlord or The
Redevelopment Agency of the City of San Marcos or any of their personal assets
for satisfaction of any liability in respect to this Lease.
20.24 IDENTIFICATION OF TENANT
If there is more than one party constituting Tenant, then each of such
party's obligations hereunder shall be joint and several, and any one of them
shall act for all others in every regard with respect to this Lease (including,
but not limited to, any renewal, extension, expiration, termination or
modification hereof).
20.25 LANDLORD'S TITLE
Landlord's title is and always shall be paramount to the title of Tenant.
Nothing herein contained shall empower Tenant to do any act which can, shall or
may encumber the title of Landlord.
20.26 FINANCIAL STATEMENTS
In order to induce Landlord to enter into this Lease, Tenant agrees that it
shall promptly furnish Landlord from time to time (but not more often than twice
during any twelve (12) month period) with current financial statements
reflecting Tenant's financial condition. Such financial statements shall be
prepared in accordance with generally accepted accounting principles.
20.27 RIGHT TO LEASE
Subject to Section 20.31 below, Landlord reserves die absolute fight to
effect such other tenancies in the Project as Landlord in the exercise of its
sole business judgement shall determine to best promote the interests of the
Project.
20.28 PROJECT NAME AND SIGNAGE
Landlord shall have the right at any time to change the name of the
Project (or portions thereof) and to install, affix and maintain any and all
signs on the exterior arid on the interior of the Project (except the Premises)
as Landlord may, in Landlord's reasonable discretion, desire.
20.29 LAND USE DECISIONS
The commitments of Landlord as set forth herein shall in no way bind or
influence the actions or decisions of the City of San Marcos with respect to any
land use action or decision, or any process of review required by the California
Environmental Quality Act with respect to any land use action or decision. The
commitments of Landlord as set forth herein do not express or imply any
predetermination or predisposition with respect to any action or decision which
may be required by the City of San Marcos by virtue of the performance of its
regulatory duties and responsibilities.
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20.30 EASEMENTS OVER PREMISES
Tenant agrees to execute any such easements or other documents reasonably
necessary to insure the occupant(s) of the Project (and their employees, guests
and invitees) or utility providers access over and across any common access ways
or common utility lines within the Premises, and provided that Tenant has
approved in writing the location of such access ways and utility lines and
reserved the fight to relocate such access ways and lines in connection with its
development and use of the Premises, provided 'hat such easements or other
documents will not materially and adversely affect Tenant's use of the Premises.
21. HAZARDOUS MATERIALS.
21.1 USE, STORAGE, HANDLING AND DISPOSAL OF HAZARDOUS MATERIALS
Except as provided herein, Tenant shall neither cause nor permit any
Hazardous Materials (as such term is defined in Section 21.9) to be used,
generated, stored, transported, handled or disposed of in or about the Premises
at any time following the Effective Date (such activities are hereinafter
referred to as "Environmental Activities"). This prohibition shall extend to the
Tenant Parties and Tenant shall be responsible for assuring compliance by such
persons with the foregoing prohibition. Notwithstanding the foregoing, and
subject to Tenant's covenant to strictly comply with all "Hazardous Materials
Laws" (as such term is defined in Section 21,2 below) and all other terms and
conditions of this Article 21, Tenant and the Tenant Parties may bring upon,
keep and use in or about the Premises (a) general office, and kitchen supplies
typically used in such areas in the ordinary course of business, such as copier
toner, liquid paper. glue, ink and cleaning solvents, for use in the manner for
which they were designed, in such amounts as may be normal for the business
operations conducted by Tenant on the Premises, and (b) only those additional
Hazardous Materials consented to by Landlord in writing, which consent shall be
in Landlord's sole discretion. in connection with seeking any such consent,
Tenant shall deliver to Landlord a description of handling, storage, use and
disposal procedures. Notwithstanding the foregoing, Tenant shall not install,
operate or maintain any above or below grade tank, sump, pit, pond, lagoon or
other storage or treatment vessel or device on the Property except those devices
which are required by health laws.
21.2 COMPLIANCE WITH LAWS
Tenant, at its sole cost and expense, shall comply and shall cause the
Tenant Parties to comply, with all federal, state and local laws, ordinances and
regulations and all rules, licenses, permits, orders, decrees and judgments
relating to Environmental Activities (collectively referred to as "Hazardous
Materials Laws") conducted by Tenant or any of the Tenant Parties on the
Premises. Tenant's breach of any of its covenants or obligations under this
Article 21 shall constitute a material default under this Lease. The obligations
of Tenant under this Article 21 shall (i) survive the expiration or earlier
termination of this Lease without any limitation, (ii) constitute obligations
that are independent and severable from Tenant's covenants and obligations to
pay Rent under this Lease, and (iii) inure to the benefit of, and be enforceable
by, Landlord, its assignees and successors-in-interest to the Premises.
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21.3 EXCULPATION OF LANDLORD
Other tenants of the Project may be using, handling or storing certain
Hazardous Materials in connection with such tenants' use of their premises. The
failure of another tenant to comply with applicable laws and procedures could
result in a release of Hazardous Materials and contamination to improvements
within the Project or the soil and ground water thereunder. In the event of such
release, the tenant responsible for the release, and not Landlord, shall be
solely responsible for any claim, damage or expense incurred by Tenant by reason
of such contamination.
21.4 DISCLOSURE AND NOTIFICATION
Landlord may, from time to time (but no more often than annually) (each
such date being hereafter referred to as a "Disclosure Date"), reasonably
request that Tenant disclose to Landlord the names and amounts of all Hazardous
Materials other than general supplies referred to in Section 21.1, which were
used, generated, treated, handled, stored or disposed of on the Premises or
which Tenant intends to use, generate, treat, handle, store or dispose of on the
Premises, for the year prior to and after such Disclosure Date. The foregoing in
no way shall limit the necessity for Tenant obtaining Landlord's consent
pursuant to Section 21.1.
Tenant shall immediately advise Landlord in writing of, and provide
Landlord with a copy of (i) any notices of violation or potential or alleged
violation of any Hazardous Materials Laws which are received by Tenant from any
governmental agency concerned with Tenant's Or Tenant's Agent's Environmental
Activities, (ii) any and all inquiry, investigation, enforcement, clean-up,
removal or other governmental or regulatory actions instituted or threatened
relating to Tenant or the Premises; (iii) all claims made or threatened by any
third party against Tenant or the Premises relating to any Hazardous Materials,
and (iv) any release of Hazardous Mate, mats on or about the Premises or the
Project which Tenant knows of or reasonably believes may have occurred.
21.5 INSPECTION OF PREMISES
In the event that Landlord reasonably believes that Tenant is in violation
of any of Tenant's duties or obligations under this Article 21, Landlord may
require that Tenant retain a registered environmental consultant (the
"Consultant") reasonably acceptable to Landlord to conduct an investigation of
the Premises ("Environmental Assessment") (i) for Hazardous Materials
contamination in, about or beneath the Premises and (ii) to assess all
Environmental Activities on the Premises for compliance with all applicable
laws, ordinances and regulations and for the use of procedures intended to
reasonably reduce the risk of a release of Hazardous Materials. The
Environmental Assessment shall be performed in a manner reasonably calculated
to discover the presence of Hazardous Materials contamination and shall be of a
scope and intensity reflective of the general standards of professional
environmental consultants who regularly provide environmental assessment
services in connection with the transfer or leasing of real property.
Additionally, the Environmental Assessment shall take into full consideration
the past and present uses of the Premises by Tenant or any of the Tenant Parties
and other factors unique to the Premises. The cost of the Environmental
Assessment shall be paid by Landlord unless Landlord reasonably determines that
Tenant violated a duty or obligation set forth in this
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Article 21, in which event the entire cost thereof shall be paid by Tenant as
Additional Rent. Tenant shall comply, at its sole cost and expense, with all
reasonable recommendations contained in the Environmental Assessment, including
any recommendation with respect to the precautions which should be taken with
respect to Environmental Activities on die Premises by Tenant or any of the
Tenant Parties or any recommendations for additional testing and studies to
detect the presence of Hazardous Materials. Tenant covenants to reason any
cooperate with the Consultant and to allow entry and reasonable access to all
portions of the Premises for the purpose of Consultant's investigation.
21.6 INDEMNIFICATION OF LANDLORD
Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and
hold Landlord, its directors, officers, employees, agents. assigns and any
successors to Landlord's interest in the Premises, harmless from and against any
and all loss, cost, damage, expense (including reasonable attorneys' fees),
claim, cause of action, judgment, penalty, fine or liability directly or
indirectly relating to or arising from (i) any Environmental Activity on the
Premises by Tenant or any of the Tenant Parties during the Term of this Lease,
(ii) any remedial or clean-up work undertaken by or for Tenant in connection
with its Environmental Activities or its compliance with Hazardous Materials
Laws or (iii) the breach by Tenant of any of its obligations and covenants set
forth in this Article 21. Notwithstanding the foregoing, Tenant shall not be
required to indemnify Landlord with respect to any Hazardous Materials which
were not used, generated, stored, transported, handled or disposed of in or
about the Premises by Tenant or Tenant's Agents, such as Hazardous Materials
which may migrate onto or under die Premises front another source. Landlord
shall have the right but not the obligation to join and participate in any legal
proceedings or actions initiated in connection with Tenant's Environmental
Activities. Landlord may also negotiate, defend, approve and appeal any action
taken or issued by any applicable governmental authority with regard to
contamination of the Premises by a Hazardous Materials. Any costs or expenses
incurred by Landlord for which Tenant is responsible under this Article 21 or
for which Tenant has indemnified Landlord shall be reimbursed by Tenant on
demand as Additional Rent.
21.7 REMEDIATION
If any Environmental Activities undertaken by Tenant or any of the Tenant
Parties result in contamination of the Premises or any other portion of the
Project or the soil on ground water thereunder, subject to Landlord's prior
written approval and any conditions imposed by Landlord, Tenant shall promptly
take all actions, at its sole expense arid without abatement of Rent, as are
necessary to return the affected portion of the Project, the Premises and the
soil and ground water to the condition existing prior to the introduction of the
contaminating Hazardous Material. Landlord's approval of such remedial work
shall not be unreasonably withheld so long as such actions will not cause a
material adverse effect on the Premises after expiration of the Term or any
material adverse effect on the Project. Landlord shall also have the right to
approve any and all contractors hired by Tenant to perform such remedial work.
All such remedial work shall be performed in compliance with all applicable
laws, ordinances and regulators and in such a manner as to minimize any
interference with the use and enjoyment of the Project Appearance of a Hazardous
Material in or about the Premises shall not be deemed an occurrence of damage or
destruction subject to the terms of this Lease
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49
respecting damage or destruction caused by act of God, force of nature, fire,
flood, earthquake or other casualty.
21.8 SURRENDER OF PREMISES
Prior to or after the expiration or earlier termination of the Term,
Landlord may have an Environmental Assessment of the Premises performed in
accordance with Section 21.5. Tenant shall perform, at its sole cost and
expense, any clean-up or remedial work recommended by the Consultant which is
necessary to remove, mitigate or remediate any Hazardous Materials contamination
of the Premises in connection with Tenant's or any of the Tenant Parties'
Environmental Activities. Prior to surrendering possession of the Premises,
Tenant shall also remove any personal property, equipment, fixture and/or
storage device or vessel on or about the Premises which is contaminated by or
which contains Hazardous Materials caused by Tenant or any of the Tenant
Parties.
21.9 DEFINITION OF HAZARDOUS MATERIALS
"Hazardous Materials" shall mean asbestos, any petroleum fuel and any
hazardous or toxic substance, material or waste which is or become regulated by
any local governmental authority, the State of California ore the United States
Government, including, but not limited to, any material or substance defined as
a "hazardous waste," "extremely hazardous waste," "restricted hazardous waste,"
"hazardous substance," "hazardous material" or "toxic pollutant" under the
California Health and Safety Code and/or under the Comprehensive Environmental
Response, Compensation and Liability Act, 42. U.S.C. +SC9601, at seq. The term
"Hazardous Materials" will not include cleaning products, landscape fertilizers
and other products in ordinary quantities that are customarily used in the
ordinary course of business of operating and maintaining commercial properties
(but which will nevertheless be used in compliance with all applicable Hazardous
Materials Laws).
21.10 ASSIGNMENT AND SUBLETTING
If a proposed Transferee's activities in or about the Premises involve the
use, handling, storage or disposal of any Hazardous Materials other than those
used by Tenant and in quantities and processes similar to Tenant's uses in
compliance with this Lease, (i) it shall be reasonable for Landlord to withhold
its consent to such assignment or sublease in light of the risk of contamination
posed by such activities unless Tenant satisfies the condition described in the
following clause and/or (ii) Landlord may impose an additional condition to such
assignment or sublease which requires Tenant to establish beyond a reasonable
doubt that such Transferee's activities pose no significantly greater risk of
contamination to the Premises than do Tenant's permitted activities in view of
the (a) quantities, toxicity and other properties of the Hazardous Materials to
be used by such Transferee, (b) the precautions against a release of Hazardous
Materials such Transferee agrees to implement, (c) such Transferee's financial
condition as it
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relates to its ability to fund a major clean-up and (d) such Transferee's
policy and historical record respecting its willingness to respond to and clean
up a release of Hazardous Materials.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
"LANDLORD" CITY OF SAN MARCOS, a municipal corporation
By:
------------------------------------
Name: R.W. Gittings
-----------------------------
Title: City Manager
-----------------------------
By:
------------------------------------
Name:
-----------------------------
Title:
-----------------------------
"TENANT" CINEMA STAR LUXURY THEATRES, INC., a
California corporation
By:
------------------------------------
Name: John Ellison Jr.
-----------------------------
Title: President
-----------------------------
By:
------------------------------------
Name: John Helcon
-----------------------------
Title: Secretary & General Counsel
-----------------------------
51
[FIGURE 1]
52
EXHIBIT A
THEATRE SITE
LEASE AGREEMENT
DESCRIPTION
THAT PORTION OF LOT 4 OF SAN MARCO TRACT NO. 383, IN THE CITY OF SAN MARCOS,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA. ACCORDING TO MAP THEREOF NO. 13218,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON JUNE 30, 1996,
DESCRIBED AS FOLLOWS:
COMMENCING AT A POINT ON THE WESTERLY LINE OF SAID LOT 4, DISTANT THEREON NORTH
08 DEGREES, 29 MINUTES, 01 SECONDS WEST, 358.01 FEET FROM THE MOST NORTHERLY
CORNER OF LOT 5 OF SAID MAP NO. 13218; THENCE LEAVING SAID WESTERLY LINE OF SAID
LOT 4, NORTH 81 DEGREES, 30 MINUTES, 59 SECONDS EAST 116.00 FEET TO THE TRUE
POINT OF BEGINNING; THENCE CONTINUING NORTH 81 DEGREES, 30 MINUTES, 59 SECONDS
EAST 130.78 FEET; THENCE NORTH 43 DEGREES, 06 MINUTES, 35 SECONDS EAST 140.63
FEET TO THE INTERSECTION WITH THE NORTHERLY LINE OF SAID LOT 4, SAID POINT BEING
A POINT ON THE ARC OF A 208.00 FOOT RADIUS CURVE, CONCAVE NORTHERLY AND THROUGH
WHICH A RADIAL LINE BEARS SOUTH 31 DEGREES, 31 MINUTES, 30 SECONDS WEST OF SAID
POINT; THENCE EASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF
49 DEGREES, 04 MINUTES, 29 SECONDS A DISTANCE OF 178.15 FEET; THENCE TANGENT TO
SAID CURVE, NORTH 72 DEGREES, 27 MINUTES, O1 SECONDS EAST 45.11 FEET TO THE
BEGINNING OF A TANGENT 10.00 FOOT RADIUS CURVE, CONCAVE SOUTHERLY; THENCE
EASTERLY AND SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE
OF 94 DEGREES, 32 MINUTES, 31 SECONDS A DISTANCE OF 16.50 FEET TO A POINT OF
COMPOUND CURVATURE WITH THE ARC OF A 553.00 FOOT RADIUS CURVE, CONCAVE
SOUTHWESTERLY AND THROUGH WHICH A RADIAL LINE BEARS NORTH 76 DEGREES, 59
MINUTES, 32 SECONDS EAST TO SAID POINT; THENCE SOUTHEASTERLY ALONG THE ARC OF
SAID CURVE THROUGH A CENTRAL ANGLE OF 02 DEGREES, 29 MINUTES, 59 SECONDS A
DISTANCE OF 24.13 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 10 DEGREE, 30
MINUTES, 29 SECONDS EAST 50.00 FEET TO THE BEGINNING OF A TANGENT 746.00 FOOT
RADIUS CURVE, CONCAVE NORTHEASTERLY; THENCE SOUTHEASTERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 25 DEGREE, 54 MINUTES, 23 SECONDS A DISTANCE OF
292.54 FEET TO THE INTERSECTION WITH THE NORTHERLY LINE OF THAT 12.00 FOOT
RECREATIONAL TRAIL EASEMENT AS SHOWN AND DELINEATED ON SAID MAP NO. 13218 AND
THROUGH WHICH A RADIAL LINE BEARS SOUTH 53 DEGREES, 35 MINUTES, 08 SECONDS WEST
OF SAID POINT; THENCE SOUTHWESTERLY ALONG SAID NORTHERLY LINE OF SAID
RECREATIONAL TRAIL EASEMENT, SOUTH 51 DEGREES, 12 MINUTES, 14 SECONDS WEST
40.63 MINUTES TO THE BEGINNING OF A TANGENT 69.00 FOOT RADIUS CURVE, CONCAVE
NORTHWESTERLY; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A
CENTRAL ANGLE OF 12 DEGREES, 00 MINUTES, 14 SECONDS A DISTANCE OF 14.46 FEET;
THENCE TANGENT TO SAID CURVE, SOUTH 63 DEGREES, 12 MINUTES, 28 SECONDS WEST
38.44 FEET TO THE BEGINNING OF A TANGENT 69.00 FOOT RADIUS CURVE, CONCAVE
NORTHWESTERLY; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH CENTRAL
ANGLE OF 09 DEGREES, 49 MINUTES, 11 SECONDS A DISTANCE OF 11.83 FEET; THENCE
TANGENT TO SAID CURVE SOUTH 73 DEGREES, 01 MINUTES, 39 SECONDS WEST 78.13 FEET
TO THE BEGINNING OF A TANGENT 56.00 FOOT
53
PAGE 2
THEATRE SITE
LEASE AGREEMENT
DESCRIPTION
RADIUS CURVE, CONCAVE SOUTHEASTERLY; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID
CURVE THROUGH A CENTRAL ANGLE OF 33 DEGREES 59 MINUTES 55 SECONDS A DISTANCE OF
33.23 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 39 DEGREES 01 MINUTES 44
SECONDS WEST 53.56 FEET TO THE INTERSECTION WITH THE NORTHEASTERLY LINE OF THE
IRRIGATION WELL EASEMENT AS SHOWN AND DELINEATED ON SAID MAP NO. 13218; THENCE
NORTHWESTERLY ALONG SAID NORTHEASTERLY LINE, NORTH 50 DEGREES 34 MINUTES 18
SECONDS WEST 46.99 FEET; THENCE SOUTH 39 DEGREES 25 MINUTES 42 SECONDS WEST
36.63 FEET; THENCE SOUTH 50 DEGREES 34 MINUTES 18 SECONDS EAST 47.25 FEET TO
THE INTERSECTION WITH THE NORTHERLY LINE OF SAID RECREATIONAL TRAIL EASEMENT;
THENCE SOUTHWESTERLY ALONG SAID NORTHERLY LINE, SOUTH 39 DEGREES 01 MINUTES 44
SECONDS WEST 46.17 FEET TO THE BEGINNING OF A TANGENT 94.00 FOOT RADIUS CURVE,
CONCAVE NORTHWESTERLY; THENCE SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH
A CENTRAL ANGLE OF 22 DEGREES 09 MINUTES 42 SECONDS A DISTANCE OF 36.36 FEET;
THENCE TANGENT TO SAID CURVE, SOUTH 61 DEGREES 11 MINUTES 26 SECONDS WEST 3.68
FEET TO THE BEGINNING OF A TANGENT CURVE, CONCAVE NORTHWESTERLY; THENCE
SOUTHWESTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 11 DEGREES
06 MINUTES 06 SECONDS A DISTANCE OF 37.59 FEET TO THE INTERSECTION WITH A LINE
BEARING SOUTH 08 DEGREES 29 MINUTES 01 SECONDS EAST AND THROUGH WHICH A RADIAL
LINE BEARS SOUTH 17 DEGREES 42 MINUTES 28 SECONDS EAST TO SAID POINT; THENCE
LEAVING THE NORTHERLY LINE OF SAID RECREATIONAL TRAIL EASEMENT, NORTH 08
DEGREES 29 MINUTES 01 SECONDS WEST 195.70 FEET TO THE BEGINNING OF A TANGENT
37.00 FOOT RADIUS CURVE, CONCAVE SOUTHWESTERLY; THENCE NORTHWESTERLY ALONG THE
ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 90 DEGREES 00 MINUTES 00 SECONDS A
DISTANCE OF 58.12 FEET; THENCE TANGENT TO SAID CURVE, SOUTH 81 DEGREES 30
MINUTES 59 SECONDS WEST 98.50 FEET; THENCE NORTH 08 DEGREES 29 MINUTES 01
SECONDS WEST 114.41 FEET; THENCE SOUTH 81 DEGREES 30 MINUTES 59 SECONDS WEST
32.00 FEET; THENCE NORTH 08 DEGREES 29 MINUTES 01 SECONDS WEST 156.50 FEET TO
THE TRUE POINT OF BEGINNING.
CONTAINING 4.35 ACRES.
54
EXHIBIT B
PROJECT SITE PLAN
[FIGURE 2]
55
EXHIBIT "C"
WORK LETTER
1. Tenant acknowledges that although the City of San Marcos has
established certain requirements for all persons constructing improvements
within the City, including, but not limited to, site development review,
building plan check and the like, for purposes of this Lease any approval by the
Landlord shall mean approval by those persons designated by the City to act as
the City's representatives as Landlord for the Town Center Project. Unless
Landlord shall inform Tenant otherwise, Landlord's representatives are Rick
Gittings, City Manager, and Paul Malone, Deputy City Manager.
2. Tenant shall, at Tenant's sole cost and expense, construct or cause to
be constructed all Improvements to the Premises in accordance with plans and
specifications approved in writing by Landlord (which approval shall not be
unreasonably withheld or delayed) and in accordance with the requirements of the
Operating Documents. On or before the date specified in Exhibit "E". Tenant
shall provide preliminary plans and specifications, including. elevations and
proposed landscape plans, prepared by a licensed architect or engineer, to
Landlord. On or before the date specified in Exhibit"E", Landlord shall notify
Tenant of any required changes to the plans and specifications. Landlord's
failure to so notify Tenant of any such required changes to the plans and
specifications on or before said date shall be deemed to constitute Landlord's
approval thereof. Tenant shall revise the plans and specifications in accordance
with Landlord's comments and deliver the same to Landlord on or before the date
specified in Exhibit"E", or, in the alternative, Tenant may, in the event
Landlord's proposed changes would, in Tenant's reasonable judgment, materially
and adversely alter Tenant's intended use of the Premises or significantly
increase the cost of constructing the Improvements; terminate this Lease upon
written notice delivered to Landlord on or before the date specified in Exhibit
"E", which notice may be rescinded by Landlord electing to not require such
proposed changes by giving Tenant written notice thereof within seven (7) days
following Landlord's receipt of Tenant's termination notice. Following approval
of such plans and specifications, Tenant shall cause its architect to prepare
and deliver to Landlord, for Landlord's approval, final working drawings and
specifications for the Improvements based upon and conforming in all respects to
such preliminary plans. All of Tenant's signage during construction shall be
subject to Landlord's prior approval (which shall not be unreasonably withheld)
and all applicable ordinances of the City of San Marcos and any other relevant
governmental authority and the Operating Documents. Tenant shall not be
permitted to install any pole or free-standing sign on the Premises, except that
if the San Marcos City Ordinances allow a "coming soon" or a grand opening sign,
those signs shall be permitted during the construction period.
3. No structure or other improvement of any kind shall be erected or
maintained on the Premises unless and until the plans, specifications,
elevations and proposed location of such structure or improvement have been
approved in writing by Landlord, which approval shall not be unreasonably
withheld or delayed. Landlord's review and approval of the plans for the
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Improvements shall create no liability or responsibility on the part of Landlord
for the completeness of such plans or their design sufficiency or compliance
with applicable law.
4. Landlord has constructed or will construct prior to the Commencement
Date certain On-Site Improvements (as defined below). Tenant agrees to reimburse
Landlord for the cost of the On-Site Improvements within thirty (30) days of
receipt of Landlord's invoice. The term "On-Site Improvements" means an access
road from Rancheros Road through the Premises, parking and landscaping
improvements on a portion of the Premises, a deep sewer lateral and the items
listed on the attached Exhibit "C-1. If Tenant fails to reimburse Landlord for
the cost of the on-site Improvements within the thirty (30) day period, Tenant
shall be in default of this Lease and Landlord shall be entitled to all default
remedies provided Landlord under this Lease.
5. Tenant's construction requirements and fees shall include any and all
fees (including assessment districts) required to obtain construction
entitlement, all improvements to the Premises, including grading the pad,
driveways, paved areas, landscaping, signs, utility connections, and the
building itself and the cost of bringing utilities to the Premises. Landlord
shall not be responsible for any costs associated with Tenant's construction of
any improvements except the On-Site Improvements as described in Paragraph 4
above. Tenant acknowledges that Tenant is accepting the Premises in their "as
is" condition, including but not limited to, grading.
6. The exterior finishes of the cinema building shall be Dryvit or Sto or
a comparable acrylic plaster system.
7. No work of any kind shall be commenced on and no building or other
material shall be delivered for said building project, nor shall any other
building or land development work be commenced or building materials be
delivered on the Premises until at least ten (10) business days after written
notice has been given by Tenant to Landlord of the commencement of such work or
the delivery of such materials. Landlord shall, at any and all times during the
term of this Lease, have the right to post and maintain on the Premises and to
record as required by law, any notice or notices of non-responsibility provided
for by the mechanics' lien law of the State of California. The work prohibited
by this Section until prior written notice thereof has been given to Landlord,
includes, in addition to any actual construction work, any site preparation
work, installation of utilities, street construction or improvements work, or
any grading or filling of the Premises. All work required in the construction of
the improvements, including any site preparation work, landscaping work. utility
installation work, as well as actual construction work on the building project,
shall be performed only by competent contractors duly licensed as such under the
laws of the State of California and approved by Landlord, which approval shall
not be unreasonably withheld. The contractors shall obtain performance bonds for
any work costing in the aggregate more than Twenty-Five Thousand Dollars
($25,000.00).
8. The Improvements shall be constructed, and all work performed on the
Premises, shall be in accordance with all valid laws, ordinances, regulations
and orders of all federal, state, county or local governmental agencies or
entities having jurisdiction over the Premises. All work performed on the
Premises shall be done in a good, workmanlike and lien-free manner and only with
new materials of good quality and high standards.
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57
9. Tenant will diligently pursue obtaining all required permits. After
permits are obtained, Tenant will commence construction of the Improvements
within one (1) week and shall diligently pursue construction of all Tenant's
work to completion, subject only to "force majeure" delays.
10. Tenant shall cause construction of said building project to be
completed, and shall commence business in the Premises as a Cinema Star Luxury
Theater, within the time period provided in the Lease; provided, however, that
except as expressly stated to the contrary herein or in the Lease. Tenant shall
be excused from its performance for any delays in construction or commencement
of construction, or commencement of business operations at the Premises, caused
by matters referred to in Section 20.4 of the Lease. Tenant shall, however, use
reasonable diligence to avoid any such delay and to resume construction as
promptly as possible after the delay.
11. For the work described herein, Tenant and Tenant's contractor shall
hold Landlord harmless from and against any and all claims, demands, actions or
obligations arising under the construction contract and such contract shall
contain an express provision to that effect. Tenant shall deliver evidence of
such agreement to Landlord prior to the commencement of any construction.
3
58
EXHIBIT "C-1"
SUBJECT: Existing Improvements to Theater Premises
(costs reimbursable by Cinema Star to City)
DATE: June 24, 1996
ITEM NO. ITEM DESCRIPTION TOTAL
- -------- ---------------- -----
1. Civil/Grading design $ 5,507.70
2. Water main design 390.04
3. Hydrology & Erosion Control design 100.00
4. Landscape & Irrigation design 1,680.00
5. Surveying calculations/staking 1,694.04
6. Geotechnical site observation 591.58
7. Grading operations (parking lot & access road) 13,262.00
8. Curb & Gutter, Curb, and X-Gutter 10,701.25
9. Water main & fittings, valves, etc 6,050.00
10. 8" sewer lateral 6,859.00
11. Storm drains, curb inlets 7,535.00
12. Street light standards (3) in parking lot 4,438.00
13. Parking lot & access road structural section 29,227.60
14. Irrigation system 9,350.00
15. Tree, Shrub & sod planting 12,186.00
-----------
GRAND TOTAL $109,572.21
===========
59
EXHIBIT "D"
PROVISIONS GOVERNING THE PURCHASE AND DELIVERY OF WELL
WATER FOR IRRIGATION OF LEASED PREMISES
SECTION 1.0 RECITAL
As part of the San Marcos Town Center development infrastructure, Landlord
has constructed two groundwater wells yielding sufficient flows to meet the
irrigation needs of the entire 60 acre site, including all leased premises. By
its execution of the Lease, Tenant agrees to purchase and Landlord agrees to
furnish, well Water for the irrigation of ornamental landscaping, under the
terms and conditions set forth below.
Section 2.0 DEFINITIONS
(a) Agreement ("Agreement") shall mean that certain Ground Lease between
the parties dated June 25th, 1996.
(b) Irrigation Design Criteria ("Design Criteria") shall mean those
criteria dated December 12, 1994, which shall apply to the design of all
landscape and irrigation improvements on leased premises within the San Marcos
Town Center. A copy of same has been provided to. Tenant or its representative
under separate cover.
(c) "Premises" shall mean the leasehold which is the subject of the
Lease.
(d) Town Center Irrigation System ("The Irrigation System") shall
collectively mean the groundwater wells, well pumping facilities and equipment,
cabling and controls, distribution piping and points of connection to any leased
premises within the limits of the San Marcos Town Center.
SECTION 3.0 LIMITATIONS ON USE
Tenant shall be entitled to a single use of well water (in an amount
calculated as provided below) for the express purpose of augmenting natural
precipitation to satisfy the irrigation requirements of all trees, shrubs and
groundcover materials within the leasehold limits. Ownership of water delivered
pursuant to this exhibit to the Lease shall remain with the Landlord and
Landlord shall drill no wells within the leasehold limits.
SECTION 4.0 DESIGN REQUIREMENTS
4.1 IN GENERAL
Tenant shall comply with all landscape and irrigation design requirements
set forth in the Design Criteria.
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All irrigation design and construction documents shall be prepared by an
Irrigation Associate ("IA") registered in the commercial category. All such
documents shall be signed by the IA, in addition to an architect or licensed
landscape architect (as may be required by the City of San Marcos).
4.2 DEMAND CALCULATION & MAXIMUM ALLOTMENT
Tenant's irrigation water demand shall be calculated as follows:
Leased acreage x 45 1 x 1.65" per week 2 = maximum weekly irrigation
water allocation
1 Average percentage of site devoted to landscaping
2 Based on historical reference evapotranspiration data from
the San Marcos, California Irrigation Management Information
System (CIMIS) weather station, for the month of July,
multiplied by equivalent water use for a cold, season
turfgrass (.80) with an AB 325 equivalent irrigation system
distribution uniformity of .65(65%).
In no event shall Tenant's annual irrigation water use exceed
2.25 acre feet per leasehold acre or fraction thereof, measured
after a (first year) plant material establishment period of sixty
(60) days,
5.0 CONNECTION TO SYSTEM
Delivery of water shall commence following Tenant's connection to the
irrigation System and extension of pressure supply lines and communication
cables as required, including the installation of a flow sensor as identified in
the irrigation Design Criteria. The cost of tapping the Irrigation System
distribution piping, and on-site extension of same, shall be the responsibility
of the Tenant, including all costs associated with restoration to original
condition of any existing improvements. Landlord agrees to stub the water piping
to the Premises at a location agreed to by both Landlord and Tenant in
cooperation with each other.
Tenant further agrees to pay for the purchase and installation of the flow
sensors, totalizing flow meter, and master valve. City further agrees to
maintain a central irrigation control system capable of electronic monitoring of
each point of connection. Monthly consumptive use readings shall be accessed
through tenant flow sensor. Physical readings from totalizing flow meter shall
be made at the end of the City's fiscal year, with adjustments made to Tenant's
account. if warranted.
6.0 WATER DELIVERY
Landlord agrees to deliver irrigation well water in an amount calculated
pursuant to Section 4.2, above, in the manner prescribed by the Design Criteria,
and subject to the provisions of Section 7.0 below.
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Landlord agrees to use every reasonable means to furnish a continuous
supply of water from its system to Tenant. However, the City is not a guarantor
of water supply or water availability. In order to protect the health, safety,
and welfare of the public, Tenant understands and agrees that Landlord may limit
the use of the water in times of water shortage or drought.
Landlord may promulgate reasonable rules and regulations for the use
of water furnished pursuant to this exhibit to the Lease. Such rules and
regulations shall be for the health, safety, and general welfare of the public
and any user or consumer of the water in question.
The City does not warrant or guarantee the quality of water provided to
Tenant under the terms of this agreement, except that the water quality will be
consistent with State of California, Department of Health Services, California
Administrative Code, Title 22, Division 4, Section 60313 (landscape irrigation).
7.0 SERVICES FROM ALTERNATE SOURCES
Should an interruption, reduction or cessation in non-potable water service
to the Premises occur due to well failure, Landlord reserves the right, at its
sole discretion to:
a. Maintain service to the Premises from another well or other
non-potable source; and/or
b. Serve the Premises via potable water meters purchased from the
Vallecitos Water District ("VWD") by Landlord, and to charge Tenant for
same at the VWD unit rates then in effect, as those rates may be amended
from time to time; and/or
c. Refund all non-potable water meter/capacity fees received from
the Tenant, which fees may then be applied by Tenant to the purchase of
potable irrigation meters and the payment of applicable capacity charges to
others. In such event, the Landlord shall have no further responsibility to
Tenant with regard to the provision of water to the Premises.
Should any of the above occur, Landlord reserves the right to temporarily
alter Tenant's irrigation schedule(s), as necessary pending restoration of full
service, while ensuring the delivery of potable and/or non-potable water volumes
sufficient to maintain plant life on the Premises.
8.0 CONNECTION AND USAGE FEES
If Vallecitos Water District (the "District") requires payment of a
potable water meter/capacity fee or if a separate meter for the Premises is
required and the District requires payment of a fee for same, Tenant agrees to
pay such fee. In addition to the payment of the District's fee, if any. Tenant
shall pay Landlord monthly for actual well water usage based on monthly
consumption readings recorded at the flower meter, at a rate equivalent to 95%
that of prevailing District potable water rates, as the same may be amended from
time to time. Irrigation fees shall be due and payable (with the same late
penalties) in the same manner as provided in the Lease.
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9.0 SYSTEM OPERATION & MAINTENANCE
Landlord agrees to operate and maintain the facilities necessary to deliver
water to the point of connection identified by both parties as described in
Section 5.0, including pumping facilities, distribution piping system, metering,
flow sensing, and master valve. Tenant shall be responsible for the operation
and maintenance of all facilities downstream of the master valve.
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EXHIBIT "E"
[FIGURE 3]
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EXHIBIT "G"
COMMENCEMENT DATE LETTER
This letter of Confirmation of Lease is made June 25, 1996, between THE
CITY OF SAN MARCOS, a municipal corporation ("Landlord") and CINEMA STAR LUXURY
THEATERS, INC., a California corporation ("Tenant"), who agrees as follows:
1. Landlord and Tenant entered into a Lease dated June 25, 1996, in
which Landlord leased to Tenant and Tenant leased from Landlord the premises
described in the Lease.
2. Pursuant to Paragraph 2.1 of the Lease, Landlord and Tenant agree to
confirm the commencement and expiration dates of the term as follows:
a. Commencement Date: 180 days following building permit issuance;
building permit issuance to occur no later than 147 days (21 weeks) from the
date of lease execution, per Exhibit "E".
b. Expiration Date: As stated in section 2.1 (term).
3. The provisions of this Letter of Confirmation of Lease shall inure to
the benefit, or bind, as the case may require, the parties and their respective
successors subject to the restrictions on assignment and subleasing contained
in the Lease.
LANDLORD: THE CITY OF SAN MARCOS
a municipal corporation
By: R.W. Gittings
-----------------------------------
Its: City Manager
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TENANT: CINEMA STAR LUXURY THEATRES, INC.
a California corporation
By: John Ellison Jr.
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Its: President
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EXHIBIT "H"
PARKING AGREEMENT
[to be attached]