1
EXHIBIT 10.6
MULTI-PLEX THEATER LEASE
dated December ___, 1996
by and between
MDA-San Bernardino Associates, L.L.C.
a Delaware limited liability company
"Landlord"
and
CINEMASTAR LUXURY THEATERS, INC.,
a California corporation
"Tenant"
2
GLOSSARY OF DEFINITIONS
90/10 Films . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agency Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Annual Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Box Office Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Builder's All Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Coffee Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Common Area Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Common Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Concession Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Day Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Delivery Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Developer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Development Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Development Parcels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Development Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Earthquake Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Extended Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Extensive Alteration . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
FF&E Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FF&E Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financing Evidence Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Fire and Extended Coverage . . . . . . . . . . . . . . . . . . . . . . 26, 28
First Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
First LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
First Right of Refusal Period . . . . . . . . . . . . . . . . . . . . . . . 11
Flood Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
FRV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FRV Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Hazardous Materials Laws . . . . . . . . . . . . . . . . . . . . . . . . . 67
HUD Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
HVAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Landlord's Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Landlord's Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Landlord's Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Lease Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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Lease Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Off Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Ordinance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Parking Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Parking Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Parking Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Permitted Title Exceptions . . . . . . . . . . . . . . . . . . . . . . . . 12
Permittees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Project Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Proportionate Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Quarterly Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
REA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Real Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Redevelopment Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Second Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Second LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Service Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 62
Tenant Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Tenant Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Tenant's "Proportionate Share" . . . . . . . . . . . . . . . . . . . . . . 45
Tenant's Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Tenant's Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Tenant's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tenant's Monthly Statement . . . . . . . . . . . . . . . . . . . . . . . . 15
Tenant's Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Tenant's Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Third Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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ARTICLE 1 FUNDAMENTAL LEASE PROVISIONS . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . 1
1.2 Exhibits. . . . . . . . . . . . . . . . . . . . . . 3
1.3 Recitals. . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 DEMISED PREMISES . . . . . . . . . . . . . . . . . . . . . 4
2.1 Lease. . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Building Construction and Measurement. . . . . . . 5
2.3 Assurances Regarding Tenant's Work . . . . . . . . 5
ARTICLE 3 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Commencement of Initial Term. . . . . . . . . . . . 7
3.2 Construction Completion. . . . . . . . . . . . . . 7
3.3 Building Permits. . . . . . . . . . . . . . . . . . 8
3.4 Lease Year. . . . . . . . . . . . . . . . . . . . . 8
3.5 Tenant's Certificate. . . . . . . . . . . . . . . . 8
3.6 Tenant's Work. . . . . . . . . . . . . . . . . . . 9
3.7 Extended Term. . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 FAILURE OF CONDITIONS . . . . . . . . . . . . . . . . . . . 12
4.1 Delivery of DDA. . . . . . . . . . . . . . . . . . 12
4.2 Governmental Approvals. . . . . . . . . . . . . . . 12
4.3 Environmental Studies . . . . . . . . . . . . . . . 13
4.4 Absence of Moratorium or Litigation. . . . . . . . 13
4.5 Parking. . . . . . . . . . . . . . . . . . . . . . 13
4.6 Financing Requirement. . . . . . . . . . . . . . . 13
4.7 REA. . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Final Plans . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Minimum Annual Rent. . . . . . . . . . . . . . . . 14
5.2 Percentage Rents. . . . . . . . . . . . . . . . . . 14
5.3 Security Deposit. . . . . . . . . . . . . . . . . . 17
5.4 Real Property Taxes and Insurance Expenses. . . . . 17
5.5 Insurance Allocation. . . . . . . . . . . . . . . . 19
5.6 Tax and Insurance Fund. . . . . . . . . . . . . . . 19
5.7 Other Charges. . . . . . . . . . . . . . . . . . . 19
5.8 Place of Payment. . . . . . . . . . . . . . . . . . 20
5.9 Personal Property Taxes. . . . . . . . . . . . . . 20
ARTICLE 6 TERMS OF PARKING AGREEMENT . . . . . . . . . . . . . . . . 20
ARTICLE 7 PERMISSIBLE USE . . . . . . . . . . . . . . . . . . . . . . 20
7.1 Permitted Uses. . . . . . . . . . . . . . . . . . . 20
7.2 Exclusive Uses By Others. . . . . . . . . . . . . . 23
7.3 Tenant's Exclusive Use. . . . . . . . . . . . . . . 23
ARTICLE 8 UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Utility Installation. . . . . . . . . . . . . . . . 23
8.2 Payment of Utility Cost. . . . . . . . . . . . . . 23
8.3 No Liability. . . . . . . . . . . . . . . . . . . . 24
ARTICLE 9 INDEMNITY AND INSURANCE . . . . . . . . . . . . . . . . . . 24
9.1 Indemnification and Waiver. . . . . . . . . . . . . 24
9.2 Waiver of Subrogation. . . . . . . . . . . . . . . 25
9.3 Tenant's Insurance Obligation. . . . . . . . . . . 25
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9.4 Policy Requirements. . . . . . . . . . . . . . . . 26
9.5 Increase in Coverage. . . . . . . . . . . . . . . . 27
9.6 Blanket Coverage. . . . . . . . . . . . . . . . . . 27
9.7 Landlord's Insurance Obligations. . . . . . . . . . 27
9.8 Insurance Use Restrictions. . . . . . . . . . . . . 28
9.9 Tenant's Failure to Obtain Insurance. . . . . . . . 28
ARTICLE 10 TENANT'S ALTERATIONS . . . . . . . . . . . . . . . . . . . 28
10.1 Permitted Alterations. . . . . . . . . . . . . . . 28
10.2 Manner of Construction. . . . . . . . . . . . . . . 29
10.3 Construction Insurance. . . . . . . . . . . . . . . 30
ARTICLE 11 MECHANICS' LIENS . . . . . . . . . . . . . . . . . . . . . 30
11.1 Tenant's Lien Obligations. . . . . . . . . . . . . 30
11.2 Notice . . . . . . . . . . . . . . . . . . . . . . 31
11.3 Inspection; Notice of Non-Responsibility . . . . . 31
11.4 Common Areas . . . . . . . . . . . . . . . . . . . 31
ARTICLE 12 SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 In General. . . . . . . . . . . . . . . . . . . . . 31
12.2 Promotional Signs. . . . . . . . . . . . . . . . . 32
ARTICLE 13 TRADE FIXTURES AND PERSONAL PROPERTY . . . . . . . . . . . 32
13.1 Ownership. . . . . . . . . . . . . . . . . . . . . 32
13.2 Security Interest. . . . . . . . . . . . . . . . . 33
13.3 Removal. . . . . . . . . . . . . . . . . . . . . . 33
13.4 Personal Property Tax. . . . . . . . . . . . . . . 34
ARTICLE 14 ASSIGNMENT, SUBLEASE AND OTHER TRANSFERS . . . . . . . . . 34
14.1 Restrictions. . . . . . . . . . . . . . . . . . . . 34
14.2 Procedure for Transfer. . . . . . . . . . . . . . . 35
14.3 Transfer Rent Adjustment. . . . . . . . . . . . . . 36
14.4 Required Documents. . . . . . . . . . . . . . . . . 36
14.5 Merger and Consolidation. . . . . . . . . . . . . . 37
14.6 Bankruptcy. . . . . . . . . . . . . . . . . . . . . 37
14.7 Exception for Concessions. . . . . . . . . . . . . 37
ARTICLE 15 OPERATION OF TENANT'S BUSINESS . . . . . . . . . . . . . . 37
15.1 Continuous Operation. . . . . . . . . . . . . . . . 37
15.2 Operating Hours. . . . . . . . . . . . . . . . . . 38
15.3 Rules and Regulations. . . . . . . . . . . . . . . 38
15.4 Special Operating Covenants. . . . . . . . . . . . 38
ARTICLE 16 REPAIRS AND MAINTENANCE . . . . . . . . . . . . . . . . . . 39
16.1 Tenant's Maintenance Obligations. . . . . . . . . . 39
16.2 Tenant's Failure to Maintain. . . . . . . . . . . . 40
16.3 Right to Enter. . . . . . . . . . . . . . . . . . . 40
16.4 Grant of License. . . . . . . . . . . . . . . . . . 41
16.5 Heating and Air Conditioning Equipment. . . . . . . 41
ARTICLE 17 DAMAGE OR DESTRUCTION . . . . . . . . . . . . . . . . . . . 42
17.1 Premises Insured Casualty. . . . . . . . . . . . . 42
17.2 Premises Uninsured Casualty. . . . . . . . . . . . 42
17.3 Damage to Other Portions of the Development. . . . 43
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17.4 Damage to Common Areas. . . . . . . . . . . . . . . 43
17.5 Right to Proceeds. . . . . . . . . . . . . . . . . 43
17.6 Casualty to Parking Areas. . . . . . . . . . . . . . 43
17.7 Damage to Premises Near End of Term. . . . . . . . 44
17.8 Release of Liability. . . . . . . . . . . . . . . . 44
17.9 Abatement of Rent. . . . . . . . . . . . . . . . . 44
ARTICLE 18 COMMON AREAS, PARKING AREAS AND EXPENSES . . . . . . . . . 45
18.1 Use of Common Areas. . . . . . . . . . . . . . . . 45
18.2 Parking Areas. . . . . . . . . . . . . . . . . . . 45
18.3 Common Area Expense. . . . . . . . . . . . . . . . 45
18.4 Expenses Included. . . . . . . . . . . . . . . . . 46
18.5 Expenses Excluded. . . . . . . . . . . . . . . . . 47
18.6 Enlargement of Common Areas. . . . . . . . . . . . 49
18.7 Common Area Rules and Regulations. . . . . . . . . 49
18.8 Control of Common Area. . . . . . . . . . . . . . . 49
18.9 Employee Parking Restrictions. . . . . . . . . . . . 50
18.10 Index . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 19 TENANT'S DEFAULTS; REMEDIES . . . . . . . . . . . . . . . . 51
19.1 Events of Default. . . . . . . . . . . . . . . . . 51
19.2 Remedies. . . . . . . . . . . . . . . . . . . . . . 52
19.3 Computations. . . . . . . . . . . . . . . . . . . . 55
19.4 Definition of Worth at the Time of Award. . . . . . 56
19.5 Efforts to Relet. . . . . . . . . . . . . . . . . . 56
19.6 No Waiver. . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 20 DEFAULT BY LANDLORD . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 21 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . 57
21.1 Legal Actions between Landlord and Tenant. . . . . 57
ARTICLE 22 EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . 57
22.1 Taking Resulting in Termination. . . . . . . . . . 57
22.2 Partial Taking. . . . . . . . . . . . . . . . . . . 57
22.3 Award. . . . . . . . . . . . . . . . . . . . . . . 58
22.4 Transfer Under Threat of Taking. . . . . . . . . . 58
22.5 Requisitioning. . . . . . . . . . . . . . . . . . . 58
ARTICLE 23 SUBORDINATION; ATTORNMENT . . . . . . . . . . . . . . . . . 58
23.1 Subordination. . . . . . . . . . . . . . . . . . . 58
23.2 Future Encumbrance. . . . . . . . . . . . . . . . . 59
23.3 Attornment. . . . . . . . . . . . . . . . . . . . . 60
23.4 Estoppel Certificate. . . . . . . . . . . . . . . . 60
ARTICLE 24 SALE OF PREMISES BY LANDLORD . . . . . . . . . . . . . . . 60
ARTICLE 25 HOLDOVER BY TENANT . . . . . . . . . . . . . . . . . . . . 60
25.1 Holdover Tenancy. . . . . . . . . . . . . . . . . . 60
25.2 Failure to Surrender. . . . . . . . . . . . . . . . 61
ARTICLE 26 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . 61
26.1 Notices. . . . . . . . . . . . . . . . . . . . . . 61
26.2 Default Notices. . . . . . . . . . . . . . . . . . 61
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ARTICLE 27 CAPTIONS AND TERMS . . . . . . . . . . . . . . . . . . . . 62
27.1 Reference Only. . . . . . . . . . . . . . . . . . . 62
27.2 Parties. . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 28 OBLIGATIONS OF SUCCESSORS . . . . . . . . . . . . . . . . . 62
ARTICLE 29 MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 62
29.1 Separability. . . . . . . . . . . . . . . . . . . . 62
29.2 Tenant Warranties. . . . . . . . . . . . . . . . . 62
29.3 Merger. . . . . . . . . . . . . . . . . . . . . . . 63
29.4 Right to Lease. . . . . . . . . . . . . . . . . . . 64
29.5 Governing Law. . . . . . . . . . . . . . . . . . . 64
29.6 Force Majeure. . . . . . . . . . . . . . . . . . . 64
29.7 Cumulative Rights. . . . . . . . . . . . . . . . . 64
29.8 Time. . . . . . . . . . . . . . . . . . . . . . . . 64
29.9 Relationship of Parties. . . . . . . . . . . . . . 64
29.10 Late Charges. . . . . . . . . . . . . . . . . . . . 65
29.11 Financial Statements. . . . . . . . . . . . . . . . 65
29.12 Real Estate Brokers. . . . . . . . . . . . . . . . . 65
29.13 Default Rate. . . . . . . . . . . . . . . . . . . . 66
29.14 No Offer to Lease. . . . . . . . . . . . . . . . . . 66
29.15 Exculpation. . . . . . . . . . . . . . . . . . . . . 66
29.16 Hazardous Materials. . . . . . . . . . . . . . . . . 66
29.17 Nondiscrimination. . . . . . . . . . . . . . . . . . 68
29.18 Title of Landlord. . . . . . . . . . . . . . . . . . 69
29.19 Restriction on Similar Businesses. . . . . . . . . . 69
29.20 Agency . . . . . . . . . . . . . . . . . . . . . . . 70
29.21 Time. . . . . . . . . . . . . . . . . . . . . . . . 70
29.22 Waiver. . . . . . . . . . . . . . . . . . . . . . . 70
29.23 Counterparts. . . . . . . . . . . . . . . . . . . . 70
29.24 Lease Not to be Recorded. . . . . . . . . . . . . . 70
29.25 Mortgagee Requirements. . . . . . . . . . . . . . . . 70
29.26 Tenant Acknowledgment. . . . . . . . . . . . . . . . 71
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SAN BERNARDINO, CALIFORNIA
MULTI-PLEX THEATER LEASE
THIS MULTI-PLEX THEATER LEASE ("Lease") is dated December ___, 1996
("Effective Date"), and entered into by and between MDA-SAN BERNARDINO
ASSOCIATES, L.L.C., a Delaware limited liability company ("Landlord"), and
CINEMASTAR LUXURY THEATERS, INC., a California corporation ("Tenant").
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
1.1 DEFINITIONS. For purposes of this Lease, the following terms
shall have the following meanings:
(a) LEASE TERM:
(i) INITIAL LEASE TERM: Twenty-five (25) years.
(ii) EXTENDED TERMS: Two (2) five (5) year
extensions.
(b) RENTAL COMMENCEMENT
DATE: Earlier of (a) 240 days after
the issuance by City of San
Bernardino of the Tenant's
permits for Tenant's Work; or
(b) 330 days after
Substantial Completion of
Landlord's Work, except as
otherwise provided in Section
3.3.
(c) MINIMUM ANNUAL RENT: Lease Year 1-5: One Dollar
thirty-nine Cents ($1.39) per
square foot per month.
(d) ESCALATION: Minimum Annual Rent increased
by 10% every fifth year of
the Initial Term beginning in
Lease Year 6, and by the
greater of Fair Rental Value
or ten percent (10%) at the
commencement of each Extended
Term.
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(e) PERCENTAGE RENT: 8% of Gross Sales from Box
Office Sales (excluding 90/10
Films, as defined in Section
4.3) and 5% of Gross Sales
from Concession Sales.
(f) EFFECTIVE DATE: Date of Lease execution
(g) ADDRESS FOR NOTICES:
TO LANDLORD: MDA-San Bernardino
Associates, L.L.C.
c/o Metropolitan Development
300 North Continental Blvd.
Suite 360
El Segundo, CA 90245
Attn: Rex Swanson
TO TENANT: CinemaStar Luxury Theaters,
Inc.
431 College Boulevard
Oceanside, CA 92057
Attn: John Ellison, Jr.,
President
(h) SECURITY DEPOSIT: None
(i) BUILDING: The free standing Building to
be constructed by Tenant
having approximately Eighty
Thousand (80,000) square feet
of floor area, exclusive of
any mezzanine, measured from
the outside of exterior walls
(i.e., the Building
footprint).
(j) THEATER PARCEL: The land on which the
Building shall be constructed
as more particularly
described in Exhibit A-1.
(k) PREMISES: The Theater Parcel and
Building.
(l) USE OF PREMISES: First class, state of the
art, movie theater, using
best efforts to-show first
run films, and attendant food
and beverage sales.
movie/video
memorabilia/novelties
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concession stands, and video
or similar interactive games
and for no other purpose.
(m) TRADE NAME: CinemaStar Luxury Theaters
(n) MARKETING FUND CHARGE: None
(o) DEVELOPMENT: That certain Development
depicted as Exhibit A-2, known
as "MDA-San Bernardino
Entertainment Center," which
Landlord intends to construct
on the Theater Parcel and
adjoining land ("Development
Parcels") described in Exhibit
A-3 in the City of San
Bernardino ("City"), County of
San Bernardino, State of
California.
1.2 EXHIBITS. The following drawings, documents and provisions are
attached hereto as Exhibits and incorporated herein by this reference:
Exhibit "A-1" - Legal Description of Theater Parcel.
Exhibit "A-2" - Preliminary Site Plan of the Development. Tenant
acknowledges that Landlord may unilaterally change the shape, size, location,
number and extent of the improvements in the Development without Tenant's
consent; provided, however, no such unilateral changes shall unreasonably
impair Tenant's ability to conduct its business, or unreasonably impair access
to, or parking for, the Premises.
Exhibit "A-3" - Legal Description of Development Parcels.
Exhibit "B" - Elevation Drawings of the Premises.
Exhibit "C" - A description of work to be performed by Landlord ("Landlord's
Work") and by Tenant ("Tenant's Work") in or on the Premises. The Premises
shall be constructed pursuant to and in accordance with the procedures outlined
in Exhibit "C."
Exhibit "D" - Form of Guaranty.
Exhibit "E" - Form of Tenant's Certificate.
Exhibit "F" - Sign Criteria.
Exhibit "G" - Rules and Regulations.
Exhibit "H" - Subordination Agreement.
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Exhibit "I" - Parking Agreement.
Exhibit "J" - Permitted Title Exceptions.
Exhibit "K" - Memorandum of Lease.
Exhibit "L" - Additional Covenants.
Landlord and Tenant shall use good faith efforts to finalize all exhibits which
are not attached hereto as of the Effective Date.
1.3 RECITALS.
(a) The Redevelopment Agency of the City of San Bernardino
("Agency") has or shall convey to Landlord fee title to the Theater Parcel and
Development Parcels (collectively, "Development Site") pursuant to the terms
and conditions of a Disposition and Development Agreement to be entered into by
the Agency and Landlord, on terms and conditions acceptable to Landlord
("DDA").
(b) The Development Site is part of a larger tract of land
(the "Project Area") that is subject to the Redevelopment Plan for Project Area
No. _____ of Agency (the "Redevelopment Plan"). The Redevelopment Plan was
approved and adopted by the City pursuant to Ordinance No. ______ adopted
____________________ (the "Ordinance").
(c) Agency and Landlord, as "Developer," will be executing
the DDA for the purposes of setting forth their agreement as to the development
of the Development Site by Landlord. Landlord shall lease the Theater Parcel
to Tenant pursuant to Landlord's rights under the DDA.
(d) Certain third parties (collectively, the "Parking
Owners") own certain real property in near proximity to the Theater Parcel on
which at least 1,500 parking spaces shall be made available for the
non-exclusive use by "Permittees" (as defined in Section 4.4) of the Premises
during evenings, weekends and holidays ("Off Hours") and on which at least
1,100 parking spaces shall be made available for the non-exclusive use by
Permittees of the Premises at all other times ("Day Hours") (collectively the
Parking Areas), as shall be described in one or more agreements, between
Parking Owners and Landlord and/or Agency ("Parking Agreement"), a copy of
which shall be attached hereto as Exhibit "I."
ARTICLE 2
DEMISED PREMISES
2.1 LEASE. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises, which will be a part of the Development as
shown on Exhibit "A-2") hereof. This Lease is subject to the terms, covenants
and conditions herein set forth, and Tenant
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[covenants as a material part of the consideration of this Lease to keep and
perform each and all of Tenant's terms, covenants and conditions.
2.2 BUILDING CONSTRUCTION AND MEASUREMENT. Tenant is responsible
for the design and construction of the Building and agrees to construct an
approximately 80,000 square foot building as set forth on Exhibit "C." Except
for Landlord's Work and the Tenant Improvement Allowance (as defined in Exhibit
"C"), all Tenant Work shall be at Tenant's sole cost and expense. Within
thirty (30) days after completion of the construction of the Building, Landlord
and/or Tenant shall have the right, but not the obligation, to cause its
architect(s) to remeasure the Building. Landlord and Tenant shall enter into
an amendment to this Lease to reflect the actual number of square feet of floor
area. In the event the number of square feet of floor area in the Building
(excluding mezzanines), measured from exterior walls to exterior walls (i.e.,
the Building footprint) as determined by such remeasurement is greater or less
than one percent (1%) of 80,000 square feet (i.e., + 800 square feet), Landlord
shall proportionately adjust all charges which are calculated based on the
number of square feet of floor area hereunder (except as expressly provided
below, no adjustment shall be made in Minimum Annual Rent). If the actual
square footage of floor area is (a) greater than 80,000 square feet, Tenant
nonetheless shall not be entitled to any Tenant Improvement Allowance for such
excess square footage provided, however, if Landlord elects to contribute an
additional Tenant Improvement Allowance (at $115 per square foot of floor area
in excess of 80,000 square feet) for such excess space, then Tenant shall pay
Minimum Annual Rent at the rate specified in Section 1.1(e) and (d) for such
excess space; or (b) less than 80,000 square feet, Tenant nonetheless shall not
be entitled to any portion of the Tenant Improvement Allowance per square foot
in excess of the actual square footage of floor area constructed in the
Building, and, if subsection (b) above applies, Tenant shall refund to Landlord
any portion of the Tenant Improvement Allowance theretofore paid to Tenant in
excess of the actual square footage of floor area of the Building multiplied by
the per square foot amount of the Tenant Improvement Allowance (i.e. $115)
within fifteen (15) days of billing.
2.3 ASSURANCES REGARDING TENANT'S WORK. Tenant covenants that it
shall contribute not less than $1,000,000 in cash towards payment of Tenant's
Work (provided, however, Tenant may encumber FF&E purchased with such cash
funds as set forth in Section 2.3(a)). In order to provide Landlord with
assurances that Tenant shall be financially able to commence and complete
Tenant's obligations with respect to construction of the Building and
installation of FF&E, in addition to the delivery of the Guaranty concurrently
with the execution of this Lease, Tenant shall do each of the following as and
when required below:
(a) On or before sixty (60) days after execution of this
Lease, Tenant shall deliver to Landlord, at Tenant's sole cost and
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expense the firm written commitment of a bank, savings and loan or other
institutional lender ("FF&E Lender") verifying that Tenant has been
pre-approved by FF&E Lender and verifying the availability to Tenant (or, upon
notice by Landlord to FF&E Lender that Tenant is in default hereunder, to
Landlord) of loan funds in the principal amount of not less than $1,000,000
("FF&E Commitment") to finance a portion of the cost of constructing and
installing the FF&E in the Premises, which loan shall be secured by a security
interest in at least $2,000,000 of FF&E at the Premises, superior in priority
to Landlord's lien, and providing that such loan may be drawn upon by Landlord
in the event of a default by Tenant under the Lease (at Landlord's election,
prior to or after Landlord's draw down of funds under the "First LC and "Second
LC" described below), and otherwise on terms and conditions satisfactory to
Landlord and Landlord's Mortgagees in their sole discretion. Landlord shall
give notice to Tenant of its approval or disapproval of the FF&E Commitment
within thirty (30) days of receipt. If Landlord disapproves, Tenant shall use
good faith and commercially reasonable efforts to obtain a revised loan
commitment satisfying Landlord's requirements (which commitment when approved
by Landlord shall be referred to as the "Approved FF&E Commitment").
(b) On or before the later of ("Financing Evidence Date")
(1) February 15, 1997; or (2) ten (10) days after written notice to Tenant that
Landlord is prepared to encumber (or has encumbered) the Development Site with
the Development Loan and intends to commence Landlord's Work, Tenant shall
deliver to Landlord, at Tenant's sole cost and expense:
(i) an unconditional and irrevocable letter of
credit (the "First LC") in the amount of $500,000, issued by a national banking
association approved by Landlord, with an expiration date not sooner than one
(1) year from issuance, automatically renewable for successive one-year periods
unless notice is given by the issuer to Landlord at least sixty (60) days prior
to expiration (with any nonrenewal entitling Landlord to draw down on the First
LC upon certification that no substitute letter of credit has been delivered to
Landlord on or before at least thirty (30) days prior to the expiration date),
made payable to Landlord or Landlord's transferee upon delivery to the issuer
of the original First LC together with an executed certification by the
managing member of Landlord stating that (A) Tenant is in default of Tenant's
obligations under the Lease; (B) Tenant has failed to cure such default within
the applicable grace period provided under the Lease; and (C) the sums drawn
under the First LC shall be used to pay or to reimburse Landlord for a portion
of the costs incurred and to be incurred by Landlord with respect to
construction and/or fixturization of the Premises or to pay or reimburse
Landlord for any other cost or expense incurred or to be incurred by Landlord
as a result of such breach; and
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(ii) The final executed loan agreement and related
security documents, evidencing the FF&E Loan on the terms and subject to the
conditions of the Approved FF&E Commitment, and containing no additional terms
or conditions which are, in Landlord's sole opinion, in conflict with or
substantively differ from the Approved FF&E Commitment.
(c) On or before sixty (60) days after the Financing
Evidence Date, Tenant shall deliver to Landlord a second letter of credit
("Second LC"), also in the amount of $500,000, made payable to Landlord or
Landlord's transferee, on the same terms and conditions as the First LC.
(d) Provided that Tenant is not then in default hereunder,
the First LC and Second LC shall be surrendered by Landlord to Tenant upon
Landlord's receipt of reasonably satisfactory evidence from Tenant (including
invoices and lien waivers) verifying that, (i) as to the First LC, at least
$500,000 worth of FF&E has been installed in the Premises and paid for by
Tenant from Tenant's funds (other than proceeds from the FF&E Loan) and (ii) as
to the Second LC, an additional $500,000 worth of FF&E has been installed in
the Premises and paid for by Tenant from Tenant's funds (other than proceeds
from the FF&E Loan).
ARTICLE 3
TERM
3.1 COMMENCEMENT OF INITIAL TERM. The Lease shall be effective as
of the date hereof. The Initial Lease Term set forth in Section 1.1(a[i])
above shall be computed from the first day of the first full calendar month
immediately following the Rental Commencement Date, unless sooner terminated as
hereinafter provided. If the Initial Term does not commence for any reason on
or before thirty-six (36) months after the Effective Date, this Lease shall
terminate and be of no further force or effect. Landlord agrees to deliver to
Tenant, and Tenant agrees to accept from Landlord, the Theater Parcel upon
which the Building will be constructed upon "Substantial Completion" of that
portion of "Landlord's Work" related to the delivery of a "Building Pad", in a
condition such that Tenant shall be able to commence Tenant's Work thereon, all
as more particularly described in Exhibit "C" (the "Delivery Date"). Notice
from Landlord of Substantial Completion of such portion of Landlord's Work
hereof shall be conclusive and binding upon the parties hereto as to the
Delivery Date provided that such work has been performed in accordance with the
plans and specifications approved by Landlord and Tenant under Exhibit "C"
(except for "punch list" items as described in Exhibit "C"). If Landlord
inadvertently fails to give Tenant such notice prior to Tenant taking
possession of the Theater Parcel, such notice shall be deemed given as of the
date Tenant actually takes possession of the Theater Parcel.
3.2 CONSTRUCTION COMPLETION. In the event that Tenant fails to
complete construction of the Premises and open for business by the Rental
Commencement Date (plus the amount of time, if any, attributable to acts of
Landlord which prevented Tenant from completing construction of the Premises),
Tenant shall not be deemed in default hereunder so long as Tenant commences
payment of rent and other charges as of the Rental Commencement Date and
diligently pursues completion of construction and opening for business by no
later than six (6) months following the Rental Commencement Date.
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3.3 BUILDING PERMITS. In the event after using best efforts and due
diligence Tenant fails to obtain all required building permits for Tenant's
Work within ninety (90) days after Landlord's approval of Tenant's Final Plans
as provided in Exhibit "C" hereof, and provided that Landlord has cooperated
with and used good faith and commercially reasonable efforts to assist Tenant
in obtaining such permits (but without cost to Landlord), then Landlord, at
Landlord's sole option, upon written notice to Tenant at any time after one
hundred eighty (180) days from Landlord's approval of the Final Plans, but
prior to issuance of the building permits, shall have the right to terminate
this Lease. If Landlord so terminates this Lease, Tenant shall assign and
deliver, to Landlord, all investigations, studies, tests, reports, surveys,
drawings, plans, specifications, permits and other work product relating to the
Premises prepared by or on behalf of Tenant or in Tenant's possession, provided
that Landlord agrees to pay to Tenant the actual out-of-pocket costs Tenant has
incurred with respect to any such item which Landlord desires to be delivered
to it, and, except as provided in this Section 3.3 and Sections 9.1, 25,
29.2(d). 29.12, 29.15 and 29.16 below, Landlord and Tenant shall be relieved
from any and all liability hereunder accruing from and after the termination
date. Notwithstanding anything to the contrary herein, if Tenant is unable to
obtain building permits within ninety (90) days from Landlord's approval of
Final Plans and this Lease is not terminated as permitted above, the Rental
Commencement Date shall occur on the earlier of three hundred thirty (330) days
after Landlord's approval of the Final Plans or three hundred thirty (330) days
after Substantial Completion of Landlord's Work.
3.4 LEASE YEAR. The term "Lease Year" shall mean a period of twelve
(12) consecutive full calendar months (except for the first Lease Year, which
may be longer). The first Lease Year shall commence on the Rental Commencement
Date and expire at 11:59 p.m. on the day immediately preceding either (a) the
first day of the first full calendar month immediately following the first
anniversary of the Rental Commencement Date; or (b) the first anniversary of
the Rental Commencement Date, if the Rental Commencement Date occurs on the
first day of a calendar month. Succeeding Lease Years shall commence on the
first day following the end of the preceding Lease Year.
3.5 TENANT'S CERTIFICATE. At any time after the Effective Date,
within ten (10) days following request in writing by Landlord, Tenant will
execute and deliver to Landlord a certificate substantially in the form
attached hereto as Exhibit "E" ("Tenant's Certificate"). The failure of Tenant
to execute and deliver such certificate on a timely basis shall constitute an
automatic acceptance of the Premises and an express acknowledgment by Tenant
that the statements included in Exhibit "E" are true and correct, without
exception.
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3.6 TENANT'S WORK. Except as set forth in Exhibit "C," Tenant shall
commence Tenant's Work as soon as practicable, but in no event later than
ninety (90) days following the Delivery Date. Tenant, at its sole cost and
expense, shall diligently perform all of Tenant's Work as set forth in Exhibit
"C" and shall equip the Premises with all trade fixtures and personal property
suitable or appropriate for the regular and normal operation of a first-class,
state of the art stadium seating "20-plex" (or more) motion picture theater,
open to paying audiences, with approximately 4,500 patron seats, including,
without limitation, state of the art screens, speakers, sound system,
projection equipment, concession equipment, seating, furniture and all other
fixturization. All materials, furnishings, trade fixtures, personal property,
furniture and fixtures shall be new and in first class condition. Tenant
further agrees to open for business as soon as possible after Substantial
Completion of Landlord's Work as specified in Exhibit "C." In any event, but
subject to Force Majeure, as defined in Section 29.6 below, Tenant agrees to
open for business not later than the Rental Commencement Date. If Tenant fails
to commence, diligently pursue, and complete Tenant's Work in accordance with
the work schedule set forth in Exhibit "C," in addition to all other rights and
remedies of Landlord hereunder, Landlord, after notice and opportunity to cure
as set forth herein, shall have the right to enter the Premises to commence,
perform, and/or complete Tenant's Work, and all costs and expenses incurred by
Landlord shall be paid by Tenant to Landlord upon demand.
3.7 EXTENDED TERM. Tenant may extend the Initial Term for two (2)
additional periods of five (5) years each (each, an "Extended Term") upon all
the terms and conditions of the Lease, subject to the following terms,
conditions and exceptions:
(a) Tenant's option to extend shall automatically terminate
upon any transfer, assignment, sublease, conveyance, hypothecation or
encumbrance of the Lease without Landlord's consent, or if the use of the
Premises is changed from that set forth in Section 1.1(1).
(b) Tenant shall notify Landlord in writing of Tenant's
desire to exercise an option to extend at least six (6) months but no more than
twelve (12) months prior to the expiration of the then existing Lease Term.
(c) If the Lease is not in effect on the date of giving
notice to exercise an option to extend, such notice shall be null and void. If
the Lease is not in effect on the date immediately preceding the date the
Extended Term would otherwise begin, the Extended Term shall not commence and
the Lease shall expire at the end of the original Lease Term.
(d) If Tenant is in default under any of the terms and
conditions of the Lease on the date of giving written notice to exercise an
option to extend, or if Tenant has been in material default more than three
times during the three (3) year period prior to the date of Tenant's notice
that it wishes to exercise an option to extend, such notice shall be null and
void and have no effect. If Tenant has been in material
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default during the period from the date of exercising an option to extend until
the date immediately preceding the commencement of an Extended Term, such
Extended Term shall not commence and the Lease shall expire at the end of the
then existing Lease Term.
(e) Minimum Annual Rent shall increase on the first day of
each Extended Term to the greater of one hundred ten percent (110%) of the
Minimum Annual Rent payable for the immediately prior Lease Year or the fair
rental value ("FRV") of the Premises.
(i) The FRV of the Premises shall mean the rental
rate that a ready and willing tenant and a ready and willing landlord would
agree on for the rental of a first class movie theater showing first run movies
in San Bernardino County, with such theater being in the condition in which the
Premises should be in, at the end of the Term then ending, pursuant to the
terms of this Lease, i.e., the condition the Premises would be in if Tenant has
consistently undertaken and completed all of its maintenance and repair
obligations hereunder. If Tenant has not so met its maintenance and repair
obligations, then the FRV of the Premises shall mean the rental value of the
Premises at its highest and best use, following conversion, if any, for same.
(ii) Landlord shall give Tenant written notice of
the FRV of the Premises on or before ninety (90) days prior to the commencement
date of the next ensuing Extended Term (the "FRV Notice"). If Landlord fails
to provide the FRV Notice, the Minimum Annual Rent for the applicable Extended
Term shall be one hundred ten percent (110%) of the last paid Minimum Annual
Rent. If Landlord delivers the FRV Notice and Tenant objects to Landlord's
determination of the FRV of the Premises for the Extended Term, Tenant shall
notify Landlord in writing, within fifteen (15) days after receipt of the FRV
Notice, that Tenant disagrees with Landlord's determination ("Tenant's
Notice"). In the event that Landlord and Tenant are unable to agree upon the
FRV of the Premises within thirty (30) days after Tenant's Notice, then the FRV
shall be determined by appraisal in the manner provided below. Until the FRV
is determined by appraisal, upon commencement of the Extended Term, Tenant
shall pay to Landlord one hundred ten percent (110%) of the Minimum Annual Rent
which was payable for the Lease Term immediately preceding the commencement of
the Extended Term, and, after determination of the FRV as provided below,
Tenant shall pay to Landlord any underpayment of Minimum Annual Rent owing for
prior months together with the next monthly installment of Minimum Annual Rent.
(iii) If appraisal is required pursuant to the above,
the FRV of the Premises shall be determined as follows:
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A. Within sixty (60) days of Tenant's Notice,
the FRV of the Premises shall be appraised by an independent MAI appraiser,
with at least five (5) years experience appraising commercial property in the
San Bernardino County area chosen and paid for by Tenant ("First Appraisal")
and the appraisal report, including a copy of the appraiser's qualifications,
shall be forwarded to Landlord. If Tenant fails to appoint its appraiser or
fails to deliver the First Appraisal within such 30-day period, Minimum Annual
Rent for the Extended Term shall be as set forth in Landlord's FRV Notice. If
the First Appraisal is unacceptable to Landlord, then Landlord shall so advise
Tenant in writing within ten (10) working days after receipt of the First
Appraisal, and Landlord shall, within thirty (30) days thereafter, engage at
Landlord's sole cost and expense, an independent MAI appraiser, with at least
five (5) years experience appraising commercial property in the San Bernardino
County area, to appraise the FRV of the Premises ("Second Appraisal") and the
appraisal report shall be forwarded to Tenant within such 30-day period.
B. If the Second Appraisal is unacceptable to
Tenant, then Tenant shall advise Landlord within ten (10) working days after
receipt of the Second Appraisal, and the first appraiser and second appraiser
shall be directed by Tenant and Landlord, respectively, to jointly choose a
third MAI appraiser, with at least five (5) years experience appraising
commercial property in the San Bernardino County area. The cost of the third
appraiser shall be split equally between Landlord and Tenant. The third
appraiser shall be directed to appraise the FRV of the Premises ("Third
Appraisal") and forward the appraisal report to Landlord and Tenant within
thirty (30) days of his/her selection. In that event, the FRV for the Premises
shall be the sum of the two closest of the First, Second and Third Appraisals,
divided by two (2), and the appraisal which is furthest away in amount from the
other two appraisals (whether high or low) shall be disregarded. In no event
shall the Minimum Annual Rent determined by appraisal be less than one hundred
ten percent (110%) of the Minimum Annual Rent for the immediately preceding
Lease Year.
(f) Notwithstanding the foregoing, if Tenant fails to
exercise an extension option because the FRV of the Premises results in Minimum
Annual Rent in an amount that Tenant has advised Landlord in writing during the
Lease Term is more than Tenant is willing to pay for the Extended Term, then
Landlord shall not enter into a lease of the Premises with any other party for
the uses permitted in Section 1.1(l) within a six (6) month period (the "First
Right of Refusal Period") following the expiration of the Initial Term or, if
applicable, the first Extension Term, at a cumulative rental rate which is less
than the amount Tenant would be required to pay under Section 3.7(e) above,
considering all factors (such as tenant contributions and/or allowances,
percentage rent, committed term, required Landlord's Work, brokerage
commissions, legal fees and similar costs attributable to such new lease),
without first offering
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such rental and terms to Tenant. Tenant's failure to accept such offer within
ten (10) days shall be conclusively deemed as rejection by Tenant, and Landlord
thereafter shall not be restricted under this subsection (f) from leasing the
Premises to any party on such terms (or such greater amount as Landlord may
elect). This section shall be void and of no further force or effect from and
after the end of the First Right of Refusal Period.
ARTICLE 4
FAILURE OF CONDITIONS
The following matters shall be deemed conditions to Landlord's and Tenant's
respective continuing obligations under this Lease and, if such conditions have
not been satisfied or waived by the appropriate party or parties on or before
one year from the Effective Date (unless an extension is mutually agreed to in
writing), this Lease and the parties' rights and obligations hereunder shall
terminate, and neither party shall have any further liability under this Lease
(except as provided in Sections 3.3, 9.1, 29.2(d), 29.12, and 29.16 below).
Landlord and Tenant shall each act in good faith and with due diligence and
exercise reasonable efforts to cause each of the conditions to be fulfilled.
Promptly upon the satisfaction or waiver of the condition, the parties shall
mutually execute a document acknowledging the date on which the condition has
been satisfied (but the failure to do so shall not release and relieve either
party from the obligations and liabilities of such party under this Lease).
4.1 DELIVERY OF DDA. Landlord and Agency shall have entered into
the DDA in a form acceptable to Landlord whereby, among other things, the
Agency has agreed to acquire and convey the Theater Parcel and Development
Parcels to Landlord, on terms and conditions acceptable to Landlord, and escrow
shall have closed conveying fee title to the Theater Parcel and Development
Parcels to Landlord, subject only to the exceptions to title satisfactory to
Landlord (which exceptions shall be set forth on Exhibit J attached hereto)
("Permitted Title Exceptions").
4.2 GOVERNMENTAL APPROVALS. Landlord shall have obtained all
required governmental approvals, permits, waivers, conditional use permits,
zoning changes and other land use entitlements (collectively, "Governmental
Approvals") which may be required in order for Landlord to perform Landlord's
Work. The Governmental Approvals shall not be deemed to have been "obtained"
until each of the same has become final and non-appealable and any periods for
challenge to or appeal from the same (or other conditions to final
effectiveness) shall have expired without any challenge or appeal, including
without limitation any appeals to the Board of Zoning Appeals or the City
Council and any administrative or judicial challenges to the adequacy of
compliance with the California
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Environmental Quality Act. If any of the foregoing have occurred, then the
same shall have been resolved to the satisfaction of Landlord in its sole,
absolute and unrestricted discretion. Any conditions, requirements for on-site
and off-site improvements or services, in-lieu fees or payments, dedication or
reservation requirements, water rights acquisition costs, local improvement
district costs, connection charges, assessments, mitigation fees, impact fees
or permit fees imposed on the Development by any governmental entity or utility
service provider shall be acceptable to Landlord, in Landlord's sole
discretion.
4.3 ENVIRONMENTAL STUDIES. Tenant shall have approved any soils,
environmental, hazardous waste, other similar studies and reports which Tenant
obtains in connection with the Theater Parcel.
4.4 ABSENCE OF MORATORIUM OR LITIGATION. No litigation, referendum,
moratorium, statute, order, regulation, ordinance, legislation, judgment,
ruling or decree has been enacted, adopted, issued or entered or shall be
pending or in effect, that could adversely affect the Development, or any part
thereof, or the Governmental Approvals, and if any of the foregoing have
occurred, then the same shall have been resolved to the satisfaction of
Landlord in its sole, absolute and unrestricted discretion.
4.5 PARKING. Landlord shall have entered into the Parking
Agreement, whereby one or more of the adjoining property owners shall be
obligated to provide at least the number of non-exclusive parking spaces
specified in Section 1.3(d) above for use by the owners and occupants of the
Development Site and their respective patrons, employees, agents contractors,
subtenants, licensees, and concessionaires ("Permittees") in a form acceptable
to Landlord, which provides for such parking at no charge to Permittees.
4.6 FINANCING REQUIREMENT. Landlord shall have obtained a loan or
loans with respect to the Development in an aggregate amount of not less than
$11,925,000, on terms and conditions acceptable to Landlord, including but not
limited to, the "Development Loan," "HUD Loan" and "Agency Loan," each of which
is described in Section 23.1 below.
4.7 REA. Landlord shall have recorded covenants, conditions and
restriction and reciprocal easements ("REA") in a form acceptable to Landlord
which memorializes reciprocal rights for ingress and egress and other specified
purposes over the Common Area and balance of the Development Site.
4.8 FINAL PLANS. Landlord and Tenant shall have agreed to Final
Plans for the Building in accordance with Exhibit "C".
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ARTICLE 5
RENT
5.1 MINIMUM ANNUAL RENT. Commencing on the Rental Commencement
Date, Tenant agrees to pay to Landlord, at the times and in the manner herein
provided, the Minimum Annual Rent specified in Section 1.1(1) above. Minimum
Annual Rent shall be payable, in advance, in twelve (12) equal monthly
installments on the first day of each calendar month, without demand,
deduction, abatement or offset. If the Rental Commencement Date falls on a day
of the month other than the first day of such month, the rental for the first
fractional month shall accrue on a daily basis for the period from the date of
such commencement to the end of such fractional calendar month at a rate equal
to 1/365th of the Minimum Annual Rent per day. Common Areas Expenses (as
defined in Section 18.3), "Real Property Taxes" (as defined in Section 5.4[b]),
Insurance (as defined in Section 9.3) and all other charges required to be paid
by Tenant on a monthly basis shall be prorated on the same basis as Minimum
Annual Rent (unless paid directly by Tenant as provided below).
5.2 PERCENTAGE RENTS. Tenant shall pay to Landlord in the manner,
upon the conditions, and at the times hereinafter set forth, during the Lease
Term, the greater of Minimum Annual Rent, or of "Percentage Rent" based upon
the amount of the "Gross Sales" generated from the Premises, as provided below.
So long as Tenant operates the Premises for the use specified in Section 1.1(l)
above, Gross Sales shall mean the sum of "Box Office Sales" and "Concession
Sales." "Box Office Sales" means the amount of all gross receipts from all box
office and other ticket sales (whether transacted in person, telephonically or
by computer (excluding Box Office Sales on "90/10 Films," as defined below).
"Concession Sales" means the gross receipts (less any applicable sales tax if
actually received) from all other sales and rental transactions, including but
not limited to food, beverage, video and other interactive games, novelties and
concessions, memorabilia sales and rentals and other sales and rentals of any
type generated from the Premises. Percentage Rent shall equal five percent
(5%) of Concession Sales and eight percent (8%) of Box Office Sales. If at any
time the Premises, or any portion thereof, is used for any purpose other than
the use specified in Section 1.1(l), Gross Sales shall mean all gross receipts
derived from all sales, rentals or other commercial transactions at the
Premises, and Tenant shall pay Percentage Rent in an amount equal to eight
percent (8%) of such Gross Sales. Gross Sales shall include the Gross Sales of
any subtenant, assignee or licensee of the Premises.
(a) 90/10 FILMS. "90/10 Films" shall mean a motion picture
exhibited by Tenant under an exhibition agreement with a "non- affiliated" film
distributor (as defined below) wherein ninety percent (90%) or more of Tenant's
adjusted gross box office receipts (after Tenant has first deducted therefrom
an amount agreed upon by
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the Tenant and a non-affiliated film distributors for certain allowances,
credits or reductions from the Gross Box Office Sales for theater overhead and
operating expenses and for certain other specific expenses, i.e., the so-called
"house nut") must be paid to such a film distributor for film rental.
(b) RECORDS OF SALES. Tenant shall record all sales or
other transactions in the presence of the customer, either in a cash register
or computer with sealed continuous tape, or by using any other method of
recording sequentially numbered purchases and keeping a cumulative total.
(c) REPORTS OF GROSS SALES. Tenant shall furnish to
Landlord a statement of Gross Sales for each calendar month (or part thereof)
on or before the twentieth (20th) day of the succeeding calendar month
("Tenant's Monthly Statement"), and an annual statement ("Annual Statement") on
or before the twentieth (20th) day of each "fiscal year," for the immediately
preceding fiscal year of Tenant (or part thereof in the case of the first and
last Lease Year), including in each case a monthly breakdown of each component
of Gross Sales. In addition, Tenant shall furnish a final statement of Gross
Sales on before the sixtieth (60th) day following the expiration or other
termination of the Lease Term. Each statement shall include the Gross Sales of
subtenants, assignees, concessionaires and licensees, if any, separately
calculated, and shall be in a form reasonably acceptable to Landlord. Each
statement shall separately set forth the total amount of its deduction from Box
Office Sales on account of 90/10 Films and be accompanied by evidence
supporting such deduction. As used herein, "fiscal year" shall mean each July
1 - June 30.
(d) QUARTERLY PERCENTAGE RENT PAYMENT. Commencing on the
twentieth (20th) day of the third full calendar month after the Rental
Commencement Date, and on the twentieth (20th) day of each third calendar month
thereafter, such Monthly Statement shall, if applicable, be accompanied by a
payment to Landlord of the Percentage Rent ("Quarterly Payment"), less the
monthly payments of Minimum Annual Rent for the applicable three prior month
period which has been paid to date and any adjustment for overpayments in prior
Quarterly Payments. The Annual Statement shall include a reconciliation of all
Minimum Annual Rent and Percentage Rent paid for the applicable fiscal year
together with payment, if applicable, of any Percentage Rent due. In the case
of the first and last Lease year, Gross Sales for any partial fiscal year shall
be divided by the number of months in such partial year and Percentage Rent
shall be calculated on such average Gross Sales (less Minimum Annual Rent paid
for such period) In the event of an overpayment of Percentage Rent, Landlord
shall refund such overpayment within thirty (30) days of receipt of the Annual
Statement. Each statement and Annual Statement shall be certified by the chief
financial officer of Tenant, in good faith, and based upon the best information
and belief of same.
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(e) BOOKS AND RECORDS. For a period of three (3) years
following the close of each calendar year, Tenant shall keep at its home office
in San Diego County, California, full, complete, and proper books, records and
revenue from accounts of its daily Gross Sales, both for cash and on credit, of
each separate department, subtenant, and concessionaire at any time operated in
the Premises. Provided Landlord has given Tenant ten (10) days prior written
notice, Landlord and its agents shall have the right, during Tenant's regular
business hours, to conduct a confidential examination and inspection of all the
books and records of Tenant's business in the Premises, including but not
limited to any Internal Revenue, Franchise Tax Board, sales or other tax
reports, 90/10 Film exhibition agreements, leases, subleases and licensee and
concession agreements, and other information as Landlord may reasonably request
(including similar information for any subtenant, assignee, concessionaire and
licensee) pertaining to the businesses conducted in, upon or from the Premises,
for the purpose of investigating and verifying the accuracy of any statement of
Gross Sales.
(f) LANDLORD'S AUDIT. Landlord may, once in any calendar
year, cause an audit of Gross Sales (the "Landlord's Audit") to be made by an
accountant or other auditing company of Landlord's selection (including
non-accounting firms which specialize to percentage rents audits) (the
"Landlord's Accountant") and if any statement of Gross Sales or payment of
Percentage Rent previously made to Landlord shall be found to have been
understated, there shall be an adjustment, and Tenant shall pay, within ten
(10) days of receipt of the results of Landlord's Audit, the accurate amount of
said Percentage Rent that should have been paid to Landlord for the period or
periods covered by such inaccurate statement or statements, together with
interest at the "Default Rate" (defined in Section 29.13) from the date such
payment was due until paid in full. If such a review reveals that Tenant has
overpaid its Percentage Rent, Tenant shall receive a refund in the amount of
the overpayment less other sums due Landlord, if any, pursuant to the terms
hereof. Tenant shall pay all costs for said audit, but if the margin of
understatement in the amount of Percentage Rent is less than five percent (5%)
Landlord will pay for its own audit.
(i) If Tenant disagrees with the results of the
Landlord's Audit, Tenant may give notice thereof to Landlord within five (5)
days of receipt of Landlord's Audit results and commence a separate audit of
Tenant's records by a certified public accountant selected by Tenant ("Tenant's
Accountant") at Tenant's expense ("Tenant's Audit") (subject to reimbursement
as provided below).
(ii) Any discrepancy between the Tenant's Audit and
the Landlord's Audit shall be settled between the Tenant's Accountant and
Landlord's Accountant, which settlement shall be binding on both Tenant and
Landlord. Should Landlord's Accountant and Tenant's Accountant be unable to
agree within thirty days after completion of Landlord's and Tenant's Audits,
either party may submit the matter to a third accounting firm which shall be a
so-called "national"
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accounting firm, agreed upon by Landlord's Accountant and Tenant's Accountant.
(iii) Absent agreement by the two Accountants upon
selection of such third accounting firm within forty (40) days after completion
of Landlord's and Tenant's Audits, such third accounting firm shall be selected
by the Presiding Judge of the San Bernardino County Superior Court pursuant to
Code of Civil Procedure Section 39. Within thirty (30) days after the
selection of the third accountant or accounting firm, such accountant or firm
shall determine all unresolved discrepancies and shall reduce such resolution
to writing. Such determination shall be binding upon Landlord and Tenant. If,
as the result of such resolution, the amount of Percentage Rent due for the
period in question is not in excess of five percent (5%) of the amount shown by
Tenant's Statements, Landlord and Tenant shall each pay for one-half ( 1/2) of
the cost of the third accounting firm and Landlord shall pay all costs of
Tenant's Audit. If the underpayment is in excess of five percent (5%) of the
amount shown by Tenant's Statements, Tenant shall pay all audit costs,
including the costs of the third audit.
5.3 SECURITY DEPOSIT. INTENTIONALLY OMITTED.
5.4 REAL PROPERTY TAXES AND INSURANCE EXPENSES. It is the intention
of Landlord and Tenant that Tenant pay all Real Property Taxes and Insurance
expenses which relate directly to the Building and the Premises, as Tenant
shall be the sole occupant of the Building and Premises. In addition, Tenant
shall pay (i) its "Proportionate Share" of all Real Property Taxes, Insurance
expenses, and maintenance and repair with respect to the "Common Areas" (as
defined in Section 18.1) as provided in this Section and Article 18, and (ii)
the Tenant Parking Allocation, if any, under Section 18.4.
(a) PROPORTIONATE SHARE. Commencing upon the Rental
Commencement Date and for the balance of the Lease Term (including Extension
Terms), Tenant shall pay to Landlord its "Proportionate Share" of amounts
designated herein as Real Property Taxes and insurance expenses allocable to
the Common Areas, and one hundred percent (100%) of the Real Property Taxes and
insurance expenses allocable to the Premises. As used in this Lease,
"Proportionate Share" shall mean a fraction, the numerator of which shall be
the square footage of floor area in the Building (excluding the mezzanine) and
the denominator of which shall be the square footage of floor area in other
buildings in the Development for which certificates of occupancy have been
issued (both measured in accordance with the requirements of Section 2.2). If
the Premises and the Building are not separately assessed, Tenant's obligation
with respect to Real Property Taxes for the Premises shall be reasonably
allocated by Landlord among the parcels and improvements subject to such
assessment. The taxes and insurance described in this paragraph shall mean all
taxes and assessments levied with respect to any tax fiscal year applicable to
the Lease Term, and the
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cost to Landlord concerning any policy or policies of insurance carried by
Landlord which are allocable to the Common Areas, Building and Premises as
provided herein. During any portion of the Lease Term which is less than a
full taxable fiscal year or less than a full period for which Landlord has
obtained such insurance, Tenant's obligation for such Real Property Taxes and
insurance expenses shall be prorated on a daily basis.
(b) DEFINITION OF REAL PROPERTY TAXES. As used herein, the
term "Real Property Taxes" shall include general real property and improvement
taxes, any form of assessment, reassessment, license fee, license tax, business
license tax, commercial rental tax, in lieu tax, levy, charge, or similar
imposition whatsoever or at all, imposed by any authority having the direct
power to tax, including any city, county, state or federal government, or any
school, agricultural, lighting, redevelopment, drainage or other improvement or
special assessment district thereof, or any agency or public body, as against
any legal or equitable interest of Landlord in the Premises and/or the
Development including, but not limited to:
(i) any tax on Landlord's rent, right to rent or
other income from the Premises or Landlord's business of leasing the Premises;
(ii) any assessment, tax, fee, levy or charge in
addition to, or in partial or total substitution of any assessment, tax, fee,
levy or charge previously included within the definition of Real Property Tax.
Tenant and Landlord acknowledge that Proposition 13 was adopted by the people
of the State of California in June 1978 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. It is the intention of Tenant and Landlord that all such new and
increased assessments, taxes, fees, levies and charges and all similar
assessments, taxes, fees, levies and charges be included within the definition
of real property taxes for the purposes of this Lease;
(iii) any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the rent payable
hereunder including, but not limited to, any gross income tax with respect to
the receipt of such rent, or upon or concerning the possession, leasing,
operation, management, maintenance, alternation, repair, use or occupancy of
the Premises, or any portion thereof, by Tenant;
(iv) any assessment, tax, fee, levy, or charge
upon this Lease transaction or resulting from any conveyance of Tenant's
interest or an estate in the Premises; and
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(v) any assessment or reassessment related to any
change of ownership of Landlord's interest in the Development or portion
thereof, or any addition or improvement to the Development or a portion
thereof.
(vi) Real Property Taxes shall not include
Landlord's federal or state income, franchise, inheritance or estate taxes, or
late charges or penalties (unless such charges or penalties are due to Tenant's
late payment of its Proportionate Share of Real Property Taxes). With respect
to any assessment which may be levied against or upon the Premises and which
under the laws then in force may be evidenced by improvement or other bonds, or
may be paid in annual installments, there shall be included within the
definition of Real Property Taxes, with respect to any tax fiscal year, only
the amount currently payable on such bonds, including interest, for such tax
fiscal year, or the current annual installment or semi-annual installments for
such tax fiscal year.
5.5 INSURANCE ALLOCATION. Tenant shall pay its Proportionate Share
of all Insurance on the Common Areas and, in the event that the Premises are
not separately insured, Tenant shall pay its Proportionate Share of the costs
for all such insurance carried by Landlord.
5.6 TAX AND INSURANCE FUND. Tenant shall pay to Landlord on the
first day of each calendar month such amounts as Landlord shall from time to
time estimate and so notify Tenant as are required for Landlord to establish a
fund with which to pay Real Property Taxes and Insurance expenses prior to
delinquency. Landlord shall use commercially reasonable efforts to maintain
such fund in an interest-bearing account. If interest is earned by Landlord on
the sums so deposited by Tenant, such interest shall accrue to the benefit of
Tenant. Tenant's Proportionate Share of Real Property Taxes payable pursuant
to Article 18 hereof shall be included as Real Property Taxes pursuant to this
Article. Landlord shall deliver to Tenant at least once annually a statement
setting forth the actual Real Property Taxes and insurance expenses allocable
to the Premises together with the basis used by Landlord for computing same.
If such actual expenses exceed Tenant's payments hereunder, Tenant shall pay
the deficiency to Landlord within thirty (30) days after receipt of such
statement. If payments made by Tenant for such year exceed such actual
expenses, Landlord shall pay such excess to Tenant upon Landlord's delivery of
such statement. However, if Tenant is in default hereunder, Landlord shall be
permitted to offset an amount equal to the excess against any payments due or
damages caused by such default.
5.7 OTHER CHARGES. Tenant shall pay to Landlord when due all sums
of money required to be paid pursuant to this Article, Article 2, Article 9,
Article 15, Article 16, Article 18, and Article 18, and all other sums of money
or charges required to be paid or reimbursed by Tenant under this Lease as
"Additional Rent," whether
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or not the same is designated as Additional Rent. If Tenant shall fail to pay,
as and when due, any Minimum Annual Rent, Percentage Rent and/or Additional
Rent (collectively, "Rent"), in addition to all other rights and remedies
available to Landlord hereunder, such unpaid amount shall bear interest at the
Default Rate from the date due through the date of payment.
5.8 PLACE OF PAYMENT. All Rent charges shall be paid by Tenant to
Landlord at the address specified for service of notice upon Landlord in
Section 1.1(g) of this Lease, or at such other place as may from time to time
be designated by Landlord in writing at least ten (10) days prior to the next
ensuing payment date.
5.9 PERSONAL PROPERTY TAXES. Tenant shall pay on or before
delinquency all taxes assessed against Tenant's trade fixtures, furnishings,
equipment or other personal property directly to the tax authority or, if such
taxes are included in Real Property Tax bills, Tenant shall pay one hundred
percent (100%) of such taxes with Tenant's tax payments under Section 5.6
above.
ARTICLE 6
TERMS OF PARKING AGREEMENT
[TO BE INSERTED]
ARTICLE 7
PERMISSIBLE USE
7.1 PERMITTED USES.
(a) THEATER USE. (i) Tenant shall use the Premises solely
for the purpose specified in Section 1.1(l) and, except as otherwise provided
herein, under the trade name specified in Section 1.1(m) hereof; (ii) Tenant
shall not use or permit the Premises to be used for any other purpose or
purposes or under any other trade name whatsoever without the prior written
consent of Landlord, which consent may, except as provided herein, be withheld
in Landlord's sole, absolute and arbitrary discretion; and (iii) in the event
that Tenant sells its business pursuant to a transaction which results in a
permitted transfer under the terms of this Lease (i.e., a transfer to which
Landlord has consented, or for which no consent of Landlord is required under
Article 13), Landlord's consent to a proposed change in the trade name shall
not be unreasonably withheld or delayed. Tenant further covenants and agrees
that it will not use, nor suffer or permit any person or persons to use the
Premises or any part thereof for any use or purpose prohibited under the REA,
as same may be amended by Landlord from time to time, or in violation of the
laws of the United States of America, State of California,
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or the ordinances, regulations or requirements of the local, municipal or
county governing bodies or any other lawful governmental or quasi- governmental
authorities having jurisdiction over the Development, or in violation of any
regulations of any insurance carrier providing insurance for the Premises or
Development, or in violation of the Parking Agreement or REA.
(b) TENANT'S OPERATING COVENANT. Tenant acknowledges that
material inducement to Landlord to enter into this Lease is the generation of
Percentage Rent from Gross Sales at the Premises. Accordingly, Tenant
covenants and agrees that Tenant shall open the Premises for business to paying
audiences for the use described in Section 1.1(l), fully stocked and staffed,
on or before the Rent Commencement Date and shall continuously operate for the
use described in Section 1.1(l) throughout the Lease Term, during customary
motion picture theater hours (but in no event less than the hours and days
generally operated by Tenant in its other motion picture theaters in the
Southern California area provided that Tenant shall not be required to open
prior to 12:00 p.m.), operating at least seventy-five percent (75%) of Tenant's
movie screens during such hours at the Premises and using best efforts to show
first run films at all times.
(c) NO NUISANCE. Tenant agrees not to conduct or operate
its business in any manner which could jeopardize or increase the rate of any
fire or other insurance on the Premises or Development or to engage in conduct
which may constitute a nuisance to, or interfere with, the other property of
Landlord or its business, or the property or business of other tenants of the
Development. Tenant may not display or sell merchandise, or allow carts,
portable signs, devices or any other objects to be stored or to remain outside
the defined exterior walls or roof or permanent doorways of the Building. Any
sign placed or erected by Tenant and permitted hereunder shall be kept by
Tenant safe, secure and in conformance with the requirements of the local
governing body having jurisdiction over the Development and each of the
restrictions and requirements set forth in Exhibit "F" hereof. Tenant shall
have the right to erect aerial, antenna, or satellite dishes on the roof or
exterior walls of the Building, provided however that in each instance, the
prior written consent of Landlord shall be obtained, which consent shall not be
unreasonably withheld. Nothing set forth herein shall be deemed to permit
Tenant to erect any such structures in the Common Areas. Any aerial, antenna,
or satellite dish so installed in violation of this provision shall be subject
to removal by Landlord, Landlord's agents, and Landlord's employees, without
notice at any time. In addition, Tenant agrees that it will not solicit in any
manner in any of the Parking Areas and/or Common Areas of the Development.
(d) RULES AND REGULATIONS. Tenant shall use its best
efforts to complete or cause to be completed all deliveries, loading, unloading
and services to the Premises prior to 10:00 a.m. of each day, and to prevent
delivery trucks or other vehicles servicing the
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Premises from parking or standing in service areas for undue periods of time.
Landlord reserves the right to further reasonably regulate the activities of
Tenant in regard to deliveries and servicing of the Premises, and Tenant agrees
to abide by such further reasonable rules and regulations which Landlord may
impose from time to time.
(e) VIOLATION. In the event Tenant violates Section 7.1(a)
above and changes the use of the Premises from that specified in the "Use of
Premises" clause in Section 1.1(l) hereof, without Landlord's prior written
consent, then in addition to all other rights and remedies of Landlord in the
event of a Tenant default, Landlord may, but is not obligated to, elect to
terminate this Lease upon written notice of Landlord's intent to Tenant. If
this Lease shall terminate, both Landlord and Tenant shall be relieved of all
further liability to each other (except that occasioned by Tenant's breach of
changing the use, or otherwise, and except for covenants which expressly
survive the Lease termination), and Tenant shall vacate the Premises upon the
date specified in Landlord's notice to Tenant.
(f) LIMITED LICENSE. Subject to the limitations below,
Tenant shall have a limited right to use pushcarts to sell light snacks, and
beverages (including carbonated, soft drinks, non-alcoholic beverages, and
coffee), to its patrons while said patrons are waiting in line on the Theater
Parcel to purchase tickets or view attractions offered by Tenant in the
Premises. Said pushcarts must at all times be attended by an employee of
Tenant, and shall not offer any foods or drinks the sale of which is a material
part (as determined by Landlord) of the business of any other tenant in any
portion of the Development, except for beverages of the type typically sold in
movie theaters, provided, however, that if Landlord is unable to lease any
portion of the Development to a party which operates a food service
establishment emphasizing the sale of coffee (a "Coffee Bar") due to such sales
by Tenant, then Tenant shall either agree to lease such space from Landlord for
such use in accordance with the terms and conditions set forth in any bona fide
third party offer to lease for the Coffee Bar use or cease selling coffee from
such pushcarts. Said pushcarts shall not be permitted in the Parking Areas or
other Common Areas of the Development, and must remain on the walkways
immediately adjacent to the Building. At no time shall the presence or use of
the pushcarts create an impediment to pedestrian or vehicular traffic, and said
carts and their use shall at all times comply with all health, safety, and
other rules and regulations of all governmental bodies having jurisdiction over
food service. Landlord reserves the right to restrict the hours and days of
use of the pushcarts if Landlord determines that their presence or use creates
vehicular or pedestrian congestion or otherwise disrupts the flow of traffic in
the Development, or if their presence or use contributes to an unsightly
appearance of the area adjacent to the Premises, by resulting in refuse of any
type, including paper, other containers, or food or drink on the sidewalks,
parking areas, or landscape areas. Tenant shall bear all costs
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related to such refuse removal, including the use of extra porters to keep the
area in a neat and clean condition. Tenant recognizes that this is a very
limited use right, which may be terminated by Landlord for any violations of
this subparagraph, or if Landlord determines, in its sole and absolute
discretion, exercised in good faith, that the use or presence of the carts
contributes to an unsightly condition, or unduly impacts the businesses of
other tenants in the Development, including, without limitation, by diverting
sales from such other tenants. Tenant shall be solely responsible for
obtaining any governmental approvals that may be required in order to lawfully
operate such pushcarts. All sales from pushcarts shall be included in
Concession Sales.
7.2 EXCLUSIVE USES BY OTHERS. Tenant acknowledges the existence of
or plan to grant other exclusive use rights within the Development, and agrees
not to violate same, whether they are in existence at the time of execution
hereof, or at any time subsequently during the Term. Landlord shall endeavor
to provide notice to Tenant of exclusive uses which exist in the Development
from time to time, and this Lease shall be deemed to be amended to include as
exclusive uses enforceable against Tenant the uses specified in such notices.
As of the date hereof, no exclusive uses have been granted. However, no future
granting of an exclusive use right shall prevent Tenant from operating the
business permitted hereunder in the same manner as Tenant initially undertook
same.
7.3 TENANT'S EXCLUSIVE USE. So long as Tenant continuously operates
the Premises for the use specified in Section 1.1(l), Landlord shall not lease
space within the Development to anyone for the purpose of operating within the
Development a movie theater, or conducting a business requiring the use of
auditoriums exceeding 10,000 square feet for meetings and conventions at the
Development, without Tenant's prior written approval. This restriction shall
not apply to the operation of restaurant or banquet facilities.
ARTICLE 8
UTILITIES
8.1 UTILITY INSTALLATION. Landlord agrees that it will cause to be
made available to Tenant, stubbed to within five feet of the perimeter of the
Building Pad, facilities for the delivery to the Premises of water, power,
electricity, gas and telephone service, and for the removal of sewage from the
Premises, in the capacities specified, and in accordance with the plans to be
provided as specified in Exhibit "C." Such utilities shall be separately
metered. Tenant agrees to use such utilities in connection with the use of the
Premises.
8.2 PAYMENT OF UTILITY COST. Tenant agrees, at its own expense, to
pay for all water, power, gas and electric current,
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sewage, telephone and all other utilities used by Tenant on or from the
Premises from and after the commencement of Tenant's Work pursuant to Exhibit
"C" hereof, and Tenant agrees to provide, at Tenant's sole cost and expense,
any check meters of the type required by Landlord. In the event that any
utilities are furnished to the Premises by Landlord, whether sub-metered or
otherwise, then and in that event, Tenant shall pay Landlord for such utilities
within ten (10) days of invoice, but the rates charged to Tenant by Landlord
shall not exceed those of the public utility company furnishing same to
Landlord as if its services were being furnished directly to Tenant.
8.3 NO LIABILITY. Except for Landlord's gross negligence, Landlord
shall not be liable in damages or otherwise for any failure or interruption of
any utility service being furnished to the Premises, and no such failure or
interruption shall entitle Tenant to terminate this Lease or withhold any rent
or any other sums due under the terms of this Lease.
ARTICLE 9
INDEMNITY AND INSURANCE
9.1 INDEMNIFICATION AND WAIVER. Tenant agrees that Landlord shall
not be liable for any damage or liability of any kind, or for any injury to or
death of persons, or damage to property of Tenant or any other person during
the Lease Term, from any cause whatsoever, resulting from the use, occupation
or enjoyment of the Premises, Parking Area and Common Areas, or the operation
of business therein or therefrom by Tenant or any person holding under Tenant.
Tenant hereby further agrees to defend, indemnify and save harmless Landlord,
and Landlord's mortgagees, property managers, officers, directors, partners and
shareholders, from all expenses, costs, liability and fees arising out of or
resulting from Tenant's use of the Premises, Parking Area and Common Areas,
whatsoever including, without limitation, liability for any real or claimed
damage or injury and from all liens, claims and demands arising out of the use
of the Premises, Parking Area and Common Areas, any repairs or alterations
which Tenant may make upon the Premises, the operation of Tenant's business
thereon, any claims of any employee of Tenant against Landlord, any breach or
default in the performance of Tenant's obligations under this Lease, and the
negligence or wilful misconduct of Tenant, or its agents, contractors,
employees, subtenants, and licensees. Tenant shall not be liable for damage or
injury occasioned by the gross negligence of Landlord and its designated
agents, servants or employees, unless the same is covered by insurance Tenant
is required to provide. The foregoing obligation of Tenant to indemnify shall
survive the expiration or earlier termination of the Lease Term and shall
include all costs of legal counsel and investigation, together with other
reasonable costs,
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expenses and liabilities incurred in connection with any and all claims of
damage.
9.2 WAIVER OF SUBROGATION. To the extent any such loss or damage is
covered by insurance, Landlord and Tenant each hereby waive any rights it may
have against the other, or the other's officers, employees, or agents, on
account of any loss or damage occasioned to Landlord or Tenant, as the case may
be, their respective properties, the Premises or their contents, or to other
portions of the Development arising from any risk generally covered by fire and
extended coverage insurance or from vandalism, malicious mischief or sprinkler
leakage. The parties hereto, on behalf of their respective insurance companies
insuring such losses, waive any right of subrogation that one may have against
the other provided that no policy of insurance required herein is invalidated
by the foregoing waivers of subrogation. Tenant shall give notice of this
waiver to its insurance carrier at each policy commencement.
9.3 TENANT'S INSURANCE OBLIGATION. Tenant further covenants and
agrees that it will carry and maintain during the entire Lease Term hereof, at
Tenant's sole cost and expense, the following types of "Insurance" in the
amounts and forms hereinafter specified:
(a) PUBLIC LIABILITY AND PROPERTY DAMAGE. A policy or
policies of comprehensive general bodily injury liability and property damage
liability insurance with limits of not less than Five Million and 00/100
Dollars ($5,000,000.00) combined single limit per occurrence and in the
aggregate, insuring against any and all liability of the insured with respect
to the Premises or arising out of the maintenance, condition, use or occupancy
thereof, and property damage liability. All such bodily injury liability
insurance and property damage liability insurance shall specifically insure the
performance by Tenant of the indemnity agreement as to liability for injury to
or death of persons and injury or damage to property contained in Section 8.2
hereof. Such policies shall include, without limitation, coverage for fire,
explosion and water damage and legal liability.
(b) PLATE GLASS. Tenant shall be responsible for the
maintenance of the plate glass on the Premises, but shall have the option
either to insure the risk pursuant to Section 9.3(c) hereof or to self-insure
same, which shall obligate Tenant to be personally liable for any claim, loss
or damage related thereto, together with the cost of the repair of same.
Tenant's responsibility for maintenance of the plate glass includes its
replacement in the event repair of the glass would not restore the glass to its
original condition at the time of installation.
(c) TENANT IMPROVEMENTS. A policy or policies of casualty
insurance covering the Building (excluding excavations, foundations and
footings), including all of Tenant's Work and FF&E, both as described in
Exhibit "C" hereof, Tenant's leasehold improvements, and
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all alterations or additions thereto, Tenant's trade fixtures, merchandise and
all personal property from time to time in, on or upon the Premises, in an
amount not less than one hundred percent (100%) of their full replacement cost,
without depreciation, providing protection against any peril included within
the classification "Fire and Extended Coverage," together with insurance
against sprinkler damage, vandalism and malicious mischief (and policies of
earthquake and flood insurance and such other insurance as may be required by
Landlord's lenders and available at commercial reasonably premiums). Any
insurance 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 17 hereof, whereupon any proceeds of insurance
covering Tenant's leasehold improvements (excluding FF&E) and any alterations
or additions permitted under Article 10 hereof shall be payable to Landlord.
(d) WORKERS' COMPENSATION. Tenant shall carry Workers'
Compensation and Employer's Liability Insurance as required by applicable law
for all of Tenant's employees.
(e) BUSINESS INTERRUPTION. Business interruption or loss
of income insurance in amounts sufficient to cover Minimum Annual Rent and all
other Additional Rent due under the Lease for a period of at least twelve (12)
months.
(f) CONSTRUCTION. Until completion of Tenant's Work, and
at any time during the course of any construction at the Premises, the
insurance required in Sections 2.4 and 4.2 of Exhibit "C," in an amount equal
to one hundred percent (100%) of the cost of construction, including but not
limited to explosion, collapse and underground hazards.
9.4 POLICY REQUIREMENTS. All policies of insurance provided for
herein shall be issued by insurance companies with a general policy holder's
rating of not less than "A" and a financial rating of not less than Class VIII,
as rated in the most current available Best's Insurance Reports, and qualified
to do business in the State of California. All such policies shall name
Landlord and, if requested by Landlord, Landlord's property manager, Mortgagees
and/or Landlord's lessor, if any as additional insureds and loss payees, as
applicable, which policies shall be for the mutual and joint benefit and
protection of Landlord and Tenant, and, if applicable, Landlord's property
manager, Mortgagees, and/or Landlord's lessor. Executed copies of such
policies of insurance or original certificates thereof shall be delivered to
Landlord prior to Tenant's entry upon the Premises to commence Tenant's Work
and thereafter at least thirty (30) days prior to the expiration of the term of
each such policy. All public liability and property damage policies shall
contain a provision that Landlord, although named as an additional insured,
shall nevertheless be entitled to recovery under such policies for any loss
occasioned to it, its servants, agents, or employees by
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reason of any act or omission of Tenant or its servants, agents, employees or
contractors. As often as any such policy shall expire or terminate, renewal or
additional policies shall be procured and maintained by Tenant pursuant to the
terms of this Article 9. All policies of insurance delivered to Landlord must
contain a provision that the company writing such policy will give to Landlord
and the other additional insureds and loss payees at least thirty (30) days'
notice in writing in advance of any cancellation or lapse or the effective date
of any reduction in the amount of or other material change of insurance. All
public liability, property damage and other casualty policies maintained by
Tenant shall be written as primary policies, and any insurance maintained by
Landlord shall be excess insurance. All deductibles shall be subject to
Landlord's reasonable consent depending on such factors as Tenant's then net
worth, cost of premiums, customary insurance practices, Mortgagee requirements,
and other reasonable factors.
9.5 INCREASE IN COVERAGE. In the event Landlord or Landlord's
Mortgagees deem it necessary to increase the amounts, types, or limits of
insurance required to be carried by Tenant hereunder, Landlord may request a
commercially reasonable increase in such amounts, types or limits of insurance,
and Tenant shall so increase the amounts, types or limits of the insurance
required to be carried by Tenant hereunder and shall provide Landlord with
policies or original certificates indicating the increased amounts, types or
limits as provided in Section 9.4 hereof.
9.6 BLANKET COVERAGE. Tenant's obligations to carry Insurance
provided for in this Article 9 may be brought within the coverage of a
so-called blanket policy or policies of insurance carried and maintained by
Tenant provided, however, that Landlord, Landlord's property manager, Mortgagee
and Landlord's lessor, shall be named as an additional insureds and loss payees
thereunder as their respective interests may appear, and that the coverage
afforded Landlord and the other additional insureds and loss payees will not be
reduced or diminished by reason of the use of such blanket policy of insurance,
and provided further that the requirements set forth herein are otherwise
satisfied. Any other casualty or commercial general liability policy carried
by Tenant, with respect to the Premises which is not expressly required herein,
shall be made available to Landlord at all reasonable times and shall
nevertheless name Landlord, its property manager, Mortgagees, and lessor as an
additional insured and/or loss payee, as applicable.
9.7 LANDLORD'S INSURANCE OBLIGATIONS. Landlord shall maintain in
effect a policy or policies of casualty insurance covering "Landlord's Work" as
described in Exhibit "C" (but not "Tenant's Work" as described in Exhibit "C"
hereof, Tenant's leasehold improvements, alterations or additions, Tenant's
trade fixtures, merchandise or other personal property), and the Common Areas
in an amount of not less than eighty percent (80%) of its full replacement cost
(including excavations, foundations and footings) during the
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Lease Term, providing protection against any peril generally included within
the classification "Fire and Extended Coverage" (and earthquake and flood if
Landlord or its Mortgagee deems such insurance to be necessary or desirable),
together with insurance against sprinkler damage, vandalism and malicious
mischief and such further insurance as Landlord or Landlord's lenders deem
necessary or desirable. Landlord shall also carry comprehensive general
liability insurance in an amount deemed reasonable by Landlord insuring against
any and all liability of the insured with respect to the Common Areas.
Landlord's obligation to carry the insurance provided for herein may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by Landlord, provided that the coverage afforded will
not be reduced or diminished by reason of the use of such blanket policy of
insurance. Tenant shall pay to Landlord as set forth in Sections 5.1 and 5.4
above, Tenant's Proportionate Share of all Insurance maintained by Landlord
hereunder.
9.8 INSURANCE USE RESTRICTIONS. Tenant agrees that it will not at
any time during the Lease Term carry any stock of goods or do or permit
anything to be done in or about the Premises which will tend to increase the
insurance rates upon the building or the Development of which the Premises are
a part. Tenant agrees to pay to Landlord forthwith upon demand the amount of
any increase in premiums for insurance against loss by fire or any other peril
normally covered by fire and extended coverage insurance resulting from Tenant
doing any act in or about the Premises which does so increase the insurance
rates, whether or not Landlord shall have consented to such act on the part of
Tenant. If Tenant installs upon the Premises any electrical equipment which
constitutes an overload on the electrical lines of the Premises, Tenant shall
at its own expense make whatever changes or provide whatever equipment
safeguards are necessary to comply with the requirement of the insurance
underwriters and any governmental authority having jurisdiction thereover, but
nothing herein contained shall be deemed to constitute Landlord's consent to
such overloading.
9.9 TENANT'S FAILURE TO OBTAIN INSURANCE. If Tenant fails to obtain
and maintain throughout the Lease Term any insurance required to be obtained by
Tenant hereunder, or fails to provide Landlord with evidence of insurance as
required herein, Landlord shall have the right, but not the obligation, to
obtain such insurance, and Tenant shall pay to Landlord as Additional Rent,
within ten (10) days of invoice, the premium attributable to such insurance.
ARTICLE 10
TENANT'S ALTERATIONS
10.1 PERMITTED ALTERATIONS. Landlord agrees that Tenant may, from
time to time during the Lease Term, at Tenant's sole cost and
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expense and after giving Landlord at least thirty (30) days' prior written
notice of its intention to do so, make such alterations, additions and changes
in and to the interior of the Building (except those of a structural nature) as
Tenant may find necessary or convenient, provided that the value of the
Premises is not thereby diminished, and provided that no alterations, additions
or changes costing in excess of One hundred Thousand 00/100 Dollars
($100,000.00), cumulatively, in any Lease Year ("Extensive Alteration") may be
made without first procuring the prior written consent of Landlord. In no
event shall Tenant make any alterations, additions or changes of a structural
nature, or to the storefront or the exterior walls or roof of the Building, or
penetration through the roof or demising walls of the Premises, erect any
mezzanine or increase the size of same, if one be initially constructed, or
construct an Extensive Alteration, unless and until the written consent of
Landlord shall first have been obtained, which consent may not be unreasonably
withheld (except as provided below); Tenant acknowledges that Landlord's
consent to any increase in the size of the Premises, including to the
mezzanine, may be conditioned upon an equitable adjustment in the Rent, and
that Landlord's consent to any changes to the exterior of the Premises may be
conditioned on the maintenance of architectural conformity with, and adequate
pedestrian and vehicular ingress and egress to the balance of the Development.
Notwithstanding anything else herein to the contrary, Landlord may withhold its
consent, in its sole and absolute discretion, to any modification or alteration
which affects the Building systems, roof, or structural integrity of the
Building or the Premises. Tenant shall be directly responsible for any and all
damages resulting from such construction and any violation of the provisions of
this Article.
10.2 MANNER OF CONSTRUCTION. All alterations, additions, or changes
to be made to the Premises shall be under the supervision of a competent
licensed general contractor satisfactory to Landlord and shall be made in
accordance with plans and specifications with respect thereto, approved in
writing by Landlord before the commencement of work. Failure of Landlord to
disapprove any such plans and specifications within thirty (30) days of
submission shall be deemed its approval of same. All work with respect to any
alterations, additions or 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 any alterations, additions or changes, Tenant agrees to cause a Notice of
Completion to be recorded in the office of the Recorder of the County in which
the Premises is located in accordance with Section 3093 of the Civil Code of
the State of California or any successor statute. Such alterations, additions
or changes shall be considered as improvements and shall become an integral
part of the Premises upon installation thereof and shall not be removed by
Tenant unless Landlord requests their removal at or prior to the expiration or
earlier termination of the Lease. All improvements to the Premises by Tenant
including, but not limited
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to, light fixtures, floor coverings and partitions, and other items comprising
Tenant's Work pursuant to Exhibit "C," but excluding trade fixtures and signs,
shall be deemed to be the property of Landlord upon installation thereof. All
materials used in any alterations or changes to the Premises shall be new
quality and condition. Any such alterations, additions or changes shall be
performed and done at Tenant's sole cost and expense and strictly in accordance
with the laws and ordinances relating thereto. In performing the work of any
such alterations, additions or changes, Tenant shall have the work performed in
such manner as not to obstruct the access to the premises of any other occupant
to the Development. Tenant shall furnish Landlord with a copy of all
applicable construction permits and plans so that Landlord may hold in its file
a complete and accurate set of permits and plans for all alterations, additions
and changes to the Premises and for all of Tenant's Work on the Premises.
10.3 CONSTRUCTION INSURANCE. During the course of construction of
Tenant's Work and, in the event that Tenant shall make any alterations,
additions or changes to the Premises during the Lease Term, Tenant agrees to
carry "Builder's All Risk" insurance in one hundred percent (100%) of the value
of the improvements, and such other insurance as Landlord may reasonably
require; it being understood and agreed that all Tenant's Work and any such
alterations, additions or changes shall be insured by Tenant pursuant to
Section 9.2 immediately upon completion thereof. In addition, Landlord may, in
its discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount equal to one
hundred twenty-five percent (125%) of the estimated cost of Tenant's Work and
any such alternations, additions or changes to assure lien-free completion.
ARTICLE 11
MECHANICS' LIENS
11.1 TENANT'S LIEN OBLIGATIONS. Tenant agrees that it will pay, or
cause to be paid, all costs for permits, plans, construction and other work
done by it or caused to be done by it on or with respect to the Premises and
that Tenant will keep the Premises and the Development free and clear of all
mechanics' liens and other liens for or arising from work done by or for Tenant
or for persons claiming under Tenant. Tenant agrees to, and shall indemnify
and save Landlord and its property manager free and harmless from and against,
liability, loss, damage, costs, attorneys' fees, and all other expenses on
account of claims of contractors, subcontractors, laborers or materialmen or
others for work performed or materials or supplies furnished for Tenant or
persons claiming under it. If any laborer, person or firm supplying or
providing labor, materials or equipment or services to Tenant, or to any of
Tenant's contractors or subcontractors for Tenant's Work, shall make any claim
or demand against Landlord, the Premises or the Development, or shall file any
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claim, stop notice, lien, or otherwise, against Landlord, the Premises, the
Development or any Mortgagee, and Tenant shall not cause such claim, stop
notice or lien to be removed, rescinded or dismissed, including, without
limitation, the posting of a bond pursuant to California Civil Code Section
Section 3143 and/or 3171, as the case may be, and in the event Tenant shall
fail to do so within five (5) days after written demand by Landlord, such
failure shall constitute a default hereunder. In such event, in addition to
such other remedies Landlord may have, Landlord shall have the right (but not
the obligation) to use whatever means in its discretion Landlord may deem
appropriate to cause said claim, stop notice, or lien to be rescinded,
discharged, compromised, dismissed or removed including, without limitation,
(a) posting a bond pursuant to California Civil Code Section Section 3143
and/or 3171; or (b) paying a sum sufficient to pay all claims, demands, or
liens. Any such sums paid by Landlord, including attorneys' fees and bond
premiums, shall be immediately due and payable to Landlord by Tenant.
11.2 NOTICE. Tenant shall immediately give Landlord notice of any
claim, demand, stop notice or lien made or filed against the Premises or the
Development or any action affecting the title to such Premises or Development.
11.3 INSPECTION; NOTICE OF NON-RESPONSIBILITY. Landlord or its
representative shall have the right to go upon and inspect the Premises at all
reasonable times, and shall have the right to post and keep posted thereon
notices as permitted or provided by law or which Landlord may deem to be proper
for the protection of Landlord's interest in the Premises. Tenant shall,
before the commencement of any work which might result in any such lien, give
to Landlord a written notice of its intention to do so in sufficient time but
not less than fifteen (15) days in advance) to enable Landlord to file and
record such notices.
11.4 COMMON AREAS. Nothing contained herein shall give Tenant the
right to alter, change, improve or add to the Common Areas and Landlord shall
have the right to approve or disapprove of any request by Tenant to do so, in
Landlord's sole and absolute discretion.
ARTICLE 12
SIGNS
12.1 IN GENERAL. Except as specifically provided in Section 12.2,
below, Tenant shall not affix or maintain upon the glass panes or supports of
the show windows, or upon any window or upon the doors, roof or exterior walls
of the Premises, any signs, advertising placards, names, insignia, trademarks,
descriptive material or any other similar item or items except those approved
in writing in advance by Landlord as to the size, design, type, color,
location, copy, nature and display qualities of such item. Failure of Landlord
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to disapprove any such item within thirty (30) days of Tenant's submission of
same to Landlord shall constitute disapproval of same. Tenant shall provide
Landlord with drawings of its storefront sign which Landlord may approve or
disapprove in its reasonable discretion. All signs erected by Tenant shall
comply with the provisions of Exhibit "F" hereof and shall be installed and
maintained at Tenant's sole cost. In addition, no advertising medium shall be
utilized by Tenant the sound or effect of which extends beyond the Premises
including, without limitation, flashing lights, searchlights, loudspeakers,
phonographs, radios or televisions. Tenant shall not display, paint or place
or cause to be displayed, painted or placed, any handbills, bumper stickers or
other advertising devices on any vehicle parked in the Parking Area or
structure of the Development, whether belonging to Tenant or to Tenant's agents
or to any other person; nor shall Tenant distribute, or cause to be
distributed, in the Development any handbill or other advertising devices. In
the event Tenant shall violate any provision of this Article 12 or any
provision of Exhibit "F" hereto, Tenant hereby grants to Landlord the right to
enter the Premises and correct such violation at Tenant's sole cost and
expense. If any such violation shall occur in the Common Areas, Landlord shall
have the immediate right to cure such violation, which right shall include,
without limitation, removal of any and all unapproved signage or other items,
at Tenant's cost.
12.2 PROMOTIONAL SIGNS. Notwithstanding anything in Section 12.1
above, unless Landlord objects, in writing, within ten (10) business days of
the placement of such sign or promotional material, Tenant shall have the right
to place tasteful, professionally designed signs and promotional materials
related to the movies being offered, or shortly to be offered, by Tenant at the
Premises, on the storefront windows and doors, or in the Premises in a manner
which would be visible from outside the Building, subject to compliance with
all applicable laws. All such signs shall conform to standards of taste which
are consistent with family entertainment and the family oriented environment of
the Development. Tenant acknowledges that the standards for the display of
such material which is visible to the general public may be more restrictive
than the limitations provided for in this Lease related to the type of movies
which Tenant may offer to restricted audiences. If Landlord objects to such
material as provided above, Tenant shall remove the material which was objected
to within twenty-four (24) hours of Tenant's receipt of said notice, and the
failure to do so shall be a material breach of this Lease.
ARTICLE 13
TRADE FIXTURES AND PERSONAL PROPERTY
13.1 OWNERSHIP. Any FF&E (as defined in Exhibit "C") not permanently
affixed to the Premises or paid for by Landlord through
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the Tenant Improvement Allowance or First LC or Second LC shall be the property
of Tenant, and Landlord agrees that Tenant shall have the right, provided
Tenant is not in default under the terms of the Lease, at any time, and from
time to time, to remove any and all of its FF&E which it may have stored or
installed in the Premises including, but not limited to, counters, shelving,
showcases, mirrors and other movable personal property; provided, however,
Tenant shall immediately replace any removed personal property with similar
personal property of comparable or better quality, so as to continue to render
the Premises suitable for conducting the type of business described in Section
1.1(l). Tenant, at its expense, agrees to immediately repair any damage
occasioned to the Premises by reason of the removal of any such trade fixtures,
signs, and other personal property and, upon expiration or earlier termination
of this Lease, Tenant agrees to leave the Premises in a neat and broom-clean
condition and free of trash and debris.
13.2 SECURITY INTEREST. As additional security for performance of
Tenant's obligations under this Lease, Tenant hereby grants to Landlord a lien
and security interest in all of Tenant's FF&E hereinafter placed in or upon the
Premises, and such property shall be and remain subject to Landlord's lien and
security interest for payment and performance of all obligations of Tenant
under this Lease. Landlord's security interest in the FF&E shall be subject
and subordinate only to a lien in the principal amount not to exceed
$1,000,000, granted to the FF&E Lender as security for the FF&E Loan. This
Section 13.2 shall constitute a Security Agreement under the Uniform Commercial
Code of the State of California ("UCC") and shall be enforceable as a security
interest against all of the FF&E in accordance with the UCC. Tenant agrees to
execute, as debtor, such financing statements as Landlord may now or hereafter
request from time to time in order to establish and/or perfect the security
interest in the FF&E granted herein pursuant to the UCC. Landlord, as a
secured party, shall be entitled to all rights and remedies afforded to secured
party under the UCC in addition to and cumulative of Landlord's rights and
remedies provided hereunder or at law or in equity. Concurrently with the
execution of this Lease, and from time to time thereafter upon request, Tenant
shall execute and deliver to Landlord a UCC-1 Financing Statement in a form
reasonably acceptable to Landlord evidencing and perfecting such security
interest. Notwithstanding the foregoing, provided Tenant is not then in
default, Landlord agrees to execute, if required by the FF&E Lender (excluding
any such items which Tenant is required to leave in the Premises at the end of
the Lease Term), a UCC-2 Subordination of Landlord's security interest to the
security interest of such lender with respect to the items financed, in a form
reasonably acceptable to Landlord and such lender, at Tenant's sole cost and
expense.
13.3 REMOVAL. If Tenant fails to remove any of its trade fixtures,
furniture and other personal property on or before the expiration or the sooner
termination of this Lease, Landlord may, at Landlord's option retain all or any
of such property, and title
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thereto shall thereupon automatically vest in Landlord, or Landlord may remove
the same from the Premises and dispose of all or any portion of such property,
in which latter event Tenant shall, upon demand, pay to Landlord the actual
expense of such removal and disposition together with the cost of repair of any
and all damage to the Premises resulting from or caused by such removal.
Tenant waives any and all rights it may have under California Civil Code
Section 1980 et seq.
13.4 PERSONAL PROPERTY TAX. Tenant shall pay before delinquency all
taxes, assessments, license fees and public charges levied, assessed or imposed
upon its business operation, as well as upon its trade fixtures, merchandise
and other personal property in or upon the Premises. In the event any such
items of property are assessed with property of Landlord, such assessment shall
be divided between Landlord and Tenant to the end that Tenant shall pay only
its equitable portion of such assessment as conclusive determined by Landlord.
No taxes, assessments, fees or charges referred to in this paragraph shall be
considered as Real Property Taxes under the provisions of Section 5.4(b)
hereof.
ARTICLE 14
ASSIGNMENT, SUBLEASE AND OTHER TRANSFERS
14.1 RESTRICTIONS.
(a) PROHIBITION ON TRANSFERS. Landlord and Tenant agree
that the development benefits of this Lease, both to Landlord and Tenant, are
dependent upon Tenant's creating and maintaining a successful and profitable
retail operation in the Premises. Accordingly, Tenant shall not transfer,
assign, sublet, mortgage or otherwise hypothecate or encumber this Lease, or
Tenant's interest in and to the Premises, nor enter into any license or
concession agreements with respect to the Premises, without in each instance
procuring the prior written consent of Landlord. Any such attempted or
purported transfer, assignment, subletting, mortgage or hypothecation, or
license or concession agreement (hereinafter collectively a "Transfer") without
Landlord's prior written consent shall be void and of no force and effect,
shall not confer any interest or estate in the purported transferee, and shall
at Landlord's sole, exclusive, and absolute discretion, entitle Landlord to
terminate this Lease upon written notice to Tenant.
(b) LANDLORD'S CONSENT. The consent of Landlord required
hereunder shall not be unreasonably withheld; provided, however, that Landlord
and Tenant agree that it shall not be commercially unreasonable for Landlord to
withhold its consent to any proposed Transfer for any commercially-reasonable
reason including, but not limited to:
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(i) A difference between the contemplated use of
the Premises by the proposed transferee, assignee, or sublessee, concessionaire
or licensee following the proposed Transfer (hereinafter referred to as the
"Transferee") with the "Use of Premises" clause contained in Section 1.1(l)
hereof;
(ii) The financial worth and/or financial
stability of the Transferee is less than that of the Tenant hereunder at the
commencement of the Lease Term or at the time of the Transfer, or not
reasonably suitable to Landlord, in Landlord's sole discretion, so as to insure
the ability of the Transferee to perform Tenant's obligations under the Lease
for the full Lease Term;
(iii) A Transferee whose reputation or proposed use of
the Premises would in the exercise of Landlord's reasonable discretion, have an
adverse effect upon the reputation of the Development and/or the other business
located therein;
(iv) The Transfer would result in a breach of any
covenant of, or affecting Landlord concerning, radius, location, use or
exclusivity in any other lease, financing agreement, or other agreement
relating to the Development;
(v) The proposed Transfer would, in Landlord's
sole and exclusive discretion, require an amendment to any material term of the
Lease;
(vi) The Transfer is prohibited without the consent
of Mortgagees under their respective Mortgagees, and one or more Mortgagees
fail or refuse to provide consent;
(vii) The proposed Transfer likely would result in a
decrease in the amount of average Percentage Rent payable from that payable by
Tenant for the immediately preceding three (3) year period (or, if the Transfer
is proposed within the first three Lease Years, from the Rent Commencement
Date;
(viii) The proposed Transfer, if consented to, would
occur either (a) prior to completion of Tenant's Work in accordance with this
Lease, or (b) prior to the expiration of Tenant's operating covenant under
Section 15.1; or
(ix) The Transferee proposes to or is likely to
operate the Premises under a different trade name than the trade name in
Section 1.1(m), and such trade name does not share at least a similar name
recognition and reputation for quality as the trade name specified in Section
1.1(m).
14.2 PROCEDURE FOR TRANSFER. Should Tenant desire to make a Transfer
hereunder, Tenant shall, in each instance, give written notice of its intention
to do so to Landlord not less than sixty (60) days prior to the effective date
of such proposed Transfer,
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specifying in such notice whether Tenant proposes to assign or sublet, or enter
into a license or concession agreement, the proposed date thereof, and
specifically identifying the proposed Transferee. Such notice shall be
accompanied by (a) financial statements of the proposed Transferee, certified
by the chief financial officer or managing partner thereof if not an
individual, and (b) in the case of a sublease, license or concession agreement,
by a copy of the proposed sublease, license or concession agreement, or if same
is not available, a letter of commitment or a letter of intent. Landlord shall
have the right to reasonably request additional information in order to review
the terms of the Transfer and financial condition, reputation, and experience
of the proposed Transferee. Landlord shall, within twenty (20) days after its
receipt of such notice from Tenant of a proposed Transfer accompanied by all
information required pursuant hereto, by mailing written notice to Tenant of
its intention to do so (i) withhold consent to the Transfer pursuant to Section
13.1(b); or (ii) consent to such Transfer. No Transfer of this Lease or
agreement entered into with respect thereto, whether with or without Landlord's
consent, shall relieve Tenant or any Guarantor of this Lease from liability
under this Lease. Landlord hereby reserves the right to condition Landlord's
consent to any assignment, sublease or other transfer of all or any portion of
Tenant's interest in this Lease or the Premises upon Landlord's receipt from
Tenant of a written agreement, in form and substance acceptable to Landlord,
pursuant to which Tenant shall pay over to Landlord all rent or other
consideration received by Tenant from any such Transferee either initially or
over the term of the assignment, sublease or transfer, in excess of the Rent
called for hereunder.
14.3 TRANSFER RENT ADJUSTMENT. In the event Tenant shall make a
permitted Transfer hereunder (unless such Transfer results from the sale of
Tenant or all or substantially all of its business, in which case this Section
14.3 shall not apply), the Minimum Annual Rent specified in Sections 1.1(c) and
(d) shall be adjusted as of the date of such Transfer, to the highest of (a)
the total rental payable by the Transferee pursuant to such Transfer; or (b)
the amount specified in Sections 1.1(c) and (d) for the applicable period.
14.4 REQUIRED DOCUMENTS. Each Transfer to which Landlord has
consented shall be evidenced by a written instrument, the form and content of
which is satisfactory to Landlord, executed by Tenant and Transferee under
which the Transferee shall agree in writing for the benefit of Landlord to
perform and to abide by all of the terms, covenants and conditions of this
Lease to be done, kept and performed by Tenant, including the payment of all
amounts due or to become due under this Lease directly to Landlord and the
obligation to use the Premises only for the purpose specified in Section 1.1(l)
hereof. Tenant agrees to reimburse Landlord for Landlord's reasonable
attorneys' and administrative fees incurred in conjunction with the processing
of and documentation for each proposed Transfer, whether or not the Transfer is
consummated.
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14.5 MERGER AND CONSOLIDATION. If, in the aggregate more than
twenty-five percent (25%) of the total outstanding stock or interest in Tenant
is transferred, assigned or hypothecated in one or more transactions, each such
event shall be deemed a Transfer within the meaning and provisions of this
Article and shall require Landlord's prior written consent; provided, however,
that sales or exchanges of shares of publicly traded stock on national markets,
such as NASDAQ, shall not be deemed a Transfer.
14.6 BANKRUPTCY.
(a) NO BANKRUPTCY ESTATE. If this Lease is assigned to any
person or entity pursuant to the provisions of the United States Bankruptcy
Code, 11 U.S.C. Section 101 et seq. (the "Bankruptcy Code"), any and all
monies or other consideration payable or otherwise to be delivered in
connection with such assignment shall be paid or delivered to Landlord, shall
be and remain the exclusive property of Landlord, and shall not constitute
property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other considerations constituting
Landlord's property under this Section 14.6 not paid or delivered to Landlord
shall be held in trust for the benefit of Landlord and be promptly paid or
delivered to Landlord.
(b) ASSUMPTION. Any person or entity to which this Lease
is assigned pursuant to the provisions of the Bankruptcy Code shall be deemed
without further act or deed to have assumed all of the obligations arising
under this Lease on and after the date of such assignment, including the
obligation to operate the business which Tenant is required to operate pursuant
to Section 1.1(l) hereof.
14.7 EXCEPTION FOR CONCESSIONS. Subject to the prior written consent
of Landlord, which consent shall not be unreasonably withheld or delayed,
Tenant shall be permitted to operate its concessions in the Premises on a joint
venture basis, so long as such an arrangement does not result in any decrease
in the Rent, including, without limitation Percentage Rent, which would
otherwise be due Landlord. Tenant shall at all times keep Landlord informed
about the nature of any such joint venture or similar arrangement, including,
without limitation, the identity of the other party or parties involved, all of
whom shall be subject in all respect to the terms hereof.
ARTICLE 15
OPERATION OF TENANT'S BUSINESS
15.1 CONTINUOUS OPERATION. Tenant covenants and agrees that it will
operate and conduct within the Premises, continuously and uninterruptedly
during the Lease Term, the business which it is required to operate and conduct
under the provisions hereof, during the required operating hours under Section
15.2, except while the
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Premises are untenantable by reason of fire or other unavoidable casualty, and
that it will at all times keep and maintain within and upon the Premises an
adequate stock of merchandise and trade fixtures and have sufficient personnel
to service and supply the demands and requirements of its customers. In the
event Tenant fails, without the prior written consent of Landlord and subject
to Force Majeure, to continuously operate its business in the Premises as
required by this Section 15.1 for a period of fifteen (15) or more consecutive
days, or more than fifteen (15) days in any one calendar year period, then in
addition to all remedies available to Landlord (including, without limitations
injunction and/or damages), Landlord may, but is not obligated to, elect to
terminate this Lease upon written notice of Landlord's intent to Tenant,
whereupon this Lease shall terminate, and Tenant shall vacate the Premises upon
the date specified in Landlord's notice to Tenant. Landlord's notice pursuant
to this Section shall be in lieu of, and not in addition to, the notice and
cure period set forth in Article 18 or any notice and cure period required
under California Code of Civil Procedure Section 1161 (or any similar or
succeeding statute).
15.2 OPERATING HOURS. Commencing with the opening for business by
Tenant in the Premises, and for the remainder of the Lease Term, Tenant shall
open for business at least seven (7) days per week for such hours each day as
are specified in Section 7.1(b) above. Tenant further agrees to have its
window displays, exterior signs and exterior advertising displays adequately
illuminated continuously during those hours determined by Landlord in
Landlord's reasonable business judgment. It is agreed, however, that the
foregoing provision shall be subject to any governmental regulations to which
Tenant may be subject concerning the hours of operation of Tenant's business.
15.3 RULES AND REGULATIONS. Tenant agrees that it will keep the
Premises in a neat, clean and orderly condition and that all trash and rubbish
generated by it shall be deposited within prescribed receptacles in designated
service areas within the Development. Tenant further agrees to cause such
receptacles to be emptied and trash removed at its own cost and expense so as,
on its part, to keep such service areas in a clean and orderly condition.
Tenant shall observe faithfully and comply with and shall cause its employees
and invitees to observe faithfully and comply with reasonable rules and
regulations governing the Development as may from time to time be promulgated
and amended by Landlord, which rules and regulations shall include the
provisions of Exhibit "G" hereof.
15.4 SPECIAL OPERATING COVENANTS.
(a) Notwithstanding anything to the contrary herein, unless
Landlord consents to the contrary, which consent may be withheld in its sole
and absolute discretion, Tenant shall operate a state of the art motion picture
theater on the Premises, which contains not less than forty-five hundred
(4,500) seats and which
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shows primarily current first run movies which are reasonably consistent with
the moral values of Landlord and the residents of the Southern California area.
Without limiting the foregoing, at no time will Tenant offer for viewing "X"
rated films, or their equivalent (if the established rating system of the
Motion Picture Association of America ceases to exist or is modified from its
current standards). Tenant also reserves the right to refrain from showing
films which it believes, in its reasonable discretion, to be injurious to
Tenant's own reputation or offensive to patrons.
(b) Tenant shall use its best efforts, through the design
of the Building, Premises and its sound system, and the operation of said sound
system, to confine within the Premises all sound, noise and vibration generated
by Tenant's operation.
(c) Tenant shall, subject to all applicable city or other
governmental rules and regulations, be permitted to operate on the Premises up
to twelve (12) video or other interactive game machines, provided that all
times during the Term, as it may be extended, said games shall not be audible
from outside the Premises. Said games shall be available for use only by
theater patrons, and Tenant shall monitor the game area and keep its operation
and condition consistent with a family-oriented environment. No such games
shall be pornographic or sexually oriented.
ARTICLE 16
REPAIRS AND MAINTENANCE
16.1 TENANT'S MAINTENANCE OBLIGATIONS. Tenant agrees at all times
from and after the Delivery Date, and at its own cost and expense, to
construct, repair and maintain the Premises and every part thereof in good and
tenantable condition including, but not limited to, the roof structure,
exterior walls, structural portions of the Premises and structural floor,
demising walls, stairways and mezzanine, floor and wall coverings, utility
lines and meters, fire and safety systems, pipes and conduits, plumbing, lights
and other fixtures, heating and air conditioning equipment and ducting, and
sidewalk and landscaping installed pursuant to Exhibit "C," and all other
equipment therein, the storefront or storefronts, including plate glass, all
Tenant's signs, locks and closing devices, and all window sash, casement or
frames, doors and door frames, and all items of repair, maintenance and
improvement or reconstruction as may at any time or from time to time be
required with respect to the Premises by any governmental agency having
jurisdiction. Tenant agrees to operate the air conditioning equipment serving
the Premises during all hours so that inside temperatures of the Premises are
maintained within a range in which a majority of adults will be comfortable in
the Premises. All glass, both exterior and interior, shall be maintained at
Tenant's sole cost and expense, and any glass broken shall be promptly replaced
by Tenant with glass of the same
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kind, size and quality. Tenant's failure to replace broken glass within
seventy-two (72) hours following the occurrence of the breakage, or the failure
by Tenant to replace same with glass of the same kind, size and quality, shall
constitute a material breach. If Tenant has not replaced said glass within the
required time, Landlord may, but shall not be obligated to, replace said glass
at Tenant's sole cost and expense, which cost shall include a reasonable fee
for Landlord's services with respect to same, which fee shall not exceed ten
percent (10%) of the hard costs thereof. Tenant shall reimburse Landlord for
such costs within fifteen (15) days of its receipt of Landlord's invoice for
such costs, and Tenant's failure to pay same in a timely fashion (not to exceed
thirty [30] days) shall be a material breach hereof which may, at Landlord's
sole and absolute discretion, entitle Landlord to terminate this Lease upon
written notice to Tenant.
16.2 TENANT'S FAILURE TO MAINTAIN. If Tenant refuses or neglects to
make repairs and/or maintain the Premises, or any portion thereof, including
Tenant's storefront(s), in a manner reasonably satisfactory to Landlord,
Landlord shall have the right, upon giving Tenant written notice of its
election to do so, to make such repairs or perform such maintenance on behalf
of and for the account of Tenant. In such event, the cost of such work shall
be paid by Tenant promptly upon receipt of bills therefor. Failure of Tenant
to pay any of said charges within fifteen (15) days of receipt of bills
therefore shall constitute a default hereunder. Upon any surrender of the
Premises, Tenant shall deliver the Premises to Landlord, upon the expiration or
earlier termination of this Lease, in good order, condition and state of
repair, ordinary wear and tear excepted, and excepting such items of repair as
may be Landlord's obligation hereunder.
16.3 RIGHT TO ENTER. Tenant agrees to permit Landlord and its
authorized representatives to enter the Premises at all times for the purpose
of making emergency repairs and during usual business hours for the purpose of
inspecting the same. Tenant further agrees that Landlord may go upon the
Premises and make any necessary repairs thereto and perform any work therein
which may be necessary to comply with any laws, ordinances, rules or
regulations of any public authority, any fire rating bureau, or of any similar
body, or that Landlord may deem necessary to prevent waste or deterioration in
connection with the Premises if Tenant does not make or cause such repairs to
be made or performed or cause such work to be performed promptly after receipt
of written demand from Landlord. Nothing herein contained shall imply any duty
on the part of Landlord to do any such work which, under provisions of this
Lease, Tenant may be required to do, nor shall Landlord's failure to elect to
perform such work constitute a waiver of Tenant's default. No exercise by
Landlord of any rights herein reserved shall entitle Tenant to any damage for
any injury or inconvenience occasioned thereby, to any abatement of rent, or to
terminate this Lease.
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16.4 GRANT OF LICENSE. Tenant hereby grants to Landlord such
licenses and/or easements in, over, and under the Premises or any portion
thereof as shall be reasonably required for the installation or maintenance of
mains, conduits, shafts, pipes or other facilities to serve any other portion
of the Development including, but not by way of limitation, the premises of any
other occupant of the Development; provided, however, that Landlord shall pay
for any alteration required on or to the Premises as a result of any such
exercise, occupancy under or enjoyment of any such lien or easement and,
provided further, that no exercise, occupancy under or enjoyment of such
license or easement shall result in any unreasonable permanent interference
with Tenant's use, occupancy or enjoyment of the Premises as contemplated by
this Lease.
16.5 HEATING AND AIR CONDITIONING EQUIPMENT.
(a) MAINTENANCE. The installation of heating and air
conditioning equipment serving the Premises is described in Exhibit "C."
Tenant shall at all times during the Term hereof, as it may be extended, keep
in good order and repair all heating and air conditioning equipment related to
the Building and the Premises (the "HVAC"). Tenant agrees to enter into a
regularly scheduled preventative maintenance/service contract (the "Service
Contract") within thirty (30) days after the Rental Commencement Date with a
maintenance contractor approved by Landlord, for the servicing of the HVAC.
The Service Contract shall include all scheduled maintenance as recommended by
the equipment manufacturer as set forth in the operation/maintenance manual.
Tenant acknowledges that it has full and complete responsibility to maintain,
repair and replace all components of the HVAC, and that while the entering into
of the Service Contract is required, it is not dispositive of Tenant's
obligations with respect to the HVAC. Notwithstanding the foregoing, Landlord
may, (but shall not be obligated to), if it determines that Tenant is not
adequately performing its obligations hereunder or that such a change is
otherwise appropriate, elect to maintain the heating and air conditioning
equipment serving the Premises, in which event, Tenant shall pay to Landlord
all costs and expenses for the repair, maintenance and replacement of all HVAC
equipment for the Premises. If Tenant fails to maintain the HVAC and Landlord
elects to perform such work, Tenant shall pay to Landlord one-twelfth (1/12) of
an amount estimated by Landlord to be such heating and air conditioning
expenses for the ensuing calendar year or balance thereof (including reasonable
reserves). Within sixty (60) days following the end of each calendar year,
Landlord shall furnish Tenant a statement covering the preceding calendar year
and the payments made by Tenant with respect to such calendar year as set forth
above. If such HVAC expenses exceeds Tenant's payments so made, Tenant shall
pay Landlord the deficiency within twenty (20) days after receipt of Landlord's
statement. If Tenant's payments exceed such heating and air conditioning
expenses, Landlord shall have the option of (i) paying such excess to Tenant
upon Landlord's delivery of such statement; or (ii) allowing Tenant to credit
the excess against payments next
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thereafter to become due to Landlord for such expenses as set forth above.
Failure of Tenant to pay any of the charges required by this Section 16.5 to be
paid when due shall constitute a material default under the term of this Lease.
(b) COMPONENTS. Expenses incurred in connection with the
operation, maintenance, repair and replacement of HVAC equipment by the party
performing same shall include, but not be limited to, all sums expended in
connection with such HVAC equipment for and/or replacing filters, repairing
and/or replacing worn out parts, repairing and/or replacing utilities, duct
work and machinery maintenance and insurance contracts carried on the HVAC
equipment, and all other items of expense incurred by such party in connection
with the operation, maintenance, repair and replacement of the HVAC equipment.
ARTICLE 17
DAMAGE OR DESTRUCTION
17.1 PREMISES INSURED CASUALTY. In the event that the Premises are
partially or totally destroyed by fire or any other peril covered by insurance
maintained by Tenant, or required to be maintained by Tenant under Section 9.3,
and the uninsured damage (excluding deductibles) is less than twenty-five
percent (25%) of the replacement cost of the Building, Tenant shall, within a
period of thirty (30) days after the occurrence of such destruction, commence
reconstruction and restoration of the Premises and prosecute the same
diligently to completion, and use reasonable efforts to complete such work
within one hundred eighty (180) days of the casualty.
17.2 PREMISES UNINSURED CASUALTY. In the event that the Premises are
partially or totally destroyed as a result of any casualty or peril not covered
or required to be covered by Tenant's insurance under Section 9.3 (or any other
insurance maintained by Tenant whether or not required under Section 9.3), and
the cost to repair exceeds twenty-five percent (25%) of the replacement cost of
the Building, Tenant shall, within a period of thirty (30) days after the
occurrence of such destruction (a) commence reconstruction and restoration of
the Premises and prosecute the same diligently to completion in the manner
provided in Section 17.1, in which event this Lease shall continue in full
force and effect; or (b) notify Landlord, in writing, that it elects not to so
reconstruct or restore the Premises, in which event this Lease shall cease and
terminate as of the date of service of such notice, unless Landlord, within
thirty (30) days of such notice, notifies Tenant that Landlord shall fund the
uninsured amounts exceeding twenty-five percent (25%) of the replacement cost
of the Building. If Landlord makes such an election, or if Tenant fails to
timely give Landlord notice under subsection (b), Tenant shall thereafter
proceed diligently to complete the reconstruction, and the Lease shall not be
terminated.
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The procedures for payment of the Tenant Allowance under Exhibit "C" shall
apply to Landlord's reimbursement to Tenant of reconstruction costs to be paid
by Landlord under this section. In the event of such reconstruction, Tenant
shall be obligated for the restoration of the Premises in accordance with the
approved Final Plans, with any material deviation therefrom subject to
Landlord's consent, in accordance with the same procedures for Landlord's
review under Exhibit "C," as well as Tenant's other leasehold improvements,
trade fixtures and other personal property on the Premises.
17.3 DAMAGE TO OTHER PORTIONS OF THE DEVELOPMENT. If during the term
hereof any of the buildings and improvements located on the Development are
damaged or destroyed by fire or other casualty or any cause whatsoever, either
in whole or in part, Landlord shall either (a) repair and rebuild the same
promptly to its previous condition or better, or (b) promptly remove all
debris, demolish such building and improvements and clear the site so that it
has a neat and clean appearance. The election of Landlord to proceed pursuant
to clause (b) shall not impair Landlord's right to construct new improvements
on the Parcels then owned by Landlord.
17.4 DAMAGE TO COMMON AREAS. If the Common Areas are damaged or
destroyed by a casualty, Landlord shall with due diligence, remove any
resulting debris and repair from the Common Areas and/or rebuild the damaged
Common Areas to substantially the same function and appearance as existing
prior to the casualty.
17.5 RIGHT TO PROCEEDS. If this Lease is terminated pursuant to any
of the provisions of this Article 17, Landlord shall be entitled to one hundred
percent (100%) of the insurance proceeds from the Insurance required to be
maintained by Tenant under Section 9.3 (and Tenant shall pay to Landlord the
amount of any deductible on such policy applicable to such casualty), or from
any other casualty/ property policy maintained by Tenant pertaining to Tenant's
Building (other than for Tenant's personal property, the proceeds for which
shall be solely payable to Tenant).
17.6 CASUALTY TO PARKING AREAS.
(a) If all or a portion of the Parking Areas shall either
be rendered unusable because of fire or other casualty in accordance with the
terms so that less than the number of Parking Spaces specified in Section
1.3(d) remain useable and available for non- exclusive use by Tenant and its
Permittees; and
(b) Landlord has not provided Tenant with substitute
Parking Spaces within one (1) year after such fire or other casualty, or
unavailability of use, at a location reasonably approved by Tenant so that at
least the number of Parking Spaces specified in Section 1.3(d) are useable and
available for non-exclusive use by Tenant and its customers, invitees and
employees (which approval Tenant will not unreasonably withhold or delay),
then, if such unavailability of a
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minimum of the number of Parking Spaces specified in Section 1.3(d) shall
continue for more than one (1) year after the date of such fire or other
casualty, or unavailability of use, Tenant shall have the right to terminate
this Lease by notice to Landlord given within thirty (30) days after the
expiration of such one-year period (but prior to restoration of at least the
number of Parking Spaces).
17.7 DAMAGE TO PREMISES NEAR END OF TERM. Notwithstanding the
foregoing, in the event that the Premises are partially or totally destroyed
during the last three (3) years of the Initial Term, or the last three (3)
years of any Extension Term, Landlord and Tenant each shall have the option to
terminate this Lease by giving written notice to the other of the exercise of
such option within thirty (30) days after such destruction, in which event this
Lease shall cease and terminate as of the date of service of such notice.
However, if Tenant with Landlord's consent, agrees to exercise a then existing
option to extend the Term in advance of the period in which said option would
otherwise be exercisable, thereby extending the Term an additional five (5)
years, Landlord shall not have the option to terminate the Lease, but rather
Tenant shall be obligated to reconstruct the Premises on the same basis as set
forth in Section 17.1 above. Tenant's election to exercise said option shall
also be deemed to be Tenant's irrevocable agreement to perform its repair and
reconstruction obligations set forth in Section 17.1. For the purposes of this
Section, partial destruction shall be deemed to be a destruction to an extent
of at least one-third (1/3) of the full replacement cost of the Premises as of
the date of destruction.
17.8 RELEASE OF LIABILITY. In the event of any termination of this
Lease in accordance with this Article, the parties shall be released thereby
without further obligation to the other party coincidental with the surrender
of possession of the Premises to Landlord except for matters which have
theretofore accrued and are then unpaid or unperformed and except for survival
of the covenants and indemnifications provided in Sections 3, 9.1, 25, 29.2(d),
29.12, 29.15 and 29.16.
17.9 ABATEMENT OF RENT. In the event of reconstruction and
restoration as herein provided, and provided Tenant has maintained the business
interruption or loss of income insurance required pursuant to Section 9.3(e),
to the extent that the proceeds of such business interruption or loss of income
insurance may be exhausted during the period of reconstruction and restoration,
Minimum Annual Rent and Common Area Expenses payable hereunder shall be
thereafter abated proportionately with the degree to which Tenant's use of the
Premises is impaired during the remainder of the period of reconstruction and
restoration; provided, however, the amount of Minimum Annual Rent and Common
Area Expenses abated pursuant to this Section 17.9 shall in no event exceed the
amount of loss of rental insurance proceeds actually received by Landlord.
Tenant shall continue the operation of its business on the Premises during any
such period to the extent reasonably practicable from the standpoint of
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prudent business management, and the obligation of Tenant to pay all charges,
except the entire Minimum Annual Rent and all Common Area Expenses, shall
remain in full force and effect. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of the use of the whole or any
part of the Premises, Tenant's personal property or any inconvenience or
annoyance occasioned by such destruction, reconstruction or restoration.
Tenant hereby waives any statutory rights of termination which may arise by
reason of any partial or total destruction of the Premises which Landlord is
obligated to restore or may restore under any of the provisions of this Lease.
ARTICLE 18
COMMON AREAS, PARKING AREAS AND EXPENSES
18.1 USE OF COMMON AREAS. Those certain areas and facilities of the
Development which are intended to be used for the common use, convenience and
benefit of the customers and patrons of Tenant and of the other tenants, owners
and occupants of the Development such as plaza areas, walkways, driveways,
landscaping and lighting, and all common utility lines, service facilities and
equipment, are referred to herein as "Common Areas." Except as otherwise
specifically provided in this Lease, Tenant and its employees and invitees are
authorized, empowered and privileged to use the Common Areas in common with
other authorized persons, as determined by Landlord, during the Lease Term.
Landlord shall keep or cause to be kept said Common Areas in a neat, clean and
orderly condition, properly lighted and landscaped, and shall repair any damage
to the facilities thereof.
18.2 PARKING AREAS. [TO BE INSERTED]
18.3 COMMON AREA EXPENSE.
(a) TENANT'S PRO RATA SHARE. The expenses incurred by
Landlord in connection with the operation, maintenance, insurance, repair and
replacement and/or usage of the Common Areas [AND PARKING AREAS] (collectively,
the "Common Area Expenses") shall be apportioned among the various occupants
and tenants of the Development, and Tenant hereby agrees to pay to Landlord, as
Additional Rent, its Proportionate Share (as defined herein) of such Common
Area Expenses. Tenant's "Proportionate Share" shall mean Tenant's share based
upon a fraction, the numerator of which is the square footage of floor area of
the Premises as determined in Section 2.2, and the denominator of which is the
total square feet of floor area of all buildings in the Development for the
period in question for which certificates of occupancy have been issued.
Landlord shall use due diligence and commercially reasonable efforts to
complete construction and obtain certificates of occupancy for all buildings
Landlord elects to construct in the Development.
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(b) PAYMENT OF COMMON AREA EXPENSES. Commencing on the
Rental Commencement Date and thereafter on the first (1st) day of each calendar
month of the Lease Term, Tenant shall pay to Landlord one-twelfth (1/12) of an
amount estimated by Landlord to be Tenant's share of such total annual Common
Area Expenses for the ensuing calendar year or balance thereof. Landlord may
adjust the Common Area Expenses charged to Tenant at the end of any calendar
year on the basis of Landlord's experience and reasonably anticipated costs and
a reasonable reserve for unanticipated expenses. On or before April 1 of each
calendar year, Landlord shall furnish Tenant a statement covering the calendar
year just expired showing the total Common Area Expenses for the preceding
calendar year, the amount of Tenant's share of such Common Area Expenses, and
the payments made by Tenant with respect to such calendar year as set forth
above. If Tenant's share of such Common Area Expenses exceeds Tenant's
payments so made, Tenant shall pay Landlord the deficiency within twenty (20)
days after receipt of Landlord's statement. If Tenant's payments exceed
Tenant's share of such Common Area Expenses, Landlord shall pay such excess to
Tenant within twenty (20) days of Landlord's delivery of such statement.
Failure of Tenant to pay any of the charges required by this Article to be paid
when due shall constitute a material default under the terms of this Lease. If
Tenant fails to give Landlord written notice that Tenant objects to any Common
Area Expenses, taxes or insurance within one (1) year after Tenant receives
Landlord's annual statement of such expenses, Tenant shall be deemed to have
conclusively accepted such statement as correct and to have waived any and all
rights at law or in equity to object to the Common Area Expenses, including
taxes or insurance, set forth in such statement.
(c) AUDIT RIGHT. Tenant shall have the right to review,
during Landlord's normal business hours, the books and records of Landlord
relating to the Common Area Expenses, by providing Landlord with reasonable
notice of its request to do so. Such review shall be limited to books and
records covering the current and prior Lease Years only, and shall be
exercisable no more than once during any Lease Year. All costs related to such
review shall be borne by Tenant, unless such audit reveals, to Landlord's
reasonable satisfaction, that Landlord has overcharged Tenant with respect to a
Lease year of expenses which is considered by Landlord to be settled, by five
percent (5%) or more of Common Area Expenses, in which case Landlord shall bear
the cost of such audit.
18.4 EXPENSES INCLUDED. Expenses incurred pursuant to Section 18.3
shall include, but are not limited to, all sums expended in connection with the
Common Areas and Parking Areas for all general maintenance, repairs,
replacements and restoration, resurfacing, painting, cleaning, sweeping and
janitorial services; maintenance and repair of sidewalks, gutters, and curbs;
sprinkler systems, planting and landscaping including maintenance and
replacement thereof; lighting and other utilities including, without
limitation, gas, water, electricity, directional signs and other markers and
bumpers;
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lighting fixtures and systems (including replacement of tubes and bulbs as
necessary), storm drainage systems, irrigation systems and any other utility
systems; repair of signs; maintenance, repair and replacement of mechanical
equipment including automatic door openers, if any, installation, repair and
replacement of all security systems and trash compactors or other similar
devices; personnel to implement such services including, if Landlord deems
necessary, the cost of security guards or devices; Landlord's share of real and
personal property taxes and governmental charges, fees or assessments of any
land or nature on the facilities, improvements and land comprising the Common
Areas; the cost of any capital improvements made to the Premises or the Common
Areas by Landlord that reduce Common Area Expenses or that are required under
any governmental law or regulation not applicable to the Development at the
time it was constructed; premiums for public liability, property damage, fire
and extended coverage insurance (including such other insurance Landlord's
Mortgagee deems to be necessary or desirable) together with insurance against
sprinkler damage, vandalism, malicious mischief, and any other occurrences on
the Common Areas; and an amount equal to seventy-five cents (75c.) per square
foot of floor area of the Demised Premises for the right to use the Parking
Areas (the "Parking Cost"). The Parking Cost shall be adjusted annually by
reference to the increase, if any, in the "Index" (as defined in Section 18.10)
from the Rent Commencement Date to the first anniversary of the Rent
Commencement Date, and each annual anniversary date thereafter during the term.
Landlord shall also be entitled to receive an allowance for Landlord's
supervision of said Common Areas and Common Area Expenses in an amount equal to
ten percent (10%) of the total of the aforementioned expenses (excluding Real
Property Taxes) for each Lease Year (which amount shall be inclusive of any
management expenses paid to a third party property manager and charged herein
as a Common Area Expense). In the event Landlord shall contest any tax or
assessment affecting the Common Areas, the expenses involved in such contest
shall be part of the Common Area Expenses, regardless of whether such contest
also includes Real Property Taxes on the Building. The preceding list is for
definitional purposes only, and shall not impose any obligation upon Landlord
to incur such expenses or provide such services.
18.5 EXPENSES EXCLUDED. The following expenses shall not be included
as Common Area Expenses:
(a) Attorneys' fees and other costs relating to
negotiations and disputes with existing tenants or prospective tenants;
(b) Compensation to principals or affiliates of Landlord
for maintenance or repairs to the Common Area in excess of compensation that
would be payable to a third party for similar services under a bona fide
contract negotiated at arm's length;
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(c) Depreciation, equipment replacements, repairs and other
items that constitute capital expenses under generally accepted accounting
principles (except to the extent that reasonable amortization of any such item
for any year does not exceed the resulting Common Area Expenses savings for
such year);
(d) Costs resulting from violations by Landlord and/or
other tenants of laws, or breaches of leases and other contracts;
(e) Interest, amortization, fees and charges relating to
indebtedness of the Landlord, except as provided in subsection (g) below, or
which results from the acquisition or leasing of equipment used in the
Development;
(f) Advertising and promotions cost, subject to Article 27
below;
(g) Rent and other leasing costs for capital items (other
than equipment that is used for maintenance, repair, janitorial or similar
services in the Development);
(h) Losses covered by insurance proceeds paid to Landlord;
(i) Any expenses in connection with the original
construction of the Common Areas, the original installation of equipment or
fixtures in the Common Areas, or capital expenditures for improvements or
additions to the Common Areas in excess of $10,000.00 per year, other than
expenses for replacement of any portion of the Common Areas or any improvements
therein;
(j) Costs relating to artworks, other than reasonable costs
incurred for cleaning and minor maintenance, and costs incurred under any
governmentally mandated program requiring the placement of artworks in the
Common Areas;
(k) Costs relating to the correction of violations of law
relating to the Common Areas, which violations existed prior to the execution
of this Lease, and are not conditions which, but for the operations of Tenant,
would not be a violation of law;
(l) Any costs paid or required to be paid directly and
exclusively by other tenants, and all costs not reasonably related to or
reasonably allocable to the operation, maintenance, repair or usage of the
Common Areas and which are not specifically described in Section 18.3 above;
(m) Any costs related to casualty losses or to repairs on
other buildings in the Development which are intended to be used for the
exclusive benefit of individual tenants, rather than occupants of the
Development as a whole.
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18.6 ENLARGEMENT OF COMMON AREAS. Should Landlord acquire or make
available additional land not shown as part of the Development Site on Exhibit
"A-2" and make the same available as Common Areas, the expenses incurred by
Landlord in connection with the operation, maintenance, repair and replacement
of Common Areas also shall include all of the aforementioned expenses incurred
and paid in connection with said additional land.
18.7 COMMON AREA RULES AND REGULATIONS.
(a) Landlord shall at all times have the right and
privilege of determining the nature and extent of the Common Areas, and of
making such changes therein and thereto from time to time which in its opinion
are deemed to be desirable and for the best interests of all persons using such
Common Areas, including the location and relocation of driveways, entrances,
exits, the direction and flow of traffic, designation of prohibited areas,
landscaped areas and all other facilities thereof.
(b) Nothing contained herein shall be deemed to create any
liability upon Landlord for any damage to motor vehicles of customers or
employees or for loss of property from within such motor vehicles, unless
caused by the gross negligence or willful misconduct of Landlord, its agents,
servants or employees.
(c) Landlord shall have the right to establish reasonable
rules and regulations and, from time to time, to change, alter and amend, and
to enforce against Tenant and the other users of the Common Areas, such
reasonable rules and regulations (including the exclusion of, or designation of
area(s) for, employees' parking) as may be deemed necessary or advisable by
Landlord for the proper and efficient operation and maintenance of the Common
Areas. The rules and regulations herein provided for may include, without
limitation, the hours during which the Common Areas shall be open for use.
Tenant shall comply with a system or systems of validation or similar operation
of the Parking Areas which may be imposed under the Parking Agreement,
including a system of charges against non-validated parking checks of users,
and Tenant agrees to conform to and abide by all such rules and regulations in
its use and the use of its customers and patrons with respect to said Parking
Areas; provided, however, that all such rules and regulations and such types of
operation or validation of parking checks and other matters affecting the
customers and patrons of Tenant shall apply equally and without discrimination
to all persons entitled to the use of such Parking Areas, and provided,
further, that validations for parking for Tenant's Permittees shall be made
available to Tenant at no charge.
18.8 CONTROL OF COMMON AREA. Landlord shall at all times during the
Lease Term have the sole and exclusive control of the driveways, entrances and
exits and the sidewalks and pedestrian passageways and other Common Areas and
may, at any time and from time to time during the Lease Term, exclude and
restrain any person from use or occupancy
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thereof excepting, however, bona fide customers, patrons and service suppliers
of Tenant and other tenants of Landlord who make use of such areas in
accordance with the rules and regulations established by Landlord from time to
time with respect thereto. The rights of Tenant in and to the Common Areas
shall at all times be subject to the rights of Landlord, and the other tenants
of Landlord, if any, to use the same in common with Tenant, and it shall be the
duty of Tenant to keep all of such areas free and clear of any obstructions
created or permitted by Tenant or resulting from Tenant's operation and to
permit the use of any of such areas only for ingress and egress by customers,
patrons and service suppliers to and from the Building occupied by Tenant and
the other tenants of Landlord. If in the opinion of Landlord unauthorized
persons are using any of the Common Areas by reason of the presence of Tenant
in the Premises, Tenant, upon demand of Landlord, shall enforce the covenants,
rules and regulations provided for herein against and shall cause the removal
of, all such unauthorized persons by appropriate proceedings. Nothing herein
shall affect the rights of Landlord at any time to remove any such unauthorized
persons from the Common Areas or to restrain the use of any of such areas by
unauthorized persons.
18.9 EMPLOYEE PARKING RESTRICTIONS. It is acknowledged and agreed that the
employees of Tenant and the other tenants within the Development and employees
of other occupants of the Development shall not only be permitted to park their
automobiles or other vehicles in the Parking Areas which may from time to time
be designated for patrons of the Development. Landlord at all times shall have
the right to designate the particular parking area to be used by any or all of
such employees and any such designation may be changed by Landlord from time to
time at Landlord's sole and absolute discretion. Tenant and its employees shall
park their cars only in those portions of the parking area, if any, designated
for that purpose by Landlord, and shall attach to their cars any identification
stickers or passes required by Landlord. Tenant shall furnish Landlord with
its and its employees' license numbers within five (5) days after requested by
Landlord, and Tenant shall thereafter notify Landlord of any change within five
(5) days after such change occurs. If Tenant or its employees fail to park
their vehicles in designated parking areas, Landlord may charge Tenant Fifteen
and 00/100 Dollars ($15.00) per day for each day or partial day per vehicle
parked in any areas other than those designated; provided, however, Landlord
agrees to give Tenant written notice of the first violation of this provision
and Tenant shall have two (2) days thereafter within which to cause the
violation to be discontinued and, if not discontinued within said 2-day period,
then the Fifteen and 00/100 Dollar ($15.00) per day fine shall commence. After
notice of such violation, no prior notice of any subsequent violation shall be
required. All amounts due under the provisions of this paragraph shall be
payable by Tenant within ten (10) days after demand therefor. Tenant hereby
authorized Landlord to tow away from the Development any vehicle or vehicles
belonging to Tenant or Tenant's employees which are parked in violation of the
foregoing or
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the rules and regulations issued by Landlord from time to time and/or to attach
violations tickers or notices to such vehicles. Tenant shall be entitled to
the exclusive use of at least two (2) parking spaces adjacent to the Theater
Parcel as may be shown on the Final Plans.
18.10 INDEX. As used herein, the term "Index" shall mean the United
States Department of Labor, Bureau of Labor Statistics, Consumer Price Index
for all urban consumers for the Los Angeles-Anaheim-Riverside Statistical Area,
on the basis of 1982-1984 = 100. In the event the Index is no longer published
by the Bureau of Labor Statistics, Landlord shall substitute an index published
by an agency of the United States government which is most nearly equivalent to
the Index at such time.
ARTICLE 19
TENANT'S DEFAULTS; REMEDIES
19.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default and material breach of this Lease by Tenant:
(a) Any failure by Tenant to pay any Rent or any other
charge required to be paid under this Lease, or any part thereof, for a period
of ten (10) days after written notice from Landlord to Tenant (provided,
however, any notice shall be in lieu of, and not in addition to, any notice
required under Section 1161 of the Code of Civil Procedure of California or any
similar, superseding statute); or
(b) The failure to timely commence, pursue and complete
Tenant's Work in accordance with Exhibit "C," where such failure continues for
a ten (10) day period after written notice thereof from Landlord to Tenant; or
the failure to open for business or the cessation of Tenant's business from the
Premises or closure of the Premises following the initial construction of
Tenant's Work as provided in Section 7.1(b) and Section 15.4(b); or
(c) Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that, if the nature of such default
is such that the same cannot reasonably be cured within a thirty (30) day
period, Tenant shall not be deemed to be in default if it shall commence such
cure within such thirty (30) day period and thereafter diligently pursue such
cure to completion (provided, however, any notice shall be in lieu of, and not
in addition to, any notice required under Section 1161 of the Code of Civil
Procedure of California or any similar, superseding statute); or
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(d) Abandonment or vacation of the Premises by Tenant; or
(e) A general assignment by Tenant of this Lease for the
benefit of creditors or the appointment of a receiver to take possession of all
or substantially all of the assets of Tenant, unless possession is restored to
Tenant within thirty (30) days, or any 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 thirty (30) days; or
(f) A general assignment by any Guarantor of this Lease for
the benefit of creditors, or the filing by or against any Guarantor of any
proceeding under insolvency or bankruptcy law, unless in the case of a
proceeding filed against any Guarantor the same is dismissed within ninety (90)
days, or the appointment of a receiver or trustee to take possession of all or
substantially all of the assets of any Guarantor, unless possession is restored
to such Guarantor within thirty (30) days, provided, however, that no such
event shall be an event of default hereunder if, at the time of such event and
at all times thereafter, the other Guarantors who are not subject to such
assignment, filing, or appointment maintain a combined net worth of $5,000,000
(measured in accordance with generally accepted accounting principles).
19.2 REMEDIES. In the event of an uncured default by Tenant,
Landlord, in addition to any other remedies available to it at law or in
equity, including injunction and/or draw down of the First LC and Second LC, at
its option, and without further notice or demand of any kind to Tenant or any
other person may:
(a) TERMINATION. Terminate this Lease and declare the
Lease Term ended and re-enter the Premises and take possession thereof and
remove all persons and property therefrom, and Tenant shall have no further
claim thereon or hereunder.
(b) CONTINUE LEASE. Have the remedy described in
California Civil Code Section 1951.4 (Landlord may continue the Lease in effect
after Tenant's breach and recover Rent as it becomes due).
(c) TERMINATION AFTER RE-ENTRY. Even though Landlord may
have re-entered the Premises, thereafter elect to terminate this Lease and all
of the rights of Tenant in or to the Premises.
(d) BANKRUPTCY. In addition to any rights or remedies
hereinbefore or hereafter conferred upon Landlord under the terms of this
Lease, the following remedies and provisions shall specifically apply in the
event a bankruptcy proceeding is filed by or against Tenant.
(i) Any receiver or trustee in bankruptcy shall
either expressly assume or reject this Lease within sixty (60) days
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following the entry of an "Order for Relief" or within such earlier time as may
be provided by applicable law;
(ii) In the event of an assumption of this Lease by
a debtor or by a trustee, such debtor or trustee shall, within fifteen (15)
days after such assumption (A) cure any default or provide adequate assurance
that defaults will be promptly cured; (B) compensate Landlord for actual
pecuniary loss or provide adequate assurance that compensation will be made for
actual pecuniary loss including, but not limited to, all attorneys' fees and
costs incurred by Landlord resulting from any such proceedings; and (C) provide
adequate assurance of future performance;
(iii) Where a default exists in this Lease, the trustee
or debtor assuming this Lease may not require Landlord to provide services or
supplies incidental to this Lease before its assumption by such trustee or
debtor, unless Landlord is compensated for such services and supplies provided
and the default cured before the assumption of such Lease;
(iv) The debtor or trustee may assign this Lease
only if each of the following conditions is satisfied: (A) the Lease is
assumed; (B) adequate assurance of future performance by the assignee is
provided, whether or not the Lease is then under default; and (C) any
consideration paid by any assignee in excess of the rental reserved in this
Lease shall be the sole property of, and paid to, Landlord.
(v) Landlord shall be entitled to the fair market
value for occupancy of the Premises and the services provided by Landlord (but
in no event less than the rental reserved in this Lease) subsequent to the
commencement of a bankruptcy event;
(vi) Any security deposit given by Tenant to
Landlord to secure the future performance by Tenant of all or any of the terms
and conditions of this Lease, shall be automatically transferred to Landlord
upon the entry of an "Order of Relief;"
(vii) The parties agree that Landlord is entitled to
adequate assurance of further performance of the terms and provisions of this
Lease in the event of any assumption and assignment of the Lease under the
provisions of the Bankruptcy Code. For purposes of any such assumption or
assignment, the parties agree that the term "adequate assurance" shall include,
without rotation, the following:
A. Any proposed assignee must have
demonstrated to Landlord's satisfaction a net worth (as defined in accordance
with generally accepted accounting principles consistently applied) of, an
amount sufficient to assure that the proposed assignee will have the resources
with which to conduct the business to be operated in the Premises, including
the payment of all rent and other charges hereunder, for the balance of the
Lease Term. The financial
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condition and resources of Tenant are material inducements to Landlord entering
into this Lease.
B. Any proposed assignee must have
engaged in the permitted use described in Section 1.1(l) hereof for at least
five (5) consecutive years prior to the proposed assignment.
C. Any proposed assignee must have had
minimum sales at each location at which it operated such a business equal to at
least seventy-five percent (75%) of Tenant's average monthly sales per screen
at the Premises for the eighteen (18) month period preceding initiation of a
proceeding under the Bankruptcy Code.
D. In entering into this Lease, Landlord
considered extensively Tenant's permitted use and determined that such
permitted business would add substantially to the tenant mix in the
Development, and were it not for the Tenant's agreement to operate only
Tenant's permitted business on the Premises, Landlord would not have entered
into this Lease. Landlord's operation of the Development will be materially
impaired if a trustee in bankruptcy or any assignee of this Lease operates any
business other than Tenant's permitted business.
E. The provisions of Sections 7.1 and
29.19 of this Lease regarding permitted uses and competing locations,
respectively, were a material inducement to Landlord to enter into this Lease.
Any individual or entity proposed by a trustee in bankruptcy to be an assignee
of this Lease shall comply with the provisions of such Sections of this Lease,
and must assume and agree to be personally bound by each term, provision and
covenant of this Lease.
F. Any assumption of this Lease by a
proposed assignee shall not adversely affect Landlord's relationship with any
of the remaining tenants in the Development, taking into consideration any and
all other "use" clauses and/or "exclusivity" clauses which may then exist under
such tenants' leases with Landlord.
(e) NO LEASE TERMINATION. Should Landlord have re-entered
the Premises under the provisions of subparagraph (b) above, Landlord shall not
be deemed to have terminated this Lease or the liability of Tenant to pay any
rental or other charges thereafter accruing, or to have terminated Tenant's
liability for damages under any of the provisions hereby by any action in
unlawful detainer or otherwise to obtain possession of the Premises, unless
Landlord shall have notified Tenant in writing that it has so elected to
terminate this Lease, and Tenant further covenants that the service by Landlord
of any notice pursuant to the unlawful detainer statutes of the State of
California and the surrender of possession pursuant to such notice shall not
(unless Landlord elects to the contrary at the time of or at any time
subsequent to the serving of such notice and such
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election is evidenced by a written notice to Tenant) be deemed to be
termination of this Lease. In the event of any entry or taking possession of
the Premises as aforesaid, Landlord shall have the right, but not the
obligation, to remove therefrom all or any part of the personal property
located therein and may place the same in storage at a public warehouse at the
expense and risk of Tenant.
(f) LEASE TERMINATION. Should Landlord elect to terminate
this Lease pursuant to the provisions of subparagraphs (a) or (c) above,
Landlord may recover from Tenant as damages the following:
(i) The worth at the time of the award of any
unpaid rent and other charges which had been earned at the time of termination;
plus
(ii) The worth at the time of the award of the
amount by which the unpaid rent and other charges which would have been earned
after termination until the time of the award exceeds the amount of the loss of
such rental and other charges that Tenant proves could have been reasonably
avoided; plus
(iii) The worth at the time of the award of the amount
by which the unpaid rent and other charges for the balance of the Lease Term
after the time of the award exceeds the amount of the loss of such rental and
other charges that Tenant proves could have been reasonably avoided; plus
(iv) Any other amount necessary to compensate
Landlord for all of the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom including, but not limited to, any
costs or expenses incurred by Landlord in (A) retaking possession of the
Premises, including reasonable attorneys' fees thereof; (B) maintaining or
preserving the Premises after such default; (C) preparing the Premises for
reletting to a new tenant, including repairs or alterations to the Premises for
such reletting; (D) leasing commissions; and (E) any other costs necessary or
appropriate to relet the Premises; plus
(v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time
by applicable California law.
19.3 COMPUTATIONS. For the purposes of the preceding paragraph, all
rental and charges other than Minimum Annual Rent including, but not limited
to, Common Area Expenses shall be computed on the basis of the average monthly
amount thereof accruing during the twelve (12) month period immediately
preceding notice to Tenant of Tenant's default unless a twelve (12) month
period of this Lease has not elapsed, in which case the average monthly amount
shall be based upon the entire period of Tenant's occupancy of the Premises.
In the event of default, all of Tenant's fixtures, furniture, equipment,
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improvements, additions, alterations and other personal property shall remain
on the Premises and, during the period of such default, Landlord shall have the
right to require Tenant to remove the same forthwith.
19.4 DEFINITION OF WORTH AT THE TIME OF AWARD. As used in
subsections (i) and (ii) of Section 19.2(f) above, the "worth at the time of
the award" shall be computed by allowing interest at the rate of ten percent
(10%) per annum or the maximum interest rate permitted by law, whichever is
less. As used in subsection (iii) of Section 19.2(f) above, the "worth at the
time of the award" shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award, plus
one percent (1%).
19.5 EFFORTS TO RELET. For the purposes of this Article, Tenant's
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Premises, by its acts of maintenance or preservation with
respect to the Premises, or by appointment of a receiver to protect Landlord's
interests hereunder. The foregoing enumeration is not exhaustive, but merely
illustrative of acts which may be performed by Landlord without terminating
Tenant's right to possession.
19.6 NO WAIVER. The waiver by Landlord of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained. The subsequent acceptance
of rent by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease other than the
failure of Tenant to pay the particular rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of acceptance of such
rent. No covenant, term or condition of this Lease shall be deemed to have
been waived by Landlord unless such waiver is in writing and executed by
Landlord.
ARTICLE 20
DEFAULT BY LANDLORD
Landlord shall not be in default hereunder unless Landlord fails to perform
the obligations required of Landlord within a reasonable time, but in no event
later than thirty (30) days after written notice by Tenant to Landlord and,
following Landlord's failure to act within such thirty (30) day notice period,
to each Mortgagee whose name and address shall have theretofore been furnished
to Tenant in writing specifying wherein Landlord has failed to perform such
obligation; provided, however, if the nature of Landlord's obligation is such
that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord commences
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performance within such thirty (30) day period and thereafter diligently
prosecutes the same to completion. In the case of a default by Landlord, prior
to Tenant's exercise of any remedy, the holder of any mortgage or deed of trust
encumbering the Premises shall have the right, but not the obligation, to cure
such a default. In no event shall Tenant have the right to terminate this
Lease as a result of Landlord's default, and Tenant's remedies shall be limited
to an action at law for monetary damages. 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.
ARTICLE 21
ATTORNEYS' FEES
21.1 LEGAL ACTIONS BETWEEN LANDLORD AND TENANT. In the event that
either party shall institute any legal action or proceeding against the other
relating to the provisions of this Lease, or any default hereunder, the
unsuccessful party in such action or proceeding agrees to pay to the prevailing
party the reasonable attorneys' fees and costs actually incurred by the
prevailing party.
ARTICLE 22
EMINENT DOMAIN
22.1 TAKING RESULTING IN TERMINATION. In the event that all or
substantially all of the Premises shall be taken under the power of eminent
domain, or that any portion of the Common Areas shall be so taken so as to
render the Premises not reasonably suitable for continuation of business in
Landlord's or Landlord's Mortgagees' absolute discretion, this Lease shall
thereupon terminate as of the date possession shall be so taken. In the event
that a portion of the floor area of the Premises shall be taken under the power
of eminent domain and the portion not so taken will not be reasonably adequate
for the operation of Tenant's business, notwithstanding Landlord's performance
of restoration as hereinafter provided, this Lease shall terminate as of the
date possession of such portion is taken. If this Lease is terminated, all
Rent shall be paid up to the date that actual possession of the Premises, or a
portion thereof, is taken by public authority, and Landlord shall make an
equitable refund of any Rent paid by Tenant in advance and not yet earned.
22.2 PARTIAL TAKING. In the event of any taking under the power of
eminent domain which does not terminate this Lease as aforesaid, any obligation
of Tenant under this Lease to pay Rent and all of the provisions of this Lease
shall remain in full force and effect, except that the Minimum Annual Rent only
shall be reduced in the same proportion that the amount of floor area of the
Premises taken bears to the floor area of the Premises immediately prior to
such taking,
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and Landlord shall, to the extent of the condemnation award made available to
Landlord by Mortgagees, at Landlord's own cost and expense, restore such part
of Landlord's Work in the Premises described in Exhibit "C" as is not taken to
as near its former condition as the circumstances will permit, and Tenant shall
do likewise with respect to such part of Tenant's Work as is not taken.
22.3 AWARD. All damages awarded for any such taking under the power
of eminent domain, whether for the whole or a part of the Premises or Common
Area, shall belong to and be the property of Landlord, whether such damages
shall be awarded as compensation for diminution in value of the leasehold or
for the fee of the Premises; provided, however, that nothing herein contained
shall prevent Tenant from making claim for loss or damage to Tenant's trade
fixtures and removable personal property.
22.4 TRANSFER UNDER THREAT OF TAKING. A voluntary sale by Landlord
of all or any portion of the Premises or Common Area to a public or
quasi-public body, agency or person, corporate or otherwise, having the power
of eminent domain, either under threat of condemnation or while condemnation
proceedings are pending, shall be deemed to be a taking by eminent domain
covered by this Article 22.
22.5 REQUISITIONING. Notwithstanding anything to the contrary in the
foregoing provisions, the requisitioning of the Premises or any part thereof by
military or other public authority for purposes arising out of a temporary
emergency or other temporary situation or circumstances shall constitute a
taking of the Premises by eminent domain only when the use and occupancy by the
requisitioning authority has continued for one hundred eighty (180) days.
During such one hundred eighty (180) consecutive day period, and if this Lease
is not terminated under the foregoing provisions, then for the duration of the
use and occupancy of the Premises by the requisitioning authority, any
obligation of Tenant under this Lease to pay rent and all of the other
provisions of this Lease shall remain in full force and effect, except that
Minimum Annual Rent shall be reduced in the same proportion that the amount of
the floor area of the Premises requisitioned bears to the total floor area of
the Premises, and Landlord shall be entitled to whatever compensation may be
payable from the requisitioning authority for the use and occupation of the
Premises for the period involved.
ARTICLE 23
SUBORDINATION; ATTORNMENT
23.1 SUBORDINATION. This Lease is subject and subordinate to all
ground and/or other underlying leases including sale and leaseback leases, and
all Mortgages, together with all renewals, modifications, consolidations,
replacements and extensions thereof; provided, however, if the lessor under any
such lease or the Mortgage
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of any such Mortgage, shall advise Landlord that it or they desire to require
this Lease to be prior and superior hereto, upon written request of Landlord to
Tenant, Tenant agrees to promptly execute, acknowledge and deliver any and all
documents or instruments which Landlord or such lessor, or Mortgagee deems
necessary or desirable for purposes therefor. As used herein, a "Mortgage"
shall mean any mortgage or deed of trust or other instrument in the nature
thereof evidencing a security interest in the Premises and/or Common Area, or
any part thereof, or the Development Site, including but not limited to, the
following:
(a) That certain deed of trust encumbering the Theater
Parcel and Common Area, securing a loan in the approximate amount of
$3,600,000, the proceeds of which shall be used for the construction and/or
permanent financing of the Development ("Development Loan");
(b) That certain deed of trust encumbering the Theater
Parcel and the Common Area, securing a loan made to Landlord by Agency in an
approximate amount of $7,000,000, which loan is funded by the proceeds of a HUD
Section 108 loan to the Agency ("HUD Loan");
(c) That certain deed of trust encumbering the Theater
Parcel and Common Area, securing a loan made by the Agency to Landlord in an
approximate amount of $1,324,575 ("Agency Loan").
"Mortgagee" shall mean the mortgagee, beneficiary under a deed of trust, the
secured party under any such instrument which secures its position by a deed of
trust encumbering Landlord's interest in the Development Site or portion
thereof. This Lease is further subject and subordinate to (i) the REA and all
covenants, conditions, restrictions, easements and any other matters or
documents of record, together with all renewals, modifications, consolidations,
replacements and extensions thereof; and (ii) any zoning laws of the city,
county and state where the Development is situated. Tenant hereby covenants
that Tenant, and all persons in possession or holding under Tenant, will
conform to and will not violate the terms of said matters of record.
23.2 FUTURE ENCUMBRANCE. Landlord shall have the right to cause this
Lease to be and become and remain subject and subordinate to any and all ground
and/or other underlying leases, including the sale and leaseback leases, to any
and all Mortgages which may hereafter be executed covering the Development, the
Premises, the real property thereunder or any portion thereof, for the full
amount of all advances made or to be made thereunder and without regard to the
time or character of such advance, together with interest thereon, and subject
to all of the terms and provisions thereof, and Tenant agrees, within ten (10)
days after Landlord's written request therefor, to execute, acknowledge and
deliver upon request any and all documents or instruments requested by Landlord
or necessary or proper to assure the subordination of this Lease to any such
Mortgages, or leasehold estates.
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23.3 ATTORNMENT. Notwithstanding anything to the contrary set forth
in this Article, Tenant hereby attorns and agrees to attorn to any person, firm
or corporation purchasing or otherwise acquiring Landlord's interest in the
Development, the Premises, or the real property thereunder or any portion
thereof, at any sale or other proceeding or pursuant to the exercise of any
rights, powers, or remedies under such Mortgages or ground or underlying leases
as if such person, firm or corporation had been named as Landlord herein, it
being intended hereby that, if this Lease shall be terminated, cut off, or
otherwise defeated by reason of any act or actions by the Mortgagee of any such
Mortgage, or the lessor under any such leasehold estate, then at the option of
any such person, firm or corporation so purchasing or otherwise acquiring
Landlord's interest in the Development, the Premises, or the real property
thereunder or any portion thereof, this Lease shall continue in full force and
effect. Tenant hereby irrevocably appoints Landlord the attorney-in-fact of
Tenant to execute and deliver any documents provided herein for and in the name
of Tenant, and such power, being coupled with any interest, is irrevocable.
23.4 ESTOPPEL CERTIFICATE. If, upon any sale, assignment or
hypothecation of the Premises, the Development, or the land thereunder by
Landlord, an estoppel statement shall be required from Tenant, Tenant agrees to
deliver in recordable form within ten (10) days after written request therefor
by Landlord, an estoppel statement substantially in the form attached hereto as
Exhibit "E." Tenant's failure or refusal to timely execute such certificate,
or such other certificate shall in addition to being a material breach of this
Lease, constitute an acknowledgment by Tenant that the statements in such
certificate are true and correct without exception.
ARTICLE 24
SALE OF PREMISES BY LANDLORD
In the event of any sale, exchange or other conveyance of Landlord's
interest in the Development or any portion or portions thereof by Landlord and
an assignment by Landlord of this Lease, Landlord shall be entirely freed and
relieved of all liability under any and all of its covenants and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises or this Lease occurring after the
consummation of such sale, exchange or conveyance and assignment.
ARTICLE 25
HOLDOVER BY TENANT
25.1 HOLDOVER TENANCY. In the event that Tenant shall hold the
Premises after the expiration of the Lease Term hereof with the
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consent of Landlord, express or implied, such holding over, in the absence of
written agreement on the subject, shall be deemed to have created a tenancy
from month-to-month, terminable on thirty (30) days' written notice by either
party to the other, upon a monthly rental hereinafter stated, but otherwise
subject to all of the terms and provisions of this Lease. Such monthly rental
shall equal one hundred fifty percent (150%) of the monthly rental payable by
Tenant to Landlord for the preceding twelve (12) month period including, but
not limited to, Minimum Annual Rent and any other charges payable by Tenant
under this Lease.
25.2 FAILURE TO SURRENDER. If Tenant fails to surrender the Premises
upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant hereby agrees to indemnify
and hold Landlord harmless from loss or liability resulting from such failure
including, but not limited to, damages for the loss of a reasonably
ascertainable successor tenant, and any claims made by any succeeding tenant
based upon Tenant's failure to surrender.
ARTICLE 26
NOTICES
26.1 NOTICES. Wherever in this Lease it shall be required or
permitted that notice, approval, advice, consent or demand be given or served
by either party to this Lease to or on the other, such notice, approval,
advice, consent or demand shall be given or served, and shall not be deemed to
have been duly given or served unless in writing and forwarded by a recognized
overnight courier (such as Federal Express) or by certified or registered U.S.
mail, or by facsimile transmission (provided a copy thereof is sent within
twenty-four (24) hours by any other permitted method for notices hereunder)
addressed to the parties at the addresses listed in Section 1.1(g) hereof.
Either party may change such address by written notice sent in accordance with
the above procedures to the other.
26.2 DEFAULT NOTICES. Notwithstanding anything to the contrary
contained herein, any notices Landlord is required or authorized to serve upon
Tenant in order to advise Tenant of alleged violations of Tenant's covenants
contained in Article 7 (improper advertising medium/sights), Article 16
(failure of Tenant to properly repair and/or maintain the Premises), or Article
18 (improper parking of automobiles), must be in writing but shall be deemed to
have been duly given or served upon Tenant by delivery of a copy of such notice
to one of Tenant's managing or responsible employees at the Premises or by
mailing a copy of such notice to Tenant in the manner specified above.
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ARTICLE 27
CAPTIONS AND TERMS
27.1 REFERENCE ONLY. The captions of Articles and Sections of this
Lease are for convenience only and do not in any way limit or amplify the terms
and provisions of this Lease. Except as otherwise specifically stated in this
Lease, the "Lease Term" shall include the Initial Term and any Extension Term.
27.2 PARTIES. If more than one (1) person or corporation is named as
Tenant in this Lease and executes the same as such, the word "Tenant," wherever
used in this Lease, is intended to refer to all such persons or corporations,
and the liability of such persons or corporations for compliance with the
performance of all of the terms, covenants and provisions of this Lease shall
be joint and several. The masculine pronoun used herein shall include the
feminine or the neuter as the case may be, and the use of the singular shall
include the plural, as the context may require.
ARTICLE 28
OBLIGATIONS OF SUCCESSORS
Each and all of the provisions of this Lease shall be binding upon and inure
to the benefit of the parties hereto, and except as otherwise specifically
provided in this Lease, their respective heirs, executors, administrators,
successors and assigns, subject, however, to all agreements, covenants, and
restrictions contained elsewhere in this Lease with respect to the assignment,
transfer, encumbering or subletting of all or any part of Tenant's interest in
this Lease or the Premises.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 SEPARABILITY. It is agreed that, if any, provision of this
Lease shall be determined to be void by a court of competent jurisdiction, then
such determination shall not affect any other provision of this Lease, and all
such other provisions shall remain in full force and effect.
29.2 TENANT WARRANTIES.
(a) CORPORATE. The persons executing this Lease on behalf
of Tenant hereby covenant and warrant that Tenant is a duly formed corporation
and all steps have been taken prior to the date hereof to qualify Tenant to do
business in the State of California; that all franchise and corporate taxes
have been paid to date; and that all
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forms, reports, fees and other documents necessary to comply with applicable
laws will be filed when due, and that they are authorized and directed to
execute this Lease, and to bind Tenant to it. Tenant shall supply Landlord
with an original certificate of the duly elected Corporate Secretary of Tenant
certifying to the matters set forth in this Section 29.2 and containing a copy
of the resolution authorizing the entering into of this Lease, and the
authority of the persons executing it.
(b) DUE AUTHORIZATION; BINDING. This Lease and all
documents executed by Tenant or its assignee which are to be delivered to
Landlord are and will be duly authorized, executed, and delivered by Tenant,
and are and will be legal, valid, and binding obligations of Tenant, and do not
and will not violate any provisions of any agreement or judicial order to which
Tenant is a party or to which it is subject.
(c) CONSENTS; COMPLIANCE. Neither the execution nor
delivery of this Lease, nor the consummation of the transactions covered
hereby, nor the fulfillment of the terms hereof, nor compliance with the terms
and provisions hereof, will conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any agreement or
instrument to which Tenant is a party, or, to Tenant's knowledge, constitute a
violation of any applicable statute, regulation, rule, judgment, decree or
order.
(d) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations, warranties, covenants and agreements of Tenant contained in
this Section 29.2 or elsewhere in this Lease shall survive for the term of this
Lease, and Tenant indemnifies Landlord for, and holds Landlord harmless from
and against, any and all loss, cost, damage, liability or expense (including,
without limitation, reasonable attorneys' fees) arising out of or in connection
with the inaccuracy or breach of Tenant's representations or warranties.
29.3 MERGER. It is understood and acknowledged that there are no
oral agreements between the parties hereto affecting this Lease, and this Lease
entirely supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any, between the
parties hereto or displayed by Landlord to Tenant with respect to the subject
matter thereof, and none thereof shall be used to interpret or construe this
Lease. This Lease contains all of the terms, covenants, conditions, warranties
and agreements of the parties relating in any manner to the rental, use and
occupancy of the Premises and shall be considered to be the only agreement
between the parties hereto and their representatives and agents. None of the
terms, covenants, conditions or provisions of this Lease may be modified,
deleted or added to except by written Lease amendment signed by the parties
hereto. All negotiations and oral agreements acceptable to both parties have
been merged into and are included herein. There are no other representations
or warranties between the
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parties, and all reliance with respect to representations is totally upon the
representations and agreements contained in this Lease.
29.4 RIGHT TO LEASE. Landlord reserves the absolute right to effect
such other tenancies in the Development as Landlord in the exercise of its sole
business judgment shall determined Tenant does not rely on the fact, nor does
Landlord represent, that any specific tenant or type or number of tenants fall,
during the Lease Term, occupy any space in the Development.
29.5 GOVERNING LAW. The laws of the State of California shall govern
the validity, construction, performance and enforcement of this Lease. Should
either party institute legal action to enforce any obligation contained herein,
it is agreed that the proper venue of such suit or action shall be the county
and judicial district in which the Development is located. This Lease is a
joint product of Landlord and Tenant and shall not be construed either for or
against Landlord or Tenant but shall be interpreted in accordance with the
general tenor of its language.
29.6 FORCE MAJEURE. Any prevention, delay or stoppage due to
strikes, lockouts, labor disputes, acts of God, inability to obtain labor or
materials or reasonable substitutes therefor, governmental actions, civil
commotion, fire or other casualty, and other non-financial causes beyond the
reasonable control of the party obligated to perform (a "Force Majeure" event),
shall excuse the performance of such party for a period equal to any such
prevention, delay or stoppage. This provision shall not apply to the
obligations, once accrued, imposed with regard to Rent and other charges to be
paid by Tenant pursuant to this Lease or to any financial incapacity of Tenant.
29.7 CUMULATIVE RIGHTS. The various rights, options, elections,
powers and remedies contained in this Lease shall be construed as cumulative,
and no one remedy shall be exclusive of any other remedy, or of any other legal
or equitable remedy which either party might otherwise have in the event of
breach or default in the terms hereof, and the exercise of one right or remedy
by such party shall not impair its right to any other right or remedy until all
obligations imposed upon the other party have been fully performed.
29.8 TIME. Time is of the essence with respect to the performance of
each of the covenants and agreements contained in this Lease.
29.9 RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall
be deemed or construed by the parties hereto or by any third person to create
the relationship of principal and agent or of partnership or of joint venture
or of any association between Landlord and Tenant, and neither the method of
computation of Rent nor any other provision contained in this Lease nor any
acts of the parties hereto shall be deemed to create any relationship between
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Landlord and Tenant other than the relationship of landlord and tenant.
29.10 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant
to Landlord of rent or other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which is extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Landlord by
the terms of any mortgage or deed of trust covering the Premises. Accordingly,
if any installment of rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee when due, then Tenant shall pay to
Landlord a late charge equal to One Hundred and 00/100 Dollars ($100.00) or two
percent (2%) of the amount due, whichever is higher, and provided that such
amount will not exceed the maximum rate permitted by law, plus any attorneys'
fees incurred by Landlord by reason of Tenant's failure to pay rent and/or
other charges when due hereunder. The parties hereby agree that such late
charge represents a fair and reasonable estimate of the administrative costs
that Landlord will incur by reason of the late payment by Tenant. Acceptance
of such late charge by Landlord shall in no event constitute a waiver of
Tenant's default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. Tenant
hereby agrees that, if Tenant is subject to a late charge for three (3)
consecutive months, Minimum Annual Rent for the following twelve (12) months
shall automatically be adjusted to be payable quarterly, in advance, commencing
upon the first day of the month following such consecutive late month and
continuing for the next twelve (12) months on a quarterly basis in advance.
29.11 FINANCIAL STATEMENTS. At any time during the Lease Term, Tenant
shall, upon ten (10) days' prior written notice from Landlord, provide Landlord
or any Mortgagee which is negotiating with Landlord for interim, construction
or permanent financing, with a confidential current financial statement (dated
within ninety (90) days of the date Tenant receives Landlord's notice) and
financial statements for each of the two (2) years prior to the then current
fiscal statement year for Tenant and, if requested, for each Guarantor, and/or
Tenant's assignees, subtenants and concessionaires. Such current statements
shall be prepared in accordance with generally accepted accounting principles
and, if such is the normal practice of Tenant, Guarantor, and/or Tenant's
assignees, subtenants and concessionaires, shall be audited by an independent
certified public accountant. Tenant represents and warrants to Landlord that
each such financial statement shall be true and accurate as of the date of such
statement and shall be certified by an officer of Tenant.
29.12 REAL ESTATE BROKERS. The parties acknowledge that George Medak of
Affiliated Development Group, Inc. ("Broker") represents both Landlord and
Tenant in this transaction. Landlord and Tenant each represent and warrant to
the other that, except for Broker, it
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has not dealt with any other broker or finder in connection with the Lease or
the Premises and there are no claims (except for Broker) for brokerage
commissions or finder's fees in connection with the execution of this Lease.
Landlord and Tenant each agree to indemnify the other against, and hold the
other harmless from, all liability, costs, expenses and fees arising from any
such claim, including, without limitation, the cost of attorneys' fees in
connection therewith arising out of or resulting from the acts and omissions of
the indemnifying party. The fees and commissions to Broker shall be governed
by a separate commission agreement between Landlord and Broker.
29.13 DEFAULT RATE. Tenant shall pay to Landlord when due all sums of
money required to be paid pursuant to this Lease. If such amounts or charges
are not paid at the time provided in this Lease, such unpaid amounts shall bear
interest at the lesser of ten percent (10%) or the maximum lawful rate
("Default Rate") from the date due to the date of payment.
29.14 NO OFFER TO LEASE. The submission of this document for examination
and negotiation does not constitute an offer to lease, or a reservation of, or
option for, occupancy of the Premises; and this document shall become effective
and binding only upon execution and delivery hereof by Tenant and by Landlord
(or, when duly authorized, by Landlord's agent or employee). No act or
omission of any agent of Landlord or Landlord's broker, if any, shall alter,
change or modify any of the provisions hereof.
29.15 EXCULPATION. Notwithstanding any other provision hereof, Landlord
shall not have any personal liability hereunder. If Landlord shall fail to
perform any covenant, term or condition of this Lease upon Landlord's part to
be performed, and if as a consequence of such default Tenant shall recover a
money judgment against Landlord, such judgment shall be satisfied only out of
the proceeds of sale received upon execution of such judgment and levied
thereon against the then right, title and interest of Landlord in the Premises
and out of rents or other income from the Premises, or out of the consideration
receivable by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Premises, subject to the rights of
Landlord's Mortgagee, and neither Landlord nor any of its constituent partners
or members, or their employees, officers, directors, shareholders or
affiliates, shall be liable for any deficiency.
29.16 HAZARDOUS MATERIALS. Tenant covenants as follows:
(a) Except for usual and customary quantities of ordinary
and general office supplies typically used in the ordinary course of business,
such as copier toner, liquid paper, glue and ink and common household cleaning
materials (some or all of which may constitute "Hazardous Materials" as herein
defined), Tenant agrees not to cause or permit any Hazardous Materials to be
brought, incorporated,
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stored, used, handled, generated, released or disposed of, on, in, under or
about the Building, the Premises, the Common Areas or any portion of the
Development by Tenant, its agents, employees, subtenants, assignees,
contractors or invitees (collectively, "Tenant Parties"), without the prior
written consent of Landlord, which consent Landlord may withhold in its sole
and absolute discretion. At all times and in all respects, Tenant and the
other Tenant Parties shall comply with all federal, state and local laws,
statutes, ordinances and regulations including, but not limited to, the Federal
Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), Resource
Conservation & Recovery Act (42 U.S.C. Section 16901 et seq.), Safe Drinking
Water Act [42 U.S.C. Section 3000(f) et seq.], Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et
seq.), Comprehensive Environmental Response of Compensation and Liability Act
(42 U.S.C. Section 9601 et seq.), California Health & Safety Code (Section
25100 et seq. and 39000 et seq.), California Water Code (Section 13000 et seq.)
and other comparable state laws (collectively, "Hazardous Materials Laws"),
relating to industrial hygiene, environmental protection or the use, analysis,
generation, manufacture, storage, disposal or transportation of any oil,
flammable explosives, asbestos, urea formaldehyde, radioactive materials or
waste, or other hazardous, toxic, contaminated or polluting materials,
substances or wastes, including, without limitation, any "hazardous
substances", "hazardous wastes", hazards, federal, state or local laws,
statutes, ordinances or regulations (collectively, "Hazardous Materials").
(b) At Tenant's own expense, Tenant shall procure, maintain
in effect and comply with all conditions of any and all permits, licenses, and
other governmental and regulatory including, without limitation, discharge of
(appropriately treated) materials or wastes into and through any sanitary sewer
serving the Development or sewer in strict accordance and conformity with all
applicable Hazardous Materials Laws, Tenant shall not cause any and all
Hazardous transported, except solely by duly licensed haulers to duly licensed
facilities for disposal of such materials and wastes. Tenant shall in all
respects handle, treat, deal with and manage any and all Hazardous Materials
in, on, under or about the Development in total conformity with all applicable
Hazardous Materials Laws and prudent industry practices regarding management of
such Hazardous Materials. Upon transfer of possession of the Premises, such
transferor shall cause all Hazardous Materials to be removed from the Premises,
transferred and transported for use, storage or disposal in accordance with and
in compliance with all applicable Hazardous Materials Laws. Upon the
expiration or sooner termination of this Lease, Tenant agrees to remove from
the Premises, at its sole cost and expense, any and all Hazardous Materials,
including any equipment or systems containing Hazardous Materials which are
installed, brought, incorporated, stored, used, generated or released upon, in
or under the Premises or any portion of the Development by Tenant or any of the
Tenant Parties.
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(c) Tenant shall immediately notify Landlord in writing of
(i) any enforcement, clean-up, removal or other governmental or regulatory
action instituted, completed or threatened pursuant to any Hazardous Materials
Laws; (ii) any claim made or threatened by any person against Tenant, any of
the Tenant Parties, the Premises, or any portions of the Development including,
without limitation, any buildings located thereon, relating to damage,
contribution, cost recovery compensation, loss or injury resulting from or
claimed to result from any Hazardous Materials; and (iii) any reports made to
any environmental agency arising out of or in connection with any Hazardous
Materials in or removed from the Premises or any portions of the Development,
including any complaints, notices, warnings or asserted violations in
connection therewith. Tenant shall also supply to Landlord as promptly as
possible, and in any event within five (5) business days after any Tenant Party
first receives or sends the same, copies of all claims, reports, complaints,
notices, warnings or asserted violations, relating in any way to the Premises,
any portions of the Development or Tenant's or any Tenant Party's use thereof.
(d) Tenant shall immediately indemnify, defend, protect,
and hold Landlord and each of its constituent partners, members, employees,
agents, attorneys, successors and assigns, free and harmless from and against
any and all claims, liabilities, penalties, forfeitures, losses and expenses
(including attorneys' fees), as well as the death of or injury to any person
and damage to any property whatsoever, arising from or caused in whole or in
part, directly or indirectly, by Tenant's or any Tenant Party's use, analysis,
storage, transportation, disposal, release, threatened release, discharge or
generation of Hazardous Materials to, in, on, under, about or from the Premises
or any portion of the Development including, without limitation, any building
located thereon. Tenant's obligations hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, all costs of any required
or necessary repair, clean-up or detoxification or decontamination of the
Premises or Development or any building thereon, or the preparation and
implementation of any closure, remedial action or other required plans in
connection therewith. For purposes of the release and indemnity provisions
hereof, any acts or omissions of Tenant or any Tenant Party, or anyone holding
under Tenant or any Tenant Party, or by any of their employees, agents,
assignees, contractors or subcontractors or others acting for or on behalf of
Tenant or any Tenant Party (whether or not they are negligent, intentional,
willful or unlawful) shall be strictly attributable to Tenant. The terms of
the indemnification by Tenant set forth in this Section 29.16 shall survive the
expiration or earlier termination of this Lease.
29.17 NONDISCRIMINATION. Tenant herein covenants by and for itself, its
heirs, executors, administrators, successors and assigns, and all persons
claiming under or through them and this Lease is made and accepted upon and
subject to the following conditions:
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That there shall be no discrimination against or segregation of
any person, or group of persons, on account of race, color, creed, religion,
sex, marital status, age, physical or mental disability, ancestry or national
origin, in the leasing, renting, subleasing, transferring, use, occupancy,
tenure or enjoyment of the land herein leased, nor shall the lessee itself, or
any person claiming under or through it, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, sublessees, subtenants
or vendees in the land herein leased.
29.18 TITLE OF LANDLORD. Landlord covenants that, as of the Effective Date
hereof, there are no liens upon its estate in the Premises and Common Area
other than (a) the effect of covenants, conditions, restrictions, easements,
mortgages or deeds of trust, any ground lease(s), if any, of record, any rights
of way of record, and any other matters or documents of record; (b) the effect
of any zoning laws of the city, county and state where the Development is
situated; and (c) general and special taxes and assessments not delinquent.
Tenant agrees that (i) as to its leasehold estate it, and all persons in
possession or holding under it, will conform to and will not violate the terms
of said matters of record, and (ii) this Lease is subordinate to the REA and/or
any Declaration of Restrictions, Grant of Easements or Reciprocal Easement
Agreement (the "Declaration") and any amendments or modifications thereto;
provided, however, if the REA and/or Declaration is not of record as of the
Effective Date hereof, then this Lease shall automatically become subordinate
thereto upon recordation thereof, and Tenant further agrees to execute and
return to Landlord within ten (10) days after written demand therefor by
Landlord, an agreement in recordable form (substantially in the form of Exhibit
"H") subordinating this Lease to the REA and/or Declaration and/or any
amendment or modification thereof (it being understood that the Declaration,
REA and/or any amendment or modification thereto shall not prevent Tenant from
using the Premises for the purpose set forth in Section 1.1(l) hereof).
29.19 RESTRICTION ON SIMILAR BUSINESSES. Notwithstanding anything to the
contrary herein, if Tenant or any Transferee, or any officer, director or
manager of Tenant or a Transferee, or any entity owned or controlled by, or
owning or controlling, Tenant or any Transferee (each of which is herein
referred to as a "Tenant Affiliate") shall own, operate or become financially
interested in a motion picture theater or theaters or a similar competing
business within the radius of three (3) miles of the Development, Tenant
covenants that the pattern of films exhibited in the movie screens operated on
the Premises shall not be changed from the pattern of films exhibited prior to
the time such competing theater or theaters opened and that the films selected
for exhibition on the movie screens operated on the Premises shall be selected
in such a manner as to reasonably assure that the per screen revenues from the
Premises shall not be less than Gross Sales from Box Office Sales
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prior to the time that such competing theater or theaters commenced operation
(after taking into account any decline or increase in average national box
office revenues). In addition to Rent, and any other rights and remedies
available to Landlord herein or under law or in equity in the event this
covenant is breached, Landlord shall be entitled to damages in an amount equal
to the highest Percentage Rent paid by Tenant prior to opening such competing
use, for the balance of the term of this Lease, or any Extension hereof, so
long as such competing use remains in effect.
29.20 AGENCY. The parties acknowledge and agree that the addition of new
provisions to this Lease may be required by the Agency, or by other
governmental entities. The parties agree to execute such modifications of this
Lease as may be reasonably necessary to incorporate such required terms or
conditions, provided that such modifications do not have a material adverse
effect on the intended use of the Premises by the Tenant.
29.21 TIME. Time is of the essence in the performance of each provision of
this Lease.
29.22 WAIVER. The waiver of performance of any covenant, term or condition
of this Lease by Landlord or Tenant shall not be construed as a waiver of any
subsequent breach of the same covenant, term or condition. The various rights,
options, elections, powers and remedies of the parties contained in this Lease
shall be construed as cumulative and no one of them exclusive of any other or
of any legal or equitable remedy which either party might otherwise have in the
event of a breach by the other, and the exercise of one right or remedy by a
party shall not in any way impair its right to any other right or remedy. The
acceptance of Rent by Landlord shall not be deemed a waiver of Landlord's right
to enforce any term or provision hereof.
29.23 COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which,
taken together, shall constitute one Lease.
29.24 LEASE NOT TO BE RECORDED. The parties hereto shall promptly execute
and deliver a Memorandum of this Lease for recording purposes in the form
attached hereto as Exhibit "K," but recording shall not take place without
Landlord's prior written consent until the Conditions Precedent referred to in
Article 4 have been satisfied or waived. Landlord shall cause the same to be
recorded, at Landlord's expense, provided that Tenant shall pay all documentary
and transfer taxes.
29.25 MORTGAGEE REQUIREMENTS. Tenant acknowledges that a portion of the
financing for the development of the Development Site may be conditioned upon
Tenant's compliance with various antidiscrimination and other requirements for
employment of low and moderate income persons, all of which are set forth on
Exhibit "L"
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hereto. Tenant agrees to comply with all such requirements, and shall make
such modifications to this Lease as may be requested by Mortgagees so long as
Tenant's rights are not materially impaired and Tenant's obligations are not
materially altered.
29.26 TENANT ACKNOWLEDGMENT. Except as expressly provided in this Lease,
Tenant agrees that Tenant shall accept the Premises in its condition as of the
Delivery Date, on an "AS-IS WITH ALL FAULTS BASIS" and is relying solely upon
Tenant's own independent factual, physical and legal investigations,
examinations and inquiries and the materials and information prepared by Tenant
or by third parties at Tenant's request in determining that the Premises are
suitable and adequate in all respects for Tenant's use and any and all other
activities and uses which Tenant may conduct thereon. Landlord is not making,
has not made, and expressly disclaims any representation, warranty or other
assurance whatsoever with respect to the Premises, the Development, and any
condition or feature thereof, other than the representations or warranties
expressly provided herein.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered
this Lease as of the day and year first above written.
LANDLORD
MDA-San Bernardino Associates,
L.L.C., a Delaware limited
liability company
By: SK Metro Development, L.P.,
a California limited
partnership, its managing member
By: SK Metro Corp., a California
corporation, its general
partner
By: /s/ REX SWANSON
Rex Swanson
Title: President
TENANT
CINEMASTAR LUXURY THEATERS, INC.,
a California Corporation
By: /s/ ALAN GROSSBERG
Alan Grossberg
Title: Executive Vice President/CFO
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EXHIBIT "A-1"
LEGAL DESCRIPTION TO THEATER PARCEL
[to be attached]
80
DOWNTOWN SAN BERNARDINO - MULTIPLEX THEATER
CONCEPTUAL SITE PLAN
[DIAGRAM]
EXHIBIT A-2
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EXHIBIT "A-3"
LEGAL DESCRIPTION OF DEVELOPMENT PARCELS
[to be attached]
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EXHIBIT "B"
ELEVATION DRAWINGS OF THE PREMISES
[to be attached]
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EXHIBIT "C"
CONSTRUCTION PROVISIONS AGREEMENT
This Construction Provisions Agreement ("Agreement") dated as of
December ___, 1996, shall set forth the terms and conditions relating to the
construction of the Premises described in that certain Lease Agreement (the
"Lease") of even date herewith between MDA-San Bernardino Associates L.L.C., a
Delaware limited liability company, as Landlord, and Cinemastar Luxury Theaters,
Inc., a California corporation, as Tenant. All references in this Agreement to
Paragraphs or Subparagraphs of this Lease shall mean the relevant portions of
the Lease, to which this Agreement is attached as Exhibit C, and all references
in this Agreement to Sections of this Agreement shall mean the relevant portions
hereof. All defined terms used herein shall be given the meaning ascribed to
them in the Lease, unless a contrary indication is specifically made.
SECTION 1
DELIVERY OF THE BUILDING PAD
1.1 Building Pad as Constructed by Landlord Upon the full execution and
delivery of this Lease by Landlord and Tenant, and subject to the terms and
conditions thereof, Landlord shall deliver the Building Pad, as that term is
defined below, to Tenant, and provided that the Building Pad conforms to
descriptions set forth in subparagraph 1.2.1, below, Tenant shall accept the
Building Pad from Landlord in its then existing, as-is condition.
1.2 Landlord's Work. Landlord shall cause the construction or
installation of, or supply, the following items at its sole cost and expense
(collectively, the "Landlord's Work"), which Tenant may not change or alter,
except as provided in the Lease, or this Agreement:
1.2.1 Landlord shall do all required on-site work for the
Building, which site work shall include the creation of a finished, certified,
compacted, and appropriately sloped buildable pad (the "Building Pad") which
conforms to the Construction Drawings, as defined below, which pad shall be
located as shown on Exhibit 1 to this Agreement. The Building Pad shall be built
in conformity with all applicable governmental regulations, and pursuant to
plans and specifications mutually agreed to by Landlord and Tenant.
1.2.2 Landlord shall provide normal utility lines (electrical,
gas, telephone, water and sewer) stubbed to within five feet (5') of the
Building footprint line, as shown on the approved Construction Drawings.
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1.2.3 Landlord shall enter into Parking Agreements with third
parties to provide off-site nonexclusive parking spaces during the hours and in
the number specified in the Lease, for use by Permittees within walking
proximity of the Building, which parking may be at one or more locations.
1.2.4 Landlord shall be responsible for the construction and
installation of curbs and gutters, sidewalks surrounding the Building, which
shall be designed to conform to the hardscape plans shown in the Construction
Drawings which are part of Tenant's Work. In addition, all landscaping,
irrigation systems, and lighting in the Common Area, shall be supplied by
Landlord.
1.3 Once the Construction Drawings are approved by Landlord and Tenant,
any changes thereto which are the result of Tenant's requests or requirements,
or which become necessary in order to conform to Tenant's Final Plans are
referred to herein as a "Change". All costs, expenses and fees incurred as a
result of Changes shall be charged to Tenant and payable by Tenant within five
(5) days after written invoice from Landlord and, if not paid when due, may be
deducted from the Tenant Improvement Allowance.
SECTION 2
TENANT'S WORK
2.1 Tenant Improvement Allowance. Tenant shall be entitled to a
one-time tenant improvement allowance (the "Tenant Improvement Allowance") in
the amount of One Hundred and Fifteen Dollars ($115.00) per square foot of
actual floor area of the Building (excluding surrounding sidewalks, walkways,
and mezzanine) measured in accordance with Section 2.2 of the Lease (but in no
event shall the Tenant Improvement Allowance exceed $9,200,000 regardless if the
Building, as constructed, is over 80,000 square feet of floor area). The Tenant
Improvement Allowance shall be used solely for the costs of the initial design
and construction of the Building (the "Tenant's Work"), as more particularly
described below. Subject to its obligation to deliver the Building Pad in the
condition described above, and to complete the balance of Landlord's Work,
described in paragraph 1.2, in no event shall Landlord be obligated to make
disbursements pursuant to this Agreement or the Lease in a total amount which
exceeds the Tenant Improvement Allowance. All other costs of constructing the
Building and improving the Premises, including Changes, shall be born by Tenant.
The Building shall be a first-class, state of the art motion picture theater
building, which may include a second floor mezzanine structure, and shall
include concrete floors, both sloped and flat, auditorium dividing walls which
are adequate to prevent the intrusion into, or the- diversion out of, each.
individual auditorium, of all sounds and vibrations generated within the
Premises, and exterior walls, roof and other structural
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elements which are suitable to prevent the release or disbursement of any sound
or vibration generated within the Building or the Premises outside of such walls
or roof; a long span roof structure and all related roof materials; complete
fire sprinkler system as required by law, throughout the Building, interior
stairways and elevators as required by the design of the Building on the
Premises, finished dropped ceiling, completed electrical system, (but excluding
sound system); finished plumbing, including full, finished, and fixturized
restroom facilities; all emergency exit ways, exit doors, ramps, and other
facilities required by all building, health and safety laws, and the Americans
with Disabilities Act; all HVAC systems and equipment; store front, including
exit doors; all interior and exterior hardware, carpeting, tile, all wall
coverings, and each and every other item related to the Building structure or
Building systems. The items described below as Tenant's furniture, fixture and
equipment ("FF&E") are included within the definition of Tenant's Work for all
purposes of this Agreement, except that no reimbursement shall be made from the
Tenant Improvement Allowance for said items, as Tenant shall bear all costs
related to the furniture, fixture and equipment, except as expressly described
below as Tenant's furniture, fixture and equipment ("FF&E"). The Building shall
conform to the general architectural design plan and standards of the
Development, and Landlord's architect and Tenant's architect shall work together
to achieve this result.
2.2 Disbursement of the Tenant Improvement Allowance.
2.2.1 Tenant Improvement Allowance Items. Except as otherwise
set forth in this Agreement, the Tenant Improvement Allowance shall be disbursed
by Landlord only for the following items and costs (collectively the "Tenant
Improvement Allowance Items"):
2.2.1.1 Payment of the fees of, and costs incurred
by, the "Architect" and the "Engineers" as those terms are defined in Section
3.1 of this Agreement, including all plans, drawings and specifications;
2.2.1.2 All items described in paragraph 2.1, above,
as being part of the Building (except the FF&E);
2.2.1.3 Other hard costs of construction of the
Tenant's Work, including, without limitation tes ting and inspection costs,
freight elevator usage, if any, hoisting and trash removal costs, and
contractors' fees and general conditions;
2.2.1.4 The cost of all signs, and fees for
Conditional Use Permits, utility hookups, sewer charges, and building plan check
and permit fees (including but not limited to seismic review), and other
governmental fees and charges (including but not limited to traffic systems,
cultural and school fees)
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payable in connection with construction of the Tenant Improvements, except as
specifically set forth in the Lease or this Agreement. Tenant shall not be
responsible for traffic studies, environmental impact reviews or other required
studies or governmental approvals regarding the Development in general. Rather,
Tenant's liability for governmental approvals shall be limited to plan review,
and other fees and costs imposed in connection with obtaining the building
permit for the Demised Premises.
2.2.1.5 Sales and use taxes and Title 24 fees
related to the Tenant Improvements; and
2.2.1.6 All other hard costs expended by Te nant in
connection with the construction of the Tenant Improvements, except as
specifically set forth in the Lease or this Agreement.
Landlord, upon Tenants request, will provide Tenant with reasonable
evidence of Landlord's ability to fund all improvements which are the
responsibility of Landlord pursuant to this Lease, and Tenant shall similarly
supply Landlord of Tenant's financial ability to meet its construction
obligations hereunder.
2.2.2 Disbursement of Tenant Improvement Allowance. During the
construction of the Tenant Improvements, Landlord shall make monthly
disbursements of the Tenant Improvement Allowance for Tenant Improvement
Allowance Items, and shall authorize the release of monies as follows:
2.2.2.1 Monthly Disbursements. On or before a day
to be specified by Landlord of each calendar month during the construction of
the Tenant's Work (the "Request Date"), Tenant shall deliver to Landlord
("Payment Request"): (i) a request for payment of the "Contractor," (as that
term is defined in this Agreement) approved by Tenant, in a form to be provided
by Landlord, showing the schedule, by trade, of percentage of completion of the
Tenant's Work in the Premises, and detailing the portion of the work completed
and the portion not completed; (ii) invoices from all of "Tenant's Agents," as
that term is defined in Section 4.1.2 of this Agreement, for labor rendered and
materials delivered to the Premises; (iii) executed mechanic's lien releases
from all of Tenant's Agents which shall comply with the appropriate provisions,
as reasonably determined by Landlord, of California Civil Code Section 3262(d);
and (iv) all other information reasonably requested by Landlord or Landlord's
Mortgagee, if any, on or before the twenty-fifth (25th) day after each such
Request Date (the "Payment Date"), and assuming Landlord timely receives the
applicable information described in items (i) through (iv), above, and
unconditional lien releases, as applicable, for all work included in the Payment
Request for the previous month, Landlord shall deliver a check to Tenant, made
jointly payable to Contractor and Tenant, in payment of the amounts so requested
by Tenant, as set forth in this Section 2.2.2.1, above, multiplied by the "Draw
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Multiplier" (defined in Section 2.2.2.2 below), less a ten percent (10%)
retention (the aggregate amount of such retentions to be known a the "Final
Retention"), provided that Landlord does not dispute any request for payment
based on non-compliance of any work with the "Final Plans," as that term is
defined in Section 3.4 below, or due to any substandard work, or for any other
reason. Landlord's payment of such amounts shall not be deemed Landlord's
approval or acceptance of the work furnished or materials supplied as set forth
in Tenant's Payment Request.
2.2.2.2 Draw Multiplier. As used herein, the Draw
Multiplier shall mean a fraction, the numerator of which is the aggregate Tenant
Improvement Allowance and the denominator of which is the total cost of
construction of Tenant's Work ("Tenant Work Cost") as determined in accordance
with Section 4.2.1 below and may be adjusted as provided therein.
2.2.2.3 Final Retention. Subject to the provisions
of this Agreement, a check for the Final Retention payable jointly to Tenant and
Contractor shall be delivered by Landlord to Tenant within thirty (30) days
following the completion of construction of the Building and the Premises,
provided that (i) Tenant delivers to Landlord properly executed mechanics lien
releases in compliance with both California Civil Code Section 3262 (d) (2) and
either Section 3262(d)(3) or Section 3262(d)(4); (ii) Landlord has determined
that no substandard work exists which adversely affects the mechanical,
electrical, plumbing, heating, ventilating or air conditioning, life-safety or
other systems of the Building, any curtain walls of the Building, the structure
or exterior appearance of the Building, or the Premises; (iii) Architect
delivers to Landlord a certificate, in a form reasonably acceptable to Landlord,
certifying that the construction of the Building and the Premises has been
completed in accordance with the Final Plans; (iv) Tenant delivers to Landlord a
certificate of occupancy for the Premises from all applicable governmental
agencies; (v) all "punch list" items reasonably effecting the construction, use,
and operation of the Building have been completed; (vi) Tenant has delivered a
detailed breakdown of Tenant's final and total Tenant Work Costs; (vii) Tenant
has delivered to Landlord all items returned under Section 4.3 below; (viii)
Tenant has opened for business at the Premises as required in this Lease; and
(ix) Tenant has delivered the Estoppel Certificate.
2.2.2.4 Other Terms. Landlord shall only be
obligated to make disbursements from the Tenant Improvement Allowance only to
the extent costs are incurred by Tenant for Tenant Improvement Allowance Items.
All Tenant Improvement Allowance Items for which the Tenant Improvement
Allowance has been made available shall be deemed Landlord's property under the
terms of this Lease.
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2.2.2.5 Landlord's Mortgagee. In the event that any
construction or other Mortgagee of Landlord requires any further or different
procedure for the disbursement of the Tenant Improvement Allowance, Tenant
agrees to comply with same, so long as the general timing and terms for payment
are reasonably consistent with Section 2.2.2.1.
2.3 Tenant's Furniture, Fixture and Equipment.
Tenant shall also be required, at Tenant's sole cost. and
expense, to complete all interior finish improvements (FF&E) for a first-class,
state of the art motion picture theater, which FF&E shall include, but not be
limited to, state of the art screens, speakers, sound system, projection
equipment, concession equipment, seating, furniture, all decorative items not
described elsewhere in this Agreement communication systems, security systems,
and any other fixturization of any other type which is required in order to
render the theater fully operational and open to the public for business. The
FF&E shall be shown on the fully detailed Final Working Drawings and be subject
to all of the requirements set forth herein with respect to FF&E. Tenant shall
provide the First LC, Second LC and evidence of FF&E financing as and when
required under the Lease.
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawincgs. Tenant shall retain
a qualified, licensed architect, reasonably approved by Landlord, as its
architect (the "Architect") to prepare the Construction Drawings, as that term
is defined in this Section 3.1. Tenant shall retain engineering consultants,
reasonably approved by Landlord (the "Engineers") to prepare all plans and
engineering working drawings relating to the Tenant's Work, including without
limitation, structural, mechanical, electrical, plumbing, HVAC, life safety, and
sprinkler work, exterior elevations, and all of Tenant's other improvements and
FF&E in the Building and Premises. The plans and drawings to be prepared by
Architect and the Engineers hereunder shall be known collectively as the
Construction Drawings. All Construction Drawings shall comply with the drawing
format and specifications reasonably designated by Landlord or Landlord's
Architect prior to Tenant's preparation of such drawings, and shall be subject
to Landlord's reasonable approval. Tenant and Architect shall verify, in the
field, all relevant dimensions and conditions of the Building Pad, and following
Tenant's approval of same, Tenant and Architect shall be solely responsible for
the same, and Landlord shall have no responsibility in connection therewith.
Landlord's review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord's review of the same,
or obligate Landlord to review the same, for quality, design,
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compliance with applicable laws or other like matters. Accordingly,
notwithstanding that any Construction Drawings are reviewed by Landlord or its
space planner, Architect, engineers and consultants, and notwithstanding any
advice or assistance which may be rendered to Tenant by Landlord or Landlord's
space planner, architect, engineers, and counselor in connection therewith and
shall not be responsible for any omissions or errors contained in the
Construction Drawings, and Tenant's waiver and indemnity set forth in this Lease
shall specifically apply to the Construction Drawings.
3.2 Plan. Tenant shall supply Landlord with four (4) copies signed by
Tenant of its plan for the Building and Premises before any architectural
working drawings or engineering drawings have been commenced. The plan (the
"Plan") shall include a layout and designation of all auditoriums, lobbies,
offices, rooms and other partitioning, their intended use, and equipment to be
contained therein, as well as exterior elevations, which shall conform to the
architectural design of the Development. Landlord may request clarification or
more specific drawings for special use items not included in the Plan. Landlord
shall advise Tenant within thirty (30) business days after Landlord's receipt of
the Plan for the Premises if the same is unsatisfactory or incomplete in any
respect. If Tenant is so advised, Tenant shall promptly cause the Plan to be
revised to correct any deficiencies or other matters Landlord may reasonably
require and which are consistent with the Lease and this Agreement. Landlord
shall advise Tenant within five (5) business days after Landlord's receipt of
any revised draft if the same is unsatisfactory or incomplete in any respect.
3.3 Final Working Drawings. After the Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard, structural elements, systems, equipment and specifications!
including, without limitation, BTU calculations, electrical requirements and
special electrical receptacle requirements for the Building and Premises, to
enable the Engineers and the Architect to complete the "Final Working Drawings"
(as that term is defined below) in the manner as set forth below. Upon the
approval of the Plan by Landlord and Tenant, Tenant shall promptly cause the
Architect and the Engineers to complete the architectural and engineering
drawings for the Building and Premises, and Architect shall compile a fully
coordinated set of architectural, structural, mechanical, electrical and
plumbing working drawings in conformance with the approved Plan and in a form
which is complete to allow contractors and subcontractors to bid on the work and
to obtain all applicable permits (collectively, the "Final Working Drawings"),
together with a proposed time schedule for commencement, progress and completion
of Tenant's Work, and shall submit the same to Landlord for Landlord's approval.
Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final
Working Drawings and one (1) copy of the time schedule. Landlord shall advise
Tenant within
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thirty (30) business days after Landlord's receipt of the Final Working Drawings
for the Premises and time schedule if the same is unsatisfactory or incomplete
in any material respect. If Tenant is so advised, Tenant shall immediately
revise the Final Working Drawings and adjust the time schedule in accordance
with such review and any reasonable disapproval of Landlord in connection
therewith. Landlord shall advise Tenant within five (5) business days after
Landlord's receipt of any revised draft if the same is unsatisfactory or
incomplete in any material respect.
3.4 Approved Final Plan. The Plan and Final Working Drawings, including
the time schedule for performance of Tenant's work (collectively the "Final
Plan"), shall be approved by Landlord prior to the commencement of construction
of the Premises by Tenant. After approval by Landlord of the Final Plan, Tenant
shall submit the same to the appropriate municipal authorities for all
applicable building permits. Tenant hereby agrees that neither Landlord nor
Landlord's consultants shall be responsible for obtaining any building permit or
certificate of occupancy for the Premises and that obtaining the same shall be
Tenant's responsibility, but subject to Landlord's responsibility for obtaining
permits related to Landlord's Work; provided, however, that in all events
Landlord shall cooperate with Tenant in executing permit applications and
performing other acts reasonably necessary to enable Tenant to obtain any such
permit or certificate of occupancy. No material changes, modifications or
alterations in the Final Plan may be made without the prior written consent of
Landlord, which consent may not be unreasonably withheld.
3.5 Review Costs. Tenant shall reimburse to Landlord its actual,
reasonable and documented costs incurred in approving the Tenant's Conceptual
Design Plans and Tenant's Working Drawings within ten (10) days after Tenant's
receipt of an itemized statement from Landlord therefor if the work submitted by
Tenant is substandard in Landlord's architects' reasonable opinion.
SECTION 4
CONSTRUCTION OF THE IMPROVEMENTS
4.1 Tenant's Selection of Contractors.
4.1.1 The Contractor. A general contractor shall be retained
by Tenant to construct Tenant's Work. Such general contractor ("Contractor")
shall be selected by Tenant, and subject to approval by Landlord, and Tenant
shall deliver to Landlord notice of its selection of the Contractor upon such
selection. Landlord shall have the right to designate general contractors to be
included in Tenant's bidding process for the selection of the Contractor. By its
execution hereof, Landlord approves any of the contractors described on Exhibit
4 hereto as the Contractor.
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4.1.2 Tenant Is Agents. All subcontractors, laborers,
materialmen, and suppliers used by Tenant (such subcontractors, laborers,
materialmen, and suppliers, and the Contractor to be known collectively as
"Tenant's Agents") must be approved in writing by Landlord, which approval shall
not be unreasonably withheld or delayed. If Landlord does not approve any of
Tenant's proposed subcontractors, laborers, materialmen or suppliers, Tenant
shall submit other proposed subcontractors, laborers, materialmen or suppliers
for Landlord's written approval.
4.2 Construction of Tenant's Work by Tenant's Agents.
4.2.1 Construction Contract: Cost Budget. Prior to the
commencement of the construction of Tenant's Work, and after Tenant has accepted
all bids for Tenant's Work, Tenant shall provide Landlord with a detailed
breakdown, by trade, of the final costs to be incurred or which have been
incurred, in connection with the design and construction of Tenant's Work to be
performed by or at the direction of Tenant or the Contractor, which costs form a
basis for the amount of the Contract (the "Tenant Work Costs"). Tenant shall
also provide Landlord with a copy of its final draft of the construction
contract, which shall be subject to Landlord's written approval, which shall not
be unreasonably withheld or delayed. If Landlord objects to any term or
condition thereof, Landlord and Tenant, and Contractor, if necessary, shall meet
and confer to resolve Landlord's objection. Tenant shall submit to Landlord
detailed information regarding anticipated increases or decreases, if any, in
the Tenant Final Costs with each submittal of a Payment Request, together with
documentation supporting such change; provided, however, in no event shall
Tenant's cash contribution (i.e., amounts contributed by Tenant which are not
secured by any lien on Tenant's Work, Tenant's interest in this Lease or FF&E)
towards Tenant's Work Costs be less than $1 million (excluding the Tenant
Improvement Allowance).
The Draw Multiplier shall be adjusted from time to time to account for such
changes.
4.2.2 Tenant's Agents.
4.2.2.1 Landlord's General Conditions for Tenant's
Agents and Tenant Improvement Work. Tenant's and Tenant's Agent's construction
of Tenant's Work shall comply with the following: (i) Tenant's Work shall be
constructed in strict accordance with the Approved Working Drawings; (ii)
Tenant's Agents shall submit schedules of all work relating to Tenant's Work to
Contractor and Contractor shall, within five (5) business days of receipt
thereof, inform Tenant's Agents of any changes which are necessary therein and
Tenant's Agents shall adhere to such corrected schedule; and (iii) Tenant shall
abide by all reasonable rules made by Landlord's architect or property manager
with respect to the use of freight, loading dock and service elevators, storage
of materials, coordination of work with the contractors of other
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tenants, and any other matter in connection with this Agreement, including
without limitation, the construction of the Tenant's Work.
4.2.2.2 Indemnity. Tenant's indemnity of Landlord as set forth
in this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant's non-payment of any amount arising out of or
related to Tenant's Work and/or Tenant's disapproval of all or any portion of
any request for payment.
4.2.2.3 Requirements of Tenant's Agents. Each of Tenant's
Agents shall guarantee to Tenant and for the benefit of Landlord that the
portion of Tenant's Work for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
from the date of completion thereof. Each of Tenant's Agents shall be
responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within one (1) year after the later to occur of (i) completion of the
work performed by such contractor or subcontractors and (ii) the Commencement
Date. The correction of such work shall include, without additional charge, all
additional expenses and damages incurred in connection with such removal or
replacement of all or any part of Tenant's Work, and/or the Building and/or
common or parking areas that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship of or with respect to
Tenant' Work shall be contained in the Contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either. Tenant covenants to give to Landlord any assignment
or other assurances which may be reasonably necessary to effect such right of
direct enforcement.
4.2.2.4 Insurance Requirements.
4.2.2.4.1 General Coverages. All of Tenant's
Agents shall carry worker's compensation insurance covering all of their
respective employees, and shall also carry public liability insurance, including
property damage, all with limits, in form and with companies as are required to
be carried by Tenant as set forth in this Lease.
4.2.2.4.2 Special Coverages. Tenant shall
carry Builder's All Risk insurance in an amount approved by Landlord covering
the construction of Tenant's Work, and such other insurance reasonably required
by Landlord or Landlord's lender, if any, it being understood and agreed that
Tenant's Work shall be
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insured in accordance with this Lease immediately upon completion thereof. Such
insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that Contractor shall carry excess liability and
Products and Completed Operation Coverage insurance, each in amounts not less
than $1,000,000 per incident, $5,000,000 in aggregate, and in form and with
companies as are required by Landlord.
4.2.2.4.3 General Terms. Certificates
for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to
Landlord before the commencement of construction of Tenant's Work and before the
Contractor's equipment is moved onto the site. All such policies of insurance
must contain a provision that the company writing said policy will give Landlord
and Landlord's lender, if any, thirty (30) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts -of
such insurance. In the event that Tenant's Work is damaged by any cause during
the course of the construction thereof, Tenant shall immediately repair the same
at Tenant's sole cost and expense. Tenant's Agents shall maintain all of the
foregoing insurance coverage in force until Tenant's Work is fully completed and
accepted by Landlord, except for any Products and Completed Operation Coverage
insurance required by Landlord, which is to be maintained for ten (10) years
following completion of the work and acceptance by Landlord and Tenant. All
policies carried under this Section 4.2.2.4 shall insure Landlord, Landlord's
lender, if any, and Tenant, as their interests may appear, as well as Contractor
and Tenant's Agents. All insurance, except Workers' compensation, maintained by
Tenant's Agents shall preclude subrogation claims by the insurer against anyone
insured thereunder. Such insurance shall provide that it is primary insurance as
respects Landlord and that any other insurance maintained by Landlord is excess
and noncontributing with the insurance required hereunder. The requirements for
the foregoing insurance shall not derogate from the provisions for
indemnification of Landlord by Tenant under Section 4.2.2.2 of this Agreement.
4.2.3 Governmental Compliance. Tenant's Work shall comply in
all respects with the following: (i) all building codes and other state,
federal, city or quasi-governmental laws, codes, ordinances and regulations, as
each may apply according to the rulings of the controlling public official,
agent or other person; (ii) applicable standards of the American Insurance
Association (formerly, the -National Board of Fire Underwriters) and the
National Electrical Code; and (iii) building material manufacturer's
specifications.
4.2.4 Inspection by Landlord. Landlord shall have the right to
inspect Tenant's Work at all times, provided however, that Landlord's failure to
inspect Tenant's Work shall in no event constitute a waiver of any of Landlord's
rights hereunder nor shall
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Landlord's inspection of Tenant's Work constitute Landlord's approval of the
same. Landlord shall endeavor to inspect Tenant's Work during construction at
reasonable intervals and shall present any objections thereto as soon as
possible after discovering same, in order to avoid, to the extent reasonably
possible, Tenant's incurring of correction costs in excess of those which would
have been incurred had the inspection and notification taken place in a timely
fashion. Should Landlord disapprove any portion of Tenant's Work, Landlord shall
notify Tenant in writing' of such disapproval and shall specify the items
disapproved. Any defects or deviations in, and/or proper disapproval by Landlord
of, Tenant's Work shall be rectified by Tenant at no expense to Landlord,
provided however, that in the event Landlord determines that a defect or
deviation exists or disapproves of any matter in connection with any portion of
Tenant's Work and such defect, deviation or matter might adversely affect the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or
life-safety systems of the Building, the structure or exterior appearance of the
Building or any other tenant's use of such other tenant's leased premises, the
common area, or the parking areas, Landlord may, following reasonable notice to
Tenant and an opportunity for Tenant to cure same within a reasonable time after
receipt of the notice of the alleged defect, take such action as Landlord deems
necessary, at Tenant's expense and without incurring any liability to Tenant on
Landlord's part, to correct any such defect, deviation and/or matter, including,
without limitation, causing the cessation of performance of the construction of
the Tenant's Work until such time as the defect, deviation and/or matter is
corrected to Landlord's reasonable satisfaction.
4.2.5 Meetings. Commencing upon the execution of this Lease,
Tenant shall hold weekly (or, with the consent of Landlord, less frequent, but
regularly scheduled) meetings at a reasonable time, with the Architect and the
Contractor regarding the progress of the preparation of Construction Drawings
and the construction of Tenant's Work, and Landlord and/or its agents shall
receive prior notice of, and shall have the right to attend, all such meetings,
and, upon Landlord's request, certain of Tenant's Agents shall attend such
meetings. In addition, minutes shall be taken at all such meetings, a copy of
which shall be promptly delivered to Landlord. One such meeting each month shall
include the review of Contractor's current request for payment.
4.2.6 Work Schedule. Concurrently with approval of the Final
Plans Landlord and Tenant shall agree upon a Tenant Work time schedule so as to
enable Tenant to timely complete Tenant's Work and open for business at the
Premises no later than the Rental Commencement Date. Tenant's failure to
strictly adhere to such time schedule (plus any extensions provided for in the
Lease) shall be deemed a material default under the Lease.
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4.3 Notice of Completion: Copy of Record Set of Plans. Within ten (10)
days after completion of construction of Tenant's Work, Tenant shall cause a
Notice of Completion to be recorded in the office of the Recorder of the county
in which the Project is located in accordance with Section 3093 of the Civil
Code of the State of California or any successor statute, and shall furnish a
copy thereof to Landlord upon such recordation. If Tenant fails to do so,
Landlord may execute and file the same on behalf of Tenant as Tenant's agent for
such purpose, at Tenant's sole cost and expense. At the conclusion of
construction, (i) Tenant shall cause the Architect and Contractor (A) to update
the Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (B) to certify to
the best of their knowledge that the "record-set" of as-built drawings are true
and correct, which certification shall survive the expiration or termination of
this Lease, and (C) to deliver to Landlord two (2) sets of copies of such record
set of drawings within ninety (90) days following issuance of a certificate of
occupancy for the Premises., and (ii) Tenant shall deliver to Landlord a copy of
all warranties, guaranties, and operating manuals and information relating to
the improvements., equipment, and systems in the Building and the Premises.
4.4 Bonds. Prior to the commencement of construction of the Tenant
Improvements" Tenant shall obtain a performance and completion bond and a labor
and materials payment bond, satisfactory to Landlord for all of the Tenant
Improvements (the cost of which bonds may be submitted by Tenant for
reimbursement under Section 2.2.2.1 above).
SECTION 5
MISCELLANEOUS
5.1 Tenant's Representative. Tenant has designated Alan Grossberg as
its sole representative with respect to the matters set forth in this Agreement,
who shall, until further notice to Landlord, have full authority and
responsibility to act on behalf of the Tenant as required in this Agreement.
5.2 Landlord's Representative. Landlord has designated Rex Swanson as
its sole representative with respect to the matters set forth in this Agreement,
who, until further notice to Tenant, shall have all authority and responsibility
to act on behalf of the Landlord as required in this Agreement.
5.3 Clean Work Area. Tenant will provide for and pay all costs and
expenses of cleaning the construction area and for any cleanup required in
adjacent areas as a result of the Tenant Improvements.
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5.4 Debris. All construction materials! supplies and equipment shall be
stored in the Premises unless Landlord shall consent in writing to a contrary
arrangement. All rubbish and debris resulting from performance of the Tenant
Improvements shall be removed from the Premises and the Shopping Center no less
often than weekly. Upon completion of the Tenant Improvements, Tenant shall
promptly remove from the Shopping Center and dispose of all remaining rubbish
and debris resulting from the construction and performance of the Tenant
Improvements.
5.5 Time of the Essence in This Agreement. Unless otherwise indicated,
all references herein to a number of days" shall mean and refer to calendar
days. If any item requiring approval is timely disapproved by Landlord, the
procedure for preparation of the document and approval thereof shall be repeated
until the document is approved by Landlord.
5.6 Tenant's Lease Default. Notwithstanding any provision to the
contrary contained in this Lease, if an event of 'material default as described
in the Lease or this Agreement has occurred at any time on or before the
substantial completion of Tenant's Work, then (i) in addition to all other
rights and remedies granted to Landlord pursuant to this Lease, Landlord shall
have the right to withhold payment of all or any portion of the Tenant
Improvement Allowance and/or Landlord may cause Contractor to cease the
construction of the Tenant Work (in which case, Tenant shall be responsible for
any delay in the substantial completion of the Building and Premises caused by
such work stoppage), and (ii) all other obligations of Landlord under the terms
of this Agreement shall be forgiven until such time as such default is cured
pursuant to the terms of this Lease (in which case, Tenant shall be responsible
for any delay in the substantial completion of the Building and Premises caused
by such inaction by Landlord).
5.7 Davis-Bacon Act. Tenant shall comply with the DavisBacon Act, as
amended (40 U.S.C. 276a-276a-5) respecting wages to be paid by contractors and
subcontractors to laborers and mechanics employed by such contractors or
subcontractors in connection with Tenant's Work, and Tenant shall comply with
the requirements of the Contract Work Hours and Safety Standards Act (40 U.S.C.
327 et sea.) respecting work performed by contractors, subcontractors, laborers
and mechanics.
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EXHIBIT "D"
GUARANTY OF LEASE
This Guaranty of Lease (the "Guaranty") is attached to and made part of
that certain real estate Lease (the "Lease") dated December ____, 1996 between
MDA-SAN BERNARDINO ASSOCIATES, L.L.C., a Delaware limited liability company, as
Landlord, and CINEMASTAR LUXURY THEATERS, INC., a California corporation, as
Tenant, covering the certain real property described in Exhibit "All thereto and
referred to as the "Theater Parcel." The terms used in this Guaranty shall have
the same definitions as set forth in the Lease. In order to induce Landlord to
enter into the Lease with Tenant, JOHN ELLISON, JR., ALAN GROSSBERG, JERRY
WILLITS and RUSSELL SEHEULT (individually, a "Guarantor" and collectively, the
"Guarantors"), have agreed to execute and deliver this Guaranty to Landlord.
Each Guarantor acknowledges that Landlord would not enter into the Lease if each
Guarantor did not execute and deliver this Guaranty to Landlord.
1. GUARANTY. In consideration of the execution of the Lease by Landlord
and as a material inducement to Landlord to execute the Lease, each Guarantor
hereby irrevocably, unconditionally, jointly and severally guarantees the full,
timely and complete (a) payment of all rent and other sums payable by Tenant to
Landlord under the Lease, and any amendments or modifications thereto by
agreement or course of conduct, and (b) performance of all covenants,
representations and warranties made by Tenant and all obligations to be
performed by Tenant pursuant to the Lease (including but not limited to, the
timely commencement, performance and completion of Tenant's Work), and any
amendments or modifications thereto by agreement or course of conduct. The
payment of those amounts and performance of those obligations shall be conducted
in accordance with all terms, covenants and conditions set forth in the Lease,
without deduction, offset or excuse of any nature and without regard to the
enforceability or validity of the Lease, or any part thereof, or any disability
of Tenant.
2. LANDLORD'S RIGHTS. Landlord may perform any of the following acts at
any time during the Lease Term, without notice to or assent of any Guarantor and
without in any way releasing, affecting or impairing any of Guarantor's
obligations or liabilities under this Guaranty:
(a) alter, modify or amend the Lease by agreement or course of
conduct;
(b) grant extensions or renewals of the Lease;
(c) assign or otherwise transfer its interest in the Lease,
the Theater Parcel, or this Guaranty;
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(d) consent to any transfer or assignment of Tenant's or any
future tenant's interest under the Lease;
(e) release one or more Guarantor, or amend or modify this
Guaranty with respect to any Guarantor, without releasing or
discharging any other Guarantor from any of such Guarantor's
obligations or liabilities under this Guaranty;
(f) receive and hold security for the payment of this Guaranty
and exchange, enforce, waive and release any such security;
(g) apply such security and direct the order or manner of sale
thereof as Landlord, in its sole discretion, deems appropriate; and
(h) foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the
liability of Guarantor under this Guaranty, except to the extent the
indebtedness has been paid.
3. TENANT'S DEFAULT. This Guaranty is a guaranty of payment and
performance, and not of collection. Upon any breach or default by Tenant under
the Lease, Landlord may proceed immediately against Tenant and/or any Guarantor
to enforce any of Landlord's rights or remedies against Tenant or any Guarantor
pursuant to this Guaranty, the Lease, or at law or in equity without notice to
or demand upon either Tenant or any Guarantor. This Guaranty shall not be
released, modified or affected by any failure or delay by Landlord to enforce
any of its rights or remedies under the Lease or this Guaranty, or at law or in
equity.
4. GUARANTOR'S WAIVERS. Each Guarantor hereby waives:
(a) presentment, demand for payment and protest of
non-performance under the Lease;
(b) notice of any kind including, without limitation, notice
of acceptance of this Guaranty, protest, presentment, demand for
payment, default, nonpayment, or the creation or incurring of new or
additional obligations of Tenant to Landlord;
(c) any right to require Landlord to enforce its rights or
remedies against Tenant under the Lease, or otherwise, or against any
other Guarantor;
(d) any right to require Landlord to proceed against any
security held from Tenant or any other party, including but not limited
to, the First LC and Second LC;
Initials ______________
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(e) any right of subrogation; and
(f) any defense arising out of the absence, impairment or loss
of any right of reimbursement or subrogation or other right or remedy
of Guarantors against Landlord or any such security, whether resulting
from an election by Landlord, or otherwise. Any part payment by Tenant
or other circumstance which operates to toll any statute of limitations
as to Tenant shall operate to toll the statute of limitations as to
Guarantor.
5. SEPARATE AND DISTINCT OBLIGATIONS. Each Guarantor acknowledges and
agrees that such Guarantor's obligations to Landlord under this Guaranty are
separate and distinct from Tenant's obligations to Landlord under the Lease. The
occurrence of any of the following events shall not have any effect whatsoever
on any Guarantor's obligations to Landlord hereunder, each of which obligations
shall continue in full force or effect as though such event had not occurred:
(a) the commencement by Tenant of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended or
replaced, or any other applicable federal or state bankruptcy,
insolvency or other similar law (collectively, the "Bankruptcy Laws");
(b) the consent by Tenant to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official of Tenant or for any substantial part
of its property;
(c) any assignment by Tenant for the benefit of creditors;
(d) the failure of Tenant generally to pay its debts as such
debts become due;
(e) the taking of corporate action by Tenant in the
furtherance of any of the foregoing; or
(f) the entry of a decree or order for relief by a court
having jurisdiction in respect of Tenant in any involuntary case under
the Bankruptcy Laws, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of Tenant or for
any substantial part of its property, or ordering the winding-up or
liquidation of any of its affairs and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60)
consecutive days.
Initials ______________
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The liability of Guarantors under this Guaranty is not and shall not be affected
or impaired by any payment made to Landlord under or related to the Lease f or
which Landlord is required to reimburse Tenant pursuant to any court order or in
settlement of any dispute, controversy or litigation in any bankruptcy,
reorganization, arrangement, moratorium or other federal or state debtor relief
proceeding. If, during any such proceeding, the Lease is assumed by Tenant or
any trustee, or thereafter assigned by Tenant or any trustee to a third party,
this Guaranty shall remain in full force and effect with respect to the full
performance of Tenant, any such trustee or any such third party's obligations
under the Lease. If the Lease is terminated or rejected during any such
proceeding, or if any of the events described in Subparagraphs (a) through (f)
of this Paragraph 5 occur, as between Landlord and each Guarantor, Landlord
shall have the right to accelerate all of Tenant's obligations under the Lease
and each Guarantor's obligations under this Guaranty. In such event, all such
obligations shall become immediately due and payable by Guarantors to Landlord.
Guarantors waive any defense arising by reason of any disability or other
defense of Tenant or by reason of the cessation from any cause whatsoever of the
liability of Tenant.
6. SUBORDINATION. All existing and future advances by Guarantor to
Tenant, and all existing and future debts of Tenant to any Guarantor, shall be
subordinated to all obligations owed to Landlord under the Lease and this
Guaranty.
7. SUCCESSORS AND ASSIGNS. This Guaranty binds each Guarantor's
personal representatives, successors and assigns. By execution below, each
married Guarantor represents and warrants that he is managing his spouse's
community property interest, if any, in all community assets.
8. ENCUMBRANCES. If Landlord's interest in the Theater Parcel or the
Lease, or the rents, issues or prof its therefrom, are subject to any deed of
trust, mortgage or assignment for security, any Guarantor's acquisition of
Landlord's interest in the Theater Parcel or Lease shall not affect any of
Guarantor's obligations under this Guaranty. In such event, this Guaranty shall
nevertheless continue in full force and effect for the benefit of any mortgagee,
beneficiary, trustee or assignee or any purchaser at any sale by judicial
foreclosure or under any private power of sale, and their successors and
assigns. Any married Guarantor expressly agrees that Landlord has recourse
against any Guarantor's separate property for all of such Guarantor's
obligations hereunder.
9. GUARANTOR'S DUTY. Guarantors assumes the responsibility to remain
informed of the financial condition of Tenant and of all other circumstances
bearing upon the risk of Tenant's default, which reasonable inquiry would
reveal, and agree that Landlord
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shall have no duty to advise Guarantors of information known to it regarding
such condition or any such circumstance.
10. LANDLORD'S RELIANCE. Landlord shall not be required to inquire into
the powers of Tenant or the officers, employees, partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed under
this Guaranty.
11. INCORPORATION OF CERTAIN LEASE PROVISIONS Each Guarantor hereby
represents and warrants to Landlord that such Guarantor has received a copy of
the Lease, has read or had the opportunity to read the Lease, and understands
the terms of the Lease. Each Guarantor shall be jointly and severally liable
under this Guaranty. The provisions in the Lease relating to the execution of
additional documents, legal proceedings by Landlord against Tenant, severability
of the provisions of the Lease, interpretation of the Lease, notices, waivers,
the applicable laws which govern the interpretation of the Lease, delivery of
financial statements and the authority of the Tenant to execute the Lease are
incorporated herein in their entirety by this reference and made a part hereof.
Any reference in those provisions to "Tenant" shall mean each Guarantor and any
reference in those provisions to the "Lease" shall mean this Guaranty, except
that (a) any notice which any Guarantor desires or is required to provide to
Landlord shall be effective only if signed by all Guarantors and (b) any notice
which Landlord desires or is required to provide to any Guarantor shall be sent
to such Guarantor at such Guarantor's address indicated below, or if no address
is indicated below, at the address for notices to be sent to Tenant under the
Lease.
Signed on December 20, 1996 JOHN ELLISON, JR.
-----------------------------------
JOHN ELLISON, JR.
431 College Blvd.
Oceanside, CA 92507
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Address
Signed on December 20, 1996 ALAN GROSSBERG
-----------------------------------
ALAN GROSSBERG
431 College Blvd.
Oceanside, CA 92507
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Address
(signatures) continued on next page)
Initials ___________
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(signatures) continued from previous page)
Signed on December 20, 1996 JERRY WILLITS
-----------------------------------
JERRY WILLITS
4784 Terracina
Oceanside, CA 92506
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Address
Signed on December 20, 1996 RUSSELL SEHEULT
-----------------------------------
RUSSELL SEHEULT
1184 Nevada Street
Redlands, CA
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Address
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EXHIBIT "E"
TENANT'S CERTIFICATE
Cinemaster Luxury Theaters, Inc., a California corporation ("Tenant")
hereby certifies the following with respect to that certain Multi-plex Theater
Lease ("Lease"), dated December ___, 1996, between MDA-San Bernardino
Associates, L.C.C., a Delaware limited liability company ("Landlord") and
Tenant:
1. The date of Substantial Completion of Landlord's Work is _________.
2. The date of issuance by the City of San Bernardino of permits for
Tenant's Work is _________.
3. The Rent Commencement Date is _____________. Minimum Annual Rent is
currently payable at $_______ per month and has been paid through
___________.
4. The Initial Term commences [commenced]: _____________.
5. Landlord's Work is complete except for the following items:___________.
6. To Tenant's knowledge, Landlord is not in default of any of Landlord's
obligations under the Lease, and no event has occurred which with the
passage of time or the giving of notice would constitute such a default
(except as follows:_____________.
7. The Lease is in full force and effect and has not been modified in any
manner [except as follows: ______________.
8. Tenant has (not] exercised any right to an Extended Term granted in the
Lease.
9. Tenant's address for notice purposes is:
---------------------------------
---------------------------------
---------------------------------
Tenant acknowledges that Landlord and/or Landlord's Mortgagees and/or
prospective purchasers and tenants of the Development are relying on the
certifications made by Tenant herein, all of which are true and correct to
Tenant's knowledge as of the date of execution hereof.
104
This Tenant's Certificate is executed this ___ day of __________,19__.
CINEMASTER LUXURY THEATERS,
INC., a California corporation
By ________________________________
Its_____________________________
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EXHIBIT "F"
SIGN CRITERIA
[to be attached]
106
EXHIBIT "G"
RULES AND REGULATIONS
[to be attached]
107
RECORDING REQUESTED BY, AND
WHEN RECORDED MAIL TO:
Greenberg Glusker Fields
Claman & Machtinger LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, CA 90067-4590
Attn: Debby R. Zurzolo, Esq.
- --------------------------------------------------------------------------------
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT is made
this 14th day of October, 1996, by and between (1) ____________________, a
______________________, hereinafter referred to as "Lender;" (2) CINEMASTAR
LUXURY THEATERS, INC., a California corporation, hereinafter referred to as
"Tenant;" and (3) MDA-SAN BERNARDINO ASSOCIATES, L.L.C., a Delaware limited
liability company, hereinafter referred to as "Landlord."
W I T N E S S E T H:
WHEREAS, Lender is the holder of a deed of trust (hereinafter the "Deed
of Trust") encumbering the real property described in Exhibit "All hereto, which
Deed of Trust is dated _____________________ and recorded as Instrument No.
________________________in the Official Records of the County Recorder of the
County of San Bernardino, California ("Official Records"), and that certain
UCC-1 filed with the California Secretary of State as File No. (collectively the
"Security Documents"). The Security Documents encumber the real property
described in Exhibit "All hereto;
WHEREAS, Tenant is a tenant under a lease dated as of
___________________, 1996 by and between Landlord and Tenant (the "Premises
Lease"). The Lease demises certain premises in the City of San Bernardino, San
Bernardino County, California; and such premises (the "Leased Premises") are
encumbered by the Security Documents;
WHEREAS, Tenant is the beneficiary of certain parking rights and
easements under that certain Parking Agreement dated _______________, 1996,
recorded __________ as Instrument No. ________ in Official Records, which
agreement and Premises Lease are collectively referred to herein as the
"Lease"); and
WHEREAS, Lender and Tenant desire to enter into this agreement to
establish certain rights, safeguards and obligations
EXHIBIT H
1
108
with respect to their interests, and to further provide for various
contingencies as herein set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreement of the parties hereto to the terms and conditions hereinafter
contained, the parties hereto agree as follows:
1. The Lender hereby consents to the Lease and agrees that no action
taken by Lender under the Deed of Trust or the Security Documents to enforce the
rights of Lender thereunder shall disturb or affect the Lease or Tenant's rights
thereunder, unless and until Tenant is in default under the Lease and Landlord
or Lender is entitled to take action under the Lease in accordance with the
terms thereof.
2. Tenant hereby agrees that no action taken by Lender to enforce any
rights under the Deed of Trust or the Security Documents, by reason of any
default thereunder (including, without limitation, the appointment of a
receiver, taking of possession by Lender as Trustor under the Deed of Trust,
foreclosure of the Deed of Trust, transfer of title in lieu of foreclosure or
demand for rent under any assignment of rents or leases) shall give rise to any
right of Tenant to terminate the Lease or shall invalidate or constitute a
breach by Landlord of any of the terms thereof.
3. The Lease and any amendment, renewal, modification or extension of
the Lease, and all right, title and interest of Tenant in and to the Leased
Premises, are and shall be subject and subordinate in all respects to the
Security Documents.
4. Tenant shall attorn to Lender, its successors and assigns, to a
receiver for the Leased Premises appointed by a court of competent jurisdiction
or to a purchaser at any sheriff's or foreclosure sale of the Leased Premises or
its successors and assigns whenever said party (i) is in possession of the
Leased Premises, (ii) is exercising the right to collect rent pursuant to the
Deed of Trust, any assignment of rents and leases granted in connection
therewith or as otherwise provided in the Security Documents, (iii) has
commenced foreclosure of the Deed of Trust in any manner permitted by the laws
of the state in which the Leased Premises are located, (iv) has caused a
receiver to be appointed for the Leased Premises by a court of competent
jurisdiction, or (v) has acquired or succeeded to Landlord's interest in the
Leased Premises by deed in lieu of foreclosure or any other method. In such
event, Tenant shall be bound to Lender or said party under all of the terms,
covenants and conditions of the Lease for the balance of the term of the Lease
then remaining and any extensions or renewals thereof which may be exercised in
accordance with the terms thereof, with the same force and effect as if Lender
or said party were the Landlord under the Lease. Said attornment shall be
effective and self-operative without the execution of any further instrument on
the part of any of the
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parties hereto upon occurrence of an event described above; however, upon
request, Tenant will execute and deliver to Lender or said party any instrument
which is necessary or desirable to evidence such attornment. Tenant shall be
under no obligation to pay rent to Lender or said party until Tenant receives
written notice that Lender or said party is exercising its rights under any
assignment of rents and leases contained in the Security Documents or that it
has succeeded to the interest of Landlord under the Lease. If the Lease is
terminated as a result of Landlord's bankruptcy or reorganization, and Lender
subsequently obtains fee title to the Leased Premises, so long as Tenant is not
then in default Lender agrees to reinstate the Lease as between Lender (as
Landlord) and Tenant.
5. Tenant agrees that Lender shall not (i) be liable for any act,
omission or default on the part of Landlord arising or accruing prior to Lender
succeeding to the pos ition of the named Landlord under the Lease or for any
indemnification obligation of Landlord to Tenant under the Lease arising or
accruing prior to Lender succeeding to the position of the named Landlord under
the Lease, (ii) be subject to any offset which shall have accrued to Tenant
against Landlord, (iii) be liable for any security deposit, rental prepayment
for more than one month in advance, or other deposit (including, but not limited
to tax and insurance deposits, if any) unless and until such funds have been
transferred to Lender, (iv) be bound by any modification renewal, extension or
amendment of the Lease to which Lender has not consented, (v) be bound by any
collateral agreement, or by any waiver or forbearance suffered, entered into or
granted by Landlord unless Lender has consented to the same in writing, (vi) be
bound by or incur any liability under any provision in the Lease pursuant to
which the Landlord agrees to indemnify Tenant in connection with hazardous or
toxic substances, or (vii) be liable for any obligations or covenants which
arise and are to be performed before Lender becomes owner of the Leased Premises
or after it is no longer owner.
6. The agreements made herein shall be binding upon and inure to the
benefit of the parties hereto, their respective successors and assigns. Tenant
agrees that Lender may assign its note and Security Documents. The rights and
obligations of Lender under this Agreement shall be assignable by Lender to such
an assignee, to a purchaser at a foreclosure sale of Landlord's interest in the
Leased Premises or to a purchaser of the Leased Premises from Lender. As used
herein, the words "foreclosure" and "foreclosure sale" shall be deemed to
include the acquisition of Landlord's estate in the Leased Premises by voluntary
deed (or assignment) in lieu of foreclosure; and the word "Lender" shall include
Lender herein specifically named and any of its successors and assigns,
including anyone who shall have succeeded to Landlord's interest in the Leased
Premises by, through or under foreclosure of the Deed of Trust, and/or action
under the other Security Documents.
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7. All notices required or permitted to be given by this Agreement
shall be sent or delivered to the parties addressed as follows:
Lender: _______________________________________
_______________________________________
_______________________________________
_______________________________________
Attn:__________________________________
Tenant: CinemaStar Luxury Theaters, Inc.
431 College Boulevard
Oceanside, CA 92057
Attn: John Ellison Jr., President
Landlord: MDA-San Bernardino Associates, L.L.C.
c/o Metropolitan Development
300 Continental Boulevard
Suite 360
El Segundo, CA 90245
Attn: Rex Swanson
With copy to: Greenberg Glusker Fields
Claman & Machtinger LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, CA 90067-4590
Attn: Debby R. Zurzolo, Esq.
The parties hereto may change such addresses at any time by
written notice thereof to the other parties in accordance with the provisions
hereof. All notices shall be either (i) personally delivered to the addresses
set forth above, in which case it shall be deemed given on the date of delivery
to said address, or (ii) sent by registered or certified mail, return receipt
requested, in which case it shall be deemed given three (3) business days after
deposit in the U.S. mail postage prepaid, or (iii) sent by a nationally
recognized overnight courier, in which case it shall be deemed given upon
receipt.
8. For so long as Lender has a security interest in the Leased
Premises, as a condition of Tenant declaring the Lease in default, it must
provide written notice of such violation to Lender. Such notice shall state the
nature of default. In addition to any cure rights afforded Landlord in the
Lease, Lender shall be afforded an additional 60-day period to cure any default,
provided, however, that (i) with respect to nonmonetary defaults Lender shall be
provided extensions of such 60-day period for so long as Lender is diligently
attempting to cure the default, and (ii) after the expiration of the 60-day
period, as the same may be extended as provided herein, unless the default shall
have been cured, Tenant may proceed with the remedies for default as contained
within the Lease.
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9. This Agreement shall inure to the benefit of, and be binding upon
the parties hereto and their permitted successors and assigns.
10. This Agreement may be executed in counterparts and each copy of
this Agreement to which is attached counterpart signature pages containing the
signatures of each of the parties hereto shall be deemed for all purposes to be
an executed original of this Agreement.
11. This Agreement shall be effective as of the "Rent Commencement
Date" (as defined in the Lease).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first hereinabove set forth.
"LENDER"
-----------------------------------------
a
---------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
"TENANT"
CINEMASTAR LUXURY THEATERS, a
California corporation
By:
--------------------------------------
Alan Grossberg, Executive
Vice President/CFO
(signatures) continued on next page)
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112
(signatures) continued from previous page)
"LANDLORD"
MDA-SAN BERNARDINO ASSOCIATES,
L.L.C., a Delaware limited
liability company
By: SK Metro Development, L.P.,
a California limited
partnership, its managing
member
By: SK Metro Corp., a
California corporation,
its general partner
By:
----------------------------
Rex Swanson,
President
6
113
STATE OF CALIFORNIA )
) SS:
COUNTY OF )
On ________________________, 1996, before me, _________________________
a Notary Public, personally appeared _______________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he/she executed the same in his/her authorized capacity, and that by
his/her signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature_____________________________
(Seal)
STATE OF CALIFORNIA )
) SS:
COUNTY OF )
On __________________________________________, 1996, before me,
______________________________________ , a Notary Public, personally appeared
__________________________________ , personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
Signature ___________________________
(Seal)
7
114
STATE OF CALIFORNIA )
) SS:
COUNTY OF __________________ )
On _________________________________________ 1996, before me,
___________________________________________ a Notary Public, personally
appeared ___________________________________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person whose
name is subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her authorized capacity, and that by his/her signature
on the instrument the person, or the entity upon behalf of which the person
acted, executed the instrument.
WITNESS my hand and official seal.
Signature ______________________________
(Seal)
8
115
EXHIBIT "I"
PARKING AGREEMENT
[to be attached]
116
EXHIBIT "J"
PERMITTED TITLE EXCEPTIONS
[to be attached)
117
EXHIBIT "K"
RECORDING REQUESTED BY AND
WHEN RECORDED, MAIL TO:
GREENBERG GLUSKER FIELDS
CLAMAN & MACHTINGER LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, CA 90067-4590
Attn: Debby R. Zurzolo, Esq.
- --------------------------------------------------------------------------------
SHORT FORK OF LEASE
1. Parties.
This Short Form of Lease ("Memorandum"), dated for identification
purposes only _______________________, 1996, is entered into by and between
MDA-SAN BERNARDINO ASSOCIATES, L.L.C., a Delaware limited liability company
("Landlord"), and CINEMASTAR LUXURY THEATERS, INC., a California corporation
("Tenant").
2. Recitals.
a. Landlord is the fee owner of that certain real property more
particularly described on Exhibit "All attached hereto ("Theater Parcel").
b. The Theater Parcel is Part of a larger project which may be
developed. by Landlord on adjacent real property (collectively with the Theater
Parcel, the "Development Site"), described on Exhibit "B" attached hereto. The
Development Site is part of a larger tract of land that is subject to the
Redevelopment Plan of the Redevelopment Agency of the City of San Bernardino for
Project Area No. __________________
C. Pursuant to the Lease, Tenant shall design and construct an
approximately 80,000-foot building on the Theater Parcel for use as a
first-class, state of the art, movie theater.
d. In order to accommodate Tenant's parking requirements, Landlord
has or will enter into certain parking agreements more particularly described in
the Lease.
e. In consideration of the Recitals contained herein and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Landlord and Tenant agree as follows:
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118
3. Grant of Leases.
Landlord leases to Tenant, and Tenant leases from Landlord the
Theater Parcel, together with all improvements constructed thereon, subject to
the provisions of that certain unrecorded Lease dated , 1996, between Landlord
and Tenant ("Lease") .
4. Term of Lease.
The initial term of the Lease commences on the "RentCommencement Date"
as defined in Section 1.1(b) of the Lease, and, unless sooner terminated
pursuant to the terms thereof, shall expire twenty-five (25) years from' the
date thereof, unless extended as provided therein.
5. Option to Renew.
Section 3.7 of the Lease provides that Tenant shall have the
option to extend the initial term of the Lease for two (2) additional periods
of five (5) years each, subject to the terms and conditions set forth therein.
6. Tenant's Exclusive Use.
Section 7.3 of the Lease provides as follows:
"So long as Tenant continuously operates the Premises for the use
specified in Section 1.1(1), Landlord shall not lease space within the
Development to anyone for the purpose of operating within the
Development a movie theater, or conducting a business requiring the use
of auditoriums exceeding 10, 000 square feet for meetings and
conventions at the Development, without Tenant's prior written
approval. This restriction shall not apply to the operation of
restaurant or banquet facilities."
7. Purpose of Short Form of Lease.
This Memorandum is prepared for the purpose of recordation only, and in
no way modifies the terms and provisions of the Lease. In the event of
any inconsistency between the terms and provisions of this Memorandum
and the terms and provisions of the Lease, the terms and provisions of
the Lease shall prevail.
8. Successors and Assigns.
This Memorandum shall be binding upon and inured to the benefits of the
parties hereto and their respective permitted successors and assigns.
2
119
9, Exhibits.
All exhibits attached hereto are incorporated herein by this reference.
The parties have executed this Memorandum as of the date first set
forth opposite their signatures below.
Executed this 20 day "LANDLORD"
-------
of December , 1996,
---------------------
at Oceanside .
--------------------- MDA-San Bernardino Associates
L.L.C., a Delaware limited
liability company
By: SK Metro Development, L.P.,
a California limited
partnership, its managing member
By: SK Metro Corp., a
California corporation,
its general partner
By: \s|Rex Swanson
----------------------
Rex Swanson
Title: President
Executed this 20 day "TENANT"
-------
of December , 1996, CINEMASTAR LUXURY THEATERS,
--------------------- INC., a California Corporation
at Oceanside .
--------------------- By: \s\Alan Grossberg
----------------------
Alan Grossberg
Title: Executive Vice President/CFO
3
120
STATE OF CALIFORNIA )
) SS:
COUNTY OF Los Angeles )
-------------------
On December 24 , 1996, before me,
-------------------------------------------
Colleen M. Rafferty , a Notary Public, personally appeared
- ------------------------------------ Rex Swanson , personally
-------------------------------
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature \s\Colleen M. Rafferty
---------------------------
(Seal)
STATE OF CALIFORNIA )
) SS:
COUNTY OF San Diego )
-------------------
On December 20 , 1996, before me,
-------------------------------------------
Dana R. Carter , a Notary Public, personally appeared
- ------------------------------------ Alan Grossberg , personally
-------------------------------
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature \s\Dana R. Carter
---------------------------
(Seal)
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121
EXHIBIT "A"
LEGAL DESCRIPTION OF THEATER PARCEL
EXHIBIT "B"
LEGAL DESCRIPTION OF DEVELOPMENT SITE
5
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EXHIBIT "L"
ADDITIONAL COVENANTS
(to be attached]