STANDARD RETAIL SPACE LEASE
THIS LEASE is made and entered into, effective as of the 13th day of July,
1994, by and between PALMA REAL ASSOCIATES, S.E., a Puerto Rico special
partnership ("Landlord"), and THEATER ACQUISITIONS OF PUERTO RICO, INC., a
Puerto Rico corporation ("Tenant").
I.
REFERENCE PROVISIONS; CERTAIN DEFINED TERMS;
SHOPPING CENTER; LEASED PREMISES; AND TERM
Section 1.1 Reference Provisions.
(a) LEASED PREMISES - The "Leased Premises" consist of that portion of
that certain building constructed (or to be constructed) containing
(or to contain) the space identified on the Site Plan for the
"Shopping Center" (as hereinafter defined) attached hereto as part
of composite Exhibit A (the other portion of composite Exhibit A
consisting of the legal description for the Shopping Center),
together with appurtenant improvements relating to such space. The
Leased Premises contain approximately 18,850 square feet of "floor
space" (as hereinafter defined). In the event that the square
footage of the Leased Premises increases above or decreases below
18,850 square feet, the provisions of this Lease which are based on
the square footage of the Leased Premises, including, but not
limited to, Sections 1.1(b), 1.1(c) and 1.1(f), shall be revised as
required to reflect any such increase or decrease in the square
footage of the Leased Premises. The Leased Premises are located on
the ground floor in a building constructed (or to be constructed) in
a Shopping Center (the "Shopping Center") now known, or intended to
be known, as PLAZA PALMA REAL (which name may be changed at any
time, or from time to time, by Landlord, in Landlord's sole
discretion), and located (or to be located) on southwest corner of
the intersection of P.R. 3 and P.R. 53, Humacao, Puerto Rico.
(b) TERM - The "Term" shall be for a period of one-hundred twenty (120)
full months, commencing as hereinafter provided. If the Term
commences on a day other than the first day of a month, then the
Term shall be extended for such fractional month. Reference in this
Lease to the "Term" shall include any and all written renewals
and/or extensions, if any, of the initial Term hereof.
Provided in all cases that Tenant is not then in default hereunder
as of the date when each such Option Term, as hereinafter defined,
is exercised, Tenant shall have the following five (5) Option Terms:
one (1) option to extend the Term of the Lease for one (1)
consecutive period of ten (10) years followed by four (4) options to
extend the Term of the Lease for consecutive periods of five (5)
years each. Any such extension shall be upon all of the same terms
and conditions as are contained in the Lease (except as hereinafter
provided with respect to Minimum Rent and except that the then
remaining number of options to extend the Term hereof shall be
reduced by the number of Option Terms theretofore exercised). Each
such option term is referred to herein as an "Option Term".
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To exercise each of the foregoing option(s), Tenant must give
irrevocable written notice to Landlord of its election to extend the
Term for the then forthcoming Option Term not later than six (6)
months prior to the end of the initial ten (10) year Term (for the
first extension), and six (6) months prior to the end of each
properly exercised Option Term (for each subsequent extension). If
Tenant fails to give proper and timely notice of the exercise of any
option (or if Tenant's prior default prohibits Tenant from
exercising any such option as aforesaid), such option and all
subsequent options shall automatically be null and void in all
respects, and the Lease shall terminate absolutely on the original
maturity date hereof (or, if any option has been properly and
validly exercised, at the end of the then current Option Term, as
appropriate), if not sooner as elsewhere provided in the Lease.
Upon the timely and valid giving of any of the foregoing notices,
Landlord and Tenant shall become bound under the Lease for the then
forthcoming Option Term. Further, Landlord and Tenant shall each
execute such other documents as the other deems reasonably necessary
to evidence and confirm the extension of the Lease, and to ratify
the terms and conditions of the Lease for the entire applicable
Option Term.
(c) MINIMUM RENT (or "Minimum Rent") shall be paid on an annual basis in
each Lease Year as follows:
Each of Lease Years: Annual Amount:
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Years 1 through 10: $164,937.50, or
$8.75 per annum per
square foot in the
Leased Premises.
Minimum Rent for each Lease Year of the Option Terms (if properly
and validly exercised) shall be as follows:
Annual Amount
-------------
Option Term 1
(each of Lease Years 11 - 15) $189,678.12
Option Term 1
(each of Lease Years 16 - 20) $218,129.84
Option Term 2
(each of Lease Years 21 - 25) $250,849.32
Option Term 3
(each of Lease Years 26 - 30) $288,476.72
Option Term 4
(each of Lease Years 31 - 35) $331,748.23
Option Term 5
(each of Lease Years 36 - 40) $381,510.46
(d) PERCENTAGE RENT - "Percentage Rent" shall be, on a calendar year
basis, an amount equal to eight percent (8%) multiplied by the
positive difference, if any, between (i) "Gross Sales" (as
hereinafter defined) during each full calendar year, and (ii) the
"Break Point" $2,061,719 for yeats 1-10 [defined as the amount
equal to Minimum Rent for each such full calendar year divided by
the aforesaid percentage]; provided that, in the case of a partial
calendar year, Gross Sales shall be calculated for such partial
calendar year and the Break Point shall be equal to Minimum Rent
actually paid by Tenant for such partial calendar year divided
by the aforesaid percentage.
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(e) (i) USE - First class, multi-screen movie theatre, with not more
than an aggregate total of one thousand four hundred seven
(1,407) seats, with associated movie theatre concessions and
other movie theatre services and such other use which is
permitted under Section 4.1 of this Lease.
Provided Tenant continues to operate as a movie theatre at all times
during the term hereof, Landlord covenants and agrees that no part
of the Shopping Center, other than the Leased Premises, shall,
during the term of this Lease or any renewals or extensions thereof,
be leased, occupied or used for the exhibition of entertainment
performances including, without limitation, motion pictures, live
performances of any type and/or television broadcasts, except
television or live performances which are incidental to another
Tenant's primary business, such as in the case of a restaurant or
lounge, or which are part of a promotion being conducted by the
Shopping Center. In addition, Landlord shall not permit the sale of
popcorn anywhere in the food court of the Shopping Center, except
within the Leased Premises. The foregoing restriction on Landlord
shall automatically be rendered null and void for all purposes if
Tenant ceases to operate as a movie theatre.
Notwithstanding Landlord's agreement with Tenant herein, Landlord
shall not be liable to Tenant in the event a tenant to which
Landlord now or hereafter leases premises in the Shopping Center
violates its lease and infringes on the exclusive granted to Tenant
herein provided Landlord promptly, upon being advised in writing of
the existence of a violation, makes reasonably vigorous efforts to
enforce the exclusive granted to Tenant herein. In the event
Landlord's efforts to enforce the exclusive granted to Tenant herein
are not successful, Landlord shall, upon receipt of a written
request from Tenant, assign to Tenant Landlord's right to monetary
damages, injunction and specific performance, if any, but no other
rights which Landlord may have against such tenant to enforce the
exclusive granted to Tenant herein, in which case Tenant shall have
the right to pursue such tenant directly and in Tenant's (not
Landlord's) name, to seek monetary damages, injunction and specific
performance, if available, to remedy such tenant's violation of its
lease. Under no circumstances shall Tenant have the right to seek
the eviction of such tenant, or otherwise seek to terminate such
tenant's lease with Landlord.
(ii) OPERATING UNDER THE FOLLOWING BUSINESS NAME
Wometco Theatres (or such other name as is then generally
utilized by Tenant for its theatres from time to time)
(f) MONTHLY MARKETING CHARGE - $-0-.
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(g) SECURITY DEPOSIT - $-0-.
(h) NOTICE ADDRESS -
TO LANDLORD: TO TENANT:
------------ ----------
Mr. Mark B. Davis Mr. Frank J. Moreno
TJAC, INC. President
Royal Bank Center Theater Acquisitions of
255 Ponce de Leon Avenue Puerto Rico, Inc.
Suite 1551 Miramar Plaza Center
Hato Rey, San Juan, Suite 608
Puerto Rico 00919 Santurce, Puerto Rico
00907
With a copy to: With a copy to:
--------------- ---------------
Mr. Mark B. Davis Mr. Frank J. Moreno
7104 MelRose Castle Lane President
Boca Raton, FL 33496 Wometco Theatres
2121 Ponce De Leon Blvd.
Suite 900
Coral Gables, FL 33134
With a copy to:
---------------
Post & Romero
Attn: Carlos A. Romero,
Jr.
3195 Ponce de Leon Blvd.
Suite 200
Coral Gables, FL 33134
(i) COMPLETION PERIOD FOR TENANT'S WORK - "Tenant's Work" (as
hereinafter defined) shall be completed within 180 days from
Landlord's "Tender of Possession" (as hereinafter defined), subject
to delays caused by a strike which makes Tenant unable to obtain
labor or materials, failure of power or other utilities, riots, war,
civil commotion, unavoidable casualty, severe weather or other
causes which are (a) material and directly impact on Tenant's Work,
(b) out of the control of Tenant, (c) documented (if capable of
being documented), and (d) noticed to Landlord.
(j) OPERATING HOURS: Tenant's operating hours shall be reasonably
consistent with those of similar movie theatres of Tenant in Puerto
Rico. Tenant shall have the sole discretion on whether to conduct
midnight showings.
(k) COMPLETION PERIOD FOR LANDLORD'S WORK; TENDER OF POSSESSION -
Landlord shall complete Landlord's Work and Tender of Possession as
provided in Section 1.2 hereof, but in no event later than December
31, 1995. If Landlord fails to deliver Tender of Possession to
Tenant on or before December 31, 1995, Tenant shall have the right
to (a) cancel this Lease by written notice to Landlord, which notice
to be effective must be received by Landlord on or before Landlord
in fact delivers Tender of Possession to Tenant, even if such Tender
of Possession is after December 31, 1995, or (b) extend such Tender
of Possession date.
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(l) SUBSTANTIAL COMPLETION OF LANDLORD'S WORK - "Substantial Completion
of Landlord's Work" shall mean the date on which Landlord's
architect certifies to Landlord and Tenant (and their respective
lenders, if any) that (1) Landlord's Work has been fully and finally
completed in substantial accordance with the plans and
specifications therefore previously approved by Landlord and Tenant
(with such amendments as Landlord and Tenant may have approved from
time to time in writing), subject only to the completion of minor,
punch-list items, and (2) all inspections of Landlord's Work to be
conducted by governmental officials or governmental representatives
(if any are then required) have been completed and approved, with
all additional requirements resulting from such inspections, if any,
relating to the Landlord's Work, being fully satisfied and
satisfactorily reinspected (if required) and approved.
Section 1.2 Shopping Center, Leased Premises and Term. Landlord hereby
leases to Tenant, and Tenant hereby lets from Landlord, the Leased Premises (as
now or hereafter completed) for the Term specified in Section 1.1 (b) above. The
Term shall commence on either (a) the date which is the number of days specified
in Section 1.1 (i) above following Landlord's Tender of Possession of the Leased
Premises (the date so determined by this clause (a) being referred to herein as
the "Commencement Deadline"); or (b) the date on which Tenant opens for business
in the Leased Premises; whichever of such two dates shall first occur (such
earlier date being referred to herein as the "Commencement Date"). Any access by
Tenant to the Leased Premises prior to the Commencement Date (which prior access
shall occur only with Landlord's prior written consent) shall be upon all of the
terms, covenants and conditions of this Lease, except only for the payment of
Minimum Rent and Percentage Rent (hereinafter referred to, together, as "Rent")
and other charges. Tenant shall, however, pay all utility charges relating to
the Leased Premises which accrue from and after Landlord's Tender of Possession.
Landlord's "Tender of Possession" shall be deemed to have occurred on the
earlier of the date (a) of Substantial Completion of Landlord's Work as set
forth in Section 1.1(l) above, subject, however, to extensions until such time
as Landlord completes the curing of Tenant's objections under Section 3.1
hereof, or (b) on which Tenant in fact commences Tenant's Work in and to the
Leased Premises, even if such date is prior to Substantial Completion of
Landlord's Work. Tenant shall, immediately after Landlord's Tender of
Possession, commence Tenant's Work in and to the Leased Premises and prosecute
Tenant's Work diligently thereafter to completion.
For purposes of this Lease, "Lease Year 1" shall be the period beginning
with the Commencement Date and ending in the following year on the last day of
the month in which the Commencement Date occurred; and each "Lease Year"
thereafter shall be the next succeeding 12- month period(s) in order.
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The boundaries of the Leased Premises shall extend (i) in the case of the
rear and side boundaries which abut "Common Areas" (as hereinafter defined), to
the exterior faces of rear or side exterior walls [or to the imaginary plane
formed by connecting the two outermost points of such rear or side exterior
walls, if there are (or are to be) indentations in any such walls, and extending
such plane(s) to its/their intersection(s) with the extensions of the other
boundary lines of the Leased Premises]; (ii) in the case of the front boundary
of the Leased Premises, to an imaginary plane intersecting the extensions, at
right angles to such plane, of the side lines of the Leased Premises, which
plane lies on the line which forms the boundary within which Tenant's store
front (including "pop-out", if any) may be erected, as shall be shown on the
"blockout" floor plan of the Leased Premises delivered (or to be delivered) to
Tenant as provided in Exhibit B attached hereto; and (iii) to the center lines
separating the Leased Premises from other leased premises in the Shopping
Center. The Leased Premises shall include the appurtenances specifically granted
in this Lease, but reserving and excepting to Landlord the right to install,
maintain, use, repair and replace pipes, ductwork, conduits, utility lines,
wires and other items through hung ceiling (or exposed beam and joist) space,
column space and partitions, or in or beneath the floor slab, or in, through,
above or below the Leased Premises or other parts of the Shopping Center.
Tenant agrees to use its best efforts to complete Tenant's Work and open
the Leased Premises for business to the public, fully equipped, stocked and
staffed, not later than the Commencement Deadline. In the event Tenant fails to
take possession of the Leased Premises or open for business to the public fully
fixtured, stocked and staffed by such Commencement Deadline, then, and in any
such event, Landlord shall have, in addition to any and all remedies elsewhere
herein provided, the right at its option to collect the Minimum Rent and other
charges herein provided.
Notwithstanding any provisions of this Lease to the contrary, if the
Commencement Date falls on a date which would make the Commencement Date (i) a
date between the Wednesday before Easter and the Wednesday before May 30th of
any year, then the Commencement Date shall be the June 1 of such year; or (ii) a
date between August 15th and the first Wednesday in November of any year, then
the Commencement Date shall be the Wednesday before Thanksgiving of such year;
or (iii) a date after the Wednesday before Thanksgiving and before Christmas Day
of any year, then the Commencement Date shall be Christmas Day of such year.
Notwithstanding the foregoing, Tenant shall have the right, but not the
obligation, to open for business after the actual Commencement Date but in
advance of the postponed Commencement Date pursuant to the immediately preceding
sentence, in which case the Commencement Date shall be date Tenant in fact opens
its business in the Leased Premises, except that Minimum Rent for the period
from the date Tenant in fact opens for business in the Leased Premises up to but
excluding the first postponed Commencement Date to occur, shall be fully abated
and Tenant shall be obligated to pay Landlord, for such period only, the lesser
of (a) eight percent (8%) of Tenant's Gross Sales during such period; or (b) or
Tenant's Minimum Rent; plus in either the case of (a) or (b), Tenant's pro-rata
share of Operating Costs, Insurance and Real Estate Taxes.
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Section 1.3 Acceptance of Leased Premises; Estoppel Certificates. As often
as may be requested by Landlord or Tenant, the other party shall promptly (but
no later than 10 days following any request therefor) and without cost to the
requesting party execute, acknowledge and deliver to the requesting party, such
party's mortgagee(s) and/or any other person(s) reasonably designated by the
requesting party, a written acceptance or estoppel certificate with respect to
this Lease and/or the Leased Premises containing such information as shall then
be reasonably requested by the requesting party and in form and substance
prepared by such requesting party.
Section 1.4 Quiet Enjoyment. Tenant, upon paying the Rent and all other
charges herein reserved, and performing and observing all of the other terms,
covenants and conditions of this Lease on Tenant's part to be performed and
observed, shall peaceably and quietly have, hold and enjoy the Leased Premises
during the Term, without interference of Landlord, subject, nevertheless, to the
terms and conditions of this Lease. Subject to the foregoing, Landlord hereby
represents and warrants to Tenant that Landlord, as of the date of this Lease,
is the owner, in fee simple, of the Shopping Center and of the Leased Premises.
II.
RENT AND OTHER CHARGES
Section 2.1 Minimum Rent. Tenant shall pay to Landlord, without previous
demand therefor and without any setoff or deduction whatsoever, the Minimum Rent
in equal monthly installments, in advance, on the first day of each and every
calendar month throughout the Term, and, if the Term commences on a date other
than the first day of a month, Tenant shall pay Landlord on such Commencement
Date a pro-rata portion of such Minimum Rent, calculated on a per diem basis,
for the then actual number of days contained in such partial month. For purposes
of this Lease, the term "Minimum Rent" shall mean the amount payable in
accordance with Section 1.1(c) of this Lease during any Lease Year consisting of
exactly 12 months. In the case of any partial Lease Year (and any fractional
month added to Lease Year 1), full or pro-rated monthly installments of Minimum
Rent during such partial Lease Year (and fractional month) shall be calculated
as aforesaid and paid as if such partial Lease Year (and fractional month) were
part of a full Lease Year (i.e., 1/12 of the applicable Minimum Rent for a full
month, or a prorata portion of such 1/12th for a fractional month).
Section 2.2 Percentage Rent.
(a) In addition to the aforesaid Minimum Rent, Tenant shall pay to
Landlord the Percentage Rent in the manner above and hereinafter described.
(b) The term "Gross Sales" means the total amount in dollars of the actual
sales price, whether for cash or on credit or partly cash and partly credit of
all "Box Office Receipts", as hereinafter defined, whether sold from the Leased
Premises (excluding, however, tickets sold in the Leased Premises for use at
other theaters and not in fact used at the Leased Premises) or elsewhere and, in
the case of tickets sold elsewhere, used at the Leased Premises, including, but
not limited to, sales by computer, cable, microwave or other current
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or future technology, and "Confection Receipts", as hereinafter defined, and all
sales of merchandise and services including gift certificates and all other
receipts of any business conducted in or from the Leased Premises, specifically
excluding all sales to employees of Tenant, any commissions or fees paid to
credit card companies or remote ticket sellers and discounted sales for charity
events. On vending machines and equipment located on the Leased Premises that
are owned by Tenant or an affiliated third party, all sales from the machines
and equipment shall be included in the calculation of "Gross Sales" for
Percentage Rent purposes. In the event that the machines and equipment are owned
by an independent third party, then only the gross commissions received by the
Tenant from sales from these machines and equipment shall be included in the
calculation of "Gross Sales" for percentage rent purposes. "Gross Sales" shall
not include any sums collected or paid out for any sales or rental excise tax
imposed by any duly constituted governmental authority, whether now or hereafter
in force.
As used herein, the term "Box Office Receipts" shall mean all money
received by Tenant from theatre admissions to the Leased Premises.
As used herein, the term "Confection Receipts" shall mean all Gross Sales
from any and all concessionaires received by Tenant, from the sale of food,
beverages and any and all other items sold at the candy counter or at any other
location in or about the Leased Premises, including, but not limited to, vending
machines or equipment in or about the Leased Premises as referenced above. In
addition, any and all commissions from the sale of lottery tickets, memorabilia,
symbiotic paraphernalia (including, but not limited to records, video tapes,
audio tapes, books, T-shirts, etc.), and "Bass or Ticketmaster" type ticket
sales (concert, etc.) shall be added to "Confection Receipts" to determine total
receipts from said sources and subsequently added to "Gross Sales" for purposes
for calculating Percentage Rent.
(c) Percentage Rent for each calendar year (or partial calendar year)
shall become due and payable on the 30th day of the month immediately following
the month during which the Gross Sales for such calendar year exceed the
applicable Break Point, and thereafter shall be paid monthly on all additional
Gross Sales made during the remainder of such calendar year. Tenant shall submit
to Landlord (i) on or before the 30th day of each month of each calendar year
(and partial calendar year), a written unaudited statement showing Tenant's
Gross Sales and itemized permitted deductions and exclusions for the preceding
calendar month, certified by Tenant, or Tenant's store manager or designated
representative; and (ii) on or before the 90th day following the end of each
calendar year (and partial calendar year), a written statement showing Tenant's
Gross Sales and itemized deductions and exclusions for the preceding calendar
year (or partial calendar year), signed by Tenant and certified under oath to be
complete and correct to the best of Tenant's knowledge and belief. If Tenant
shall fail to prepare and deliver on time any such statement of Gross Sales
required herein, Landlord, in addition to other rights or remedies it may have
and upon ten (10) days' notice to Tenant [if Tenant does not cure such failure
within such ten (10) day period], may elect to make an audit of all relevant
books and records of Tenant, including
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Tenant's relevant bank accounts, and to prepare the statement or statements
which Tenant has failed to prepare and deliver. Such audit shall be made and
such statement shall be prepared by an accountant selected by Landlord. Absent
material error, the statement or statements so prepared shall be conclusive on
Tenant, and Tenant shall promptly pay all reasonable expenses of such audit and
of the preparation of any such statements and all sums, if any, as may be shown
by such audit to be due as Percentage Rent, together with "Interest" (as
hereinafter defined) thereon.
(d) Tenant shall prepare and keep at the Leased Premises or Tenant's
primary place of business, for a period of not less than three (3) years,
adequate books and records (conforming to the requirements of this Lease and
otherwise to generally accepted accounting principles consistently applied)
showing Gross Sales for each month throughout the Term. Tenant agrees that all
Gross Sales shall be registered at the time each sale is made.
(e) Landlord or its duly authorized representatives may, during regular
business hours on ten (10) days prior written notice to Tenant, inspect any and
all relevant records of Gross Sales. Tenant and each assignee, subtenant,
licensee and concessionaire (this clause not being deemed a consent thereto)
shall produce said records on request of Landlord. If Landlord's audit shall
disclose a deficiency in Percentage Rent in an amount equal to or greater than
two (2%) of the amount of Percentage Rent reported by Tenant's statement for the
period of the audit, then Tenant shall promptly pay Landlord such deficiency
together with Interest and the reasonable cost of such audit. In addition, if
such audit shall disclose that Gross Sales were understated in any Gross Sales
statement furnished by Tenant in an amount equal to or greater than two (2%) of
the amount of Gross Sales reported by Tenant's statement for the period of the
audit, whether or not disclosing a deficiency in Percentage Rent due, Tenant
shall promptly pay the reasonable cost of such audit.
(f) INTENTIONALLY DELETED.
Section 2.3 Taxes. Tenant shall pay to Landlord each month, together with
Tenant's monthly installment of Minimum Rent, a sum equal to all taxes, patentes
and other governmental impositions now or hereafter imposed and/or assessed upon
the Rent and other charges and consideration to be received by Landlord for this
Lease, including, but not limited to, sales, business and occupancy, gross
receipts, patentes and other similar taxes; and, if Landlord is legally
responsible for the payment thereof, upon all personal property of Tenant.
Nothing in this Section shall require Tenant to pay for Landlord's income
taxes.
Tenant shall also pay to Landlord Tenant's share of real estate taxes as
hereinafter specified. Tenant's annual share of real estate taxes shall be
computed by multiplying the total amount of such taxes by a fraction, the
numerator of which shall be the number of square feet of floor space in the
Leased Premises, and the denominator of which shall be the number of square feet
of floor space in all "Store Space", as hereinafter defined. The Store Space of
the Shopping Center as currently contemplated for Phase I of the Shopping
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Center and as depicted on Exhibit A hereto is presently intended by Landlord to
be 127,163 square feet, subject to modifications which may occur in the plans
and specifications for Phase I of the Shopping Center prior to its initial
construction, and thereafter, the construction of Phase II of the Shopping
Center, and subject further to additions or reductions to the Store Space of the
Shopping Center, as permitted under this Lease or otherwise. Until six (6)
months following the Commencement Deadline, Tenant's architect shall have the
right to review the foregoing square footage computations with Landlord's
architect. Any size errors discovered during such six (6) month period which are
agreed to exist between such architects shall be promptly corrected. Under no
circumstances may either party question the square footage set forth in this
Section after six (6) months following the Commencement Deadline.
The term "real estate taxes" shall mean all taxes and assessments and
other governmental impositions, charges and levies, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind and
nature, levied or assessed against realty of the Shopping Center (i.e., the
land, buildings and improvements forming the Shopping Center, as the same may be
enlarged or reduced from time to time), and other taxes (other than Landlord's
income taxes) arising out of the use and/or occupancy of the Shopping Center
imposed by federal, state, commonwealth, county, municipal or local governmental
authority or any other taxing authority having jurisdiction over the Shopping
Center, including, but not limited to, expenses incurred by Landlord in
contesting the validity of, in seeking a reduction in or in seeking to prevent
an increase in any such tax(es) and/or assessment(s); provided, however, that
Landlord shall be entitled to include expenses incurred in contesting the
validity of, in seeking a reduction in, or seeking to prevent an increase in any
taxes or assessments only to the extent such costs do not exceed the amount of
such tax determined to be invalid, the amount of such reduction relating to such
tax, or the amount of increase avoided as a result of such action. Solely for
the purpose of determining Tenant's share of "real estate taxes", an amount
equal to the then current applicable contributions, if any, paid by any "Anchor
Tenants" or "Outparcel Tenants" (both as hereinafter defined) in respect of
"real estate taxes" for the applicable period shall be deducted from the then
applicable aggregate amount thereof prior to the computation of Tenant's share.
Landlord shall estimate Tenant's annual share of the real estate taxes
referred to in this Section and Tenant shall pay one-twelfth (1/12th) thereof
monthly in advance together with the payment of Minimum Rent. Landlord shall
have the right, at any time and from time to time during each calendar year, to
increase said estimate based on changed circumstances, additional facts
previously unknown to Landlord or for any other reason. After the end of each
calendar year, Landlord shall furnish Tenant a statement of the actual real
estate taxes, and there shall be an adjustment between Landlord and Tenant, with
payment to Landlord on demand, or credit to Tenant against the next such payment
due, as the case may require, to the end that Landlord shall receive from Tenant
the entire and proper amount of Tenant's annual share for such period.
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Should the taxing authorities include in such real estate taxes the value
of any machinery, equipment, fixtures, inventory or other personal property or
assets of Tenant, then Tenant agrees to pay the entire taxes attributable to
such items in addition to, but not in duplication of, the real estate taxes
referred to above, as determined by Landlord.
If at any time during the Term of this Lease a tax, excise or patente,
however described, is levied or assessed against Landlord by any lawful taxing
authority on account of the Landlord's interest in this Lease or the Rent and/or
other charges expressly reserved hereunder (excluding only income taxes imposed
upon Landlord) as a substitute, in whole or in part, or in addition to, the real
estate taxes hereinbefore described, Tenant agrees to pay Landlord the amount of
such tax, excise or patente, but only to the extent of the amount thereof which
is lawfully assessed or imposed as a direct result of Landlord's ownership of
this Lease or the Rent and/or other charges reserved hereunder. In the event any
such tax, excise or patente is levied or assessed directly against Tenant by any
lawful taxing authority on account of Tenant's interest in this Lease or the
leasehold estate hereby created or the Rent and/or other charges to be paid by
Tenant hereunder, then Tenant shall be responsible therefor and agrees to pay
the same directly before delinquency; or should any lawful taxing authority
require that any such tax, excise or patente for which Tenant is responsible
hereunder, other than the real estate taxes levied or assessed against the
Shopping Center, be paid by Tenant, but collected by Landlord for and on behalf
of such taxing authority and from time to time forwarded by the Landlord to such
taxing authority, then the same shall be paid by Tenant to Landlord at such
times as such taxing authority shall require.
All of the sums required to be paid by Tenant to Landlord in this Section
2.3 are collectively referred to herein as "Taxes".
Section 2.4 Common Areas and Operating Costs. All common areas and other
common facilities (hereinafter collectively called "Common Areas") made
available by Landlord in, on, over or about the Shopping Center (or which may
lie outside of the Shopping Center, but serve the Shopping Center in some
manner) shall be subject to the exclusive control and management of Landlord,
expressly reserving to Landlord the right to alter, eliminate, enlarge or
otherwise make such changes to the Common Areas as Landlord, in its sole
discretion, shall deem desirable, including, without limitation, the right to
erect and install, within the Common Areas, kiosks, planters, fountains,
sculpture, free-standing buildings, additional buildings or other improvements,
additional stories to buildings, mall enclosures or otherwise, and, if any such
Common Areas are changed into leasable areas, to retain, for Landlord's own
account, all receipts in respect thereof; provided, however, notwithstanding the
foregoing, in no event shall such changes materially impair access to the Leased
Premises or result in a material modification of the "primary theatre parking
area" which serves the Leased Premises as depicted on Site Plan attached hereto
as Exhibit A, or materially impair Tenant's primary signage outside the Leased
Premises. Common Areas (as initially constructed or as the same may be enlarged
or reduced at any time thereafter, all in Landlord's sole discretion) shall mean
all land, areas, space,
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facilities, equipment, signs and special services from time to time made
available by Landlord for the common and joint, but non-exclusive (except as
specifically provided herein to the contrary), use and benefit of Landlord,
Tenant and other tenants and occupants of the Shopping Center, and their
respective employees, agents, permitted subtenants, concessionaires, licensees,
customers and invitees, whether on the property of the Shopping Center or
off-site, which shall include, without limitation (but the following shall not
be deemed a representation as to their present or future existence or
availability), to the extent applicable to the Shopping Center, the sidewalks,
parking areas, entrance areas, drainage facilities, access roads, driveways,
landscaped areas, truck serviceways, loading docks, pedestrian malls, bridges
and walkways (enclosed or open), food and other courts, stairs, ramps,
elevators, escalators, comfort and first aid stations, public restrooms,
community halls or auditoriums and common pick-up stations.
Landlord hereby expressly reserves the right, from time to time, in
Landlord's sole discretion, in addition to, and not by way of limitation of,
other rights reserved herein, to expand the Shopping Center by the addition of
an open or enclosed mall with or without additional leasable improvements
(converting Common Areas to such leasable improvements as applicable) or
otherwise; to construct, maintain and operate lighting and other facilities,
equipment and signs on all of the Common Areas; to police the same; to change
the area, level, location and arrangement of the Common Areas and other
facilities forming a part of said Common Areas; to build additional and/or
multi-story parking facilities; to designate specific areas for parking by
tenants and other occupants of the Shopping Center and their employees, agents,
subtenants, concessionaires and licensees; to close temporarily all or any
portion of the Common Areas for the purpose of making repairs or changes thereto
and to discourage non-customer parking; to establish, modify and enforce
reasonable rules and regulations with respect to the Common Areas and the use to
be made thereof; to improve drainage facilities pursuant to public requirements,
private agreements or otherwise; and to grant individual tenants and others the
right to use and/or conduct sales in the Common Areas on an exclusive basis.
Landlord shall operate, manage, equip, light and maintain the Common Areas in
such manner as Landlord may from time to time determine, and Landlord shall have
the right and exclusive authority to employ and discharge all personnel
connected therewith.
Subject to all of the terms and conditions hereof, Tenant is hereby given
a non-exclusive license to use, for the purposes intended therefor during the
Term, the Common Areas as they may now or at any time during the Term exist,
provided, however, that if the size, location or arrangement of such Common
Areas or the type of facilities or services at any time forming a part thereof
be changed, diminished or eliminated in a nonmaterial way (including, but not
limited to, elimination by reason of the conversion thereof from Common Areas to
leasable area, as aforesaid), Landlord shall not be subject to any liability
therefor (including, but not limited to, liability for the temporary or
permanent diminishment or alteration of visibility, access, etc. in connection
therewith and/or for the inconvenience and annoyance relating in any way to
construction and similar activities relating to such
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nonmaterial change, diminishment or elimination), nor shall Tenant be entitled
to any compensation or diminution or abatement of Rent (or other charges)
therefor, nor shall any such nonmaterial change, diminution or elimination of
such areas be deemed a constructive or actual eviction. Landlord reserves the
right to grant to third persons the non-exclusive right to cross over and use in
common with Landlord and all tenants and occupants of the Shopping Center the
Common Areas as designated from time to time by Landlord. In order to establish
that the Shopping Center and any portion thereof is and will continue to remain
private property and to prevent a dedication thereof or the accrual of any
rights of any person or the public therein, Landlord hereby reserves the
unrestricted right to close all or any portion of the Shopping Center to the
general public for one (1) day in each calendar year (or such longer period as
Landlord may determine), and, in connection therewith, to seal off all entrances
to the Shopping Center and/or any portion thereof. Tenant hereby acknowledges,
consents and agrees that any and/or all services, facilities and access by the
public to the Leased Premises and/or to the Shopping Center may, in Landlord's
sole discretion, be suspended in whole or in part during any periods of actual
or threatened civil commotion, insurrection or other circumstances which make
such suspension reasonable or beyond the control of Landlord.
Notwithstanding Landlord's rights in and to the Common Areas as
hereinabove or elsewhere provided in the Lease to the contrary, Landlord and
Tenant recognize that vehicular access to the Shopping Center is important to
the day-to-day operation of Tenant's intended use of the Leased Premises and
Landlord agrees to maintain access to the Shopping Center through a minimum of
two (2) of the vehicular entrances and exits shown on the Site Plan attached
hereto as Exhibit A. In the event Landlord fails to maintain a minimum of two
(2) vehicular entrances and exits to the Shopping Center for a period in excess
of fifteen (15) days, the Minimum Rent shall be fully abated and Tenant shall be
obligated to pay Landlord, for the period that Landlord fails to maintain a
minimum of two (2) vehicular entrances and exits to the Shopping Center in
excess of fifteen (15) days only [and not thereafter or for the first fifteen
(15) days], the lesser of (a) eight percent (8%) of Tenant's Gross Sales during
such period; or (b) Tenant's Minimum Rent; plus in either the case of (a) or
(b), Tenant's pro-rata share of Operating Costs, Insurance and Real Estate
Taxes.
Notwithstanding Landlord's rights in and to the parking areas as
hereinabove or elsewhere provided in the Lease to the contrary, Landlord and
Tenant recognize that vehicular parking is important to the day-to-day operation
of Tenant's intended use of the Leased Premises and Landlord agrees not to
modify the parking area outlined on the Site Plan attached hereto as Exhibit A
as "primary theatre parking area" and to maintain such area in an unobstructed
manner for the non-exclusive use by customers of Tenant. In addition, Landlord
agrees to maintain within all parking areas serving the Shopping Center a ratio
of parking equal to no less than five (5) parking spaces for each one-thousand
(1,000) square feet in the Shopping Center. Landlord shall have the right to
rearrange said parking areas, so long as the changes do not reduce the number of
parking spaces required pursuant the immediately preceding sentence or
materially alter the convenience
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of the parking areas to the Leased Premises. In the event Landlord fails to
maintain the number of parking spaces required pursuant to this paragraph, the
Minimum Rent shall be fully abated and Tenant shall be obligated to pay
Landlord, for the period that Landlord fails to maintain the number of parking
spaces required pursuant to this paragraph (but not thereafter), the lesser of
(a) eight percent (8%) of Tenant's Gross Sales during such period; or (b)
Tenant's Minimum Rent; plus in either the case of (a) or (b), Tenant's pro-rata
share of Operating Costs, Insurance and Real Estate Taxes.
Tenant hereby agrees to pay Landlord a share, computed as hereinafter
provided, of the "Operating Costs" (as hereinafter defined) of operating,
managing, insuring, maintaining, cleaning, repairing, modifying, improving and
replacing the Common Areas and all other portions of the Shopping Center and all
improvements, portions and components thereof [with the sole exception of those
portions of the Shopping Center which Tenant and/or other tenants or occupants,
from time to time, are obligated, respectively, to maintain, insure, repair
and/or replace (all such excepted portions as aforesaid being collectively
referred to as the "Excluded Property", and the Common Areas and all other
portions of the Shopping Center, except only the Excluded Property, being
collectively referred to as the "Included Property", for purposes of this
paragraph)]. In no event shall the provisions of this paragraph be interpreted
to allow a double counting for the benefit of Landlord. "Operating Costs" shall
mean the total cost and expense incurred in operating, managing, insuring,
maintaining, cleaning, repairing, modifying, improving and replacing the
Included Property and all improvements, portions and components thereof, as
aforesaid, and including, without limitation, the cost of all materials,
supplies and services purchased or hired therefor; the cost and expense of
landscaping, gardening and planting, irrigating, cleaning, painting (including,
but not limited to, line painting), sweeping, waxing, buffing, stripping,
resurfacing, decorating, paving, lighting, sanitary control, on-and off-site
drainage control, improvement and maintenance, removal of trash, garbage and
other refuse, including, but not limited to, costs relating to acquiring,
maintaining, repairing and replacing trash dumpsters and compactors (and
enclosures therefor); the cost of maintenance, repair and replacement of parking
areas, sidewalks, malls, curbs, guardrails, bumpers, fences, screens, flagpoles
and bicycle racks; the cost of illuminating, heating, ventilating,
air-conditioning ("HVAC") and sprinklering of enclosed malls, if any, and other
enclosed portions of the Common Areas, if any; the total cost and expense of all
repairs, replacements and modifications and maintenance, operation and
management of the Included Property of whatsoever nature (including, without
limitation, capital improvements), and the systems, facilities and equipment
serving the Included Property (including, without limitation, floors, ceilings,
roofs, skylights, structural and other walls, windows, escalators, elevators,
transportation equipment and systems, HVAC, sprinklering, on- and off-site
drainage and irrigation systems); the total cost and expense of fire protection,
water and sewerage, electricity and other utility charges for the Common Areas
(including, but not limited to, all costs associated with on- and off-site
equipment and its maintenance, repair and replacement, appropriately prorated
with any other properties of Landlord at which such equipment is used), and
license and permit fees for
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the Common Areas; and the total cost and expense of all types of insurance
coverages ("Insurance Costs") carried from time to time by Landlord in
connection with the entire Shopping Center including, but not limited to, (i)
fire and casualty insurance with standard extended coverage and coverage for
such other risks as Landlord may elect or be required to carry covering all
portions of the building(s) and other improvement(s) in the Shopping Center,
including, but not limited to, all improvements, betterments, fixtures,
equipment and machinery installed in such building(s), excluding any personal
property, movable trade fixtures and contents owned by Tenant and the other
respective tenants occupying the Shopping Center, (ii) all other insurance
covering the Shopping Center, including, without limitation, public liability,
personal and bodily injury and property damage, liability and automobile
coverage, fire and extended coverage, vandalism and malicious mischief and all
broad form coverages, sign insurance, worker's compensation, plate glass
insurance and any other insurance that may be carried by Landlord covering the
Shopping Center or any part thereof, all in limits and with deductibles selected
by Landlord, and (iii) other insurance in such amounts, and for such purposes,
as Landlord may determine; the total cost and expense of operation, maintenance
and replacement of loudspeakers and any other equipment supplying music to the
Common Areas or any parts thereof; operation of public toilets; maintenance and
replacement of signs; maintenance, operation, utility costs, repair and
replacement of all free-standing signs advertising the Shopping Center;
maintenance, repair and replacement of utility systems serving the Included
Property including, but not limited to, water, fire protection, sanitary sewer
and storm water lines and other utility lines, pipes and conduits; maintenance,
repair and acquisition cost (i.e., rental fees and/or purchase price or, in lieu
of purchase price, the annual depreciation allocable thereto) of all machinery
and equipment used in the operation, cleaning, and maintenance of the Common
Areas; depreciation of all depreciable items included in the Included Property
(or, in lieu of depreciation for all or any of such items, in Landlord's
reasonable discretion, reserves for future repairs and/or replacements thereof);
all personal property taxes and other charges incurred in connection with any of
the foregoing; the cost of personnel (including, but not limited to, applicable
payroll taxes, worker's compensation insurance, disability insurance and other
employee benefits), whether full or part time, to implement all or any of the
foregoing (appropriately prorated with any other properties of Landlord for
which such personnel are also used), whether such personnel are located on-site
or off-site, including, without limitation, management and administrative
employees and security and maintenance personnel for the Common Areas and, if
any, for security and/or the directing of traffic and parking of automobiles on
the parking areas thereof; audit and other professional fees incurred in
connection with the maintenance and operation of the Common Areas of the
Shopping Center, including, but not limited to, the preparation of any
statements of Operating Costs. The period of depreciation or reserves, but not
both in order to avoid double counting, shall be the useful life of the item for
which such depreciation is being taken or reserve is being made. Landlord may
cause any or all of said services to be provided by Landlord or by a contractor
or contractors, whether or not affiliated with Landlord (or if affiliate with
Landlord, the services and charges therefor shall be competitively
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priced), the cost of which shall be included in Operating Costs, provided that
any annual management fee included in Operating Costs shall not exceed an amount
equal to 5% multiplied by the total gross receipts of the Shopping Center (i.e.,
the total annual charges under this Lease and all other leases and agreements in
the Shopping Center -- e.g., contributions to Operating Costs, Taxes, Rent and
all other sums specified herein and therein). Any item of Operating Costs which
is paid directly to Landlord or to an affiliated entity of Landlord shall be
competitively priced.
Tenant's annual share of the Operating Costs shall be computed by
multiplying the total amount of such annual Operating Costs for the Shopping
Center (after reduction as set forth below) by a fraction, the numerator of
which shall be the number of square feet of floor space in the Leased Premises,
and the denominator of which shall be the number of square feet of floor space
in all Store Space. Solely for the purpose of determining Tenant's share of
Operating Costs, an amount equal to the then applicable contributions, if any,
including any special user charges (such as charges for utilities which are
included as Operating Costs), paid by any Anchor Tenants and Outparcel Tenants
for the relevant year in respect of Operating Costs for such year shall be
deducted from the then applicable aggregate amount thereof prior to the
computation of Tenant's share. Tenant's annual share of the Operating Costs for
each full calendar year and partial calendar year shall be paid in monthly
installments on the first day of each calendar month, in advance, in an amount
estimated by Landlord from time to time. Landlord shall have the right, at any
time and from time to time during each calendar year, by notice to Tenant, to
change said estimate based on changed circumstances, additional facts previously
unknown to Landlord or for any other reason. Subsequent to the end of each full
calendar year or partial calendar year, Landlord shall notify Tenant of Tenant's
actual share of Operating Costs for such full calendar year (or partial calendar
year). If the estimated payment made by Tenant pursuant to this paragraph for
any full (or partial) calendar year shall be less than the actual amount due
from Tenant for such period as determined by the foregoing formula and as shown
on such notice, Tenant shall pay to Landlord the difference between the amount
paid by Tenant and the actual amount due, within ten (10) days after receipt of
such notice. If the total amount paid by Tenant for any full (or partial)
calendar year shall exceed the actual amount due from Tenant for such full (or
partial) calendar year, such excess shall be credited against the next payment
for Operating Costs, Minimum Rent, Percentage Rent or other charges due from
Tenant to Landlord pursuant to this paragraph. If the Commencement Date is a day
other than the first day of the calendar year, or if the Term shall end on a day
other than the last day of the calendar year, then Tenant's share of Operating
Costs shall be billed and adjusted on the basis of such fraction of a calendar
year, provided that the amount which Tenant shall owe shall be the total
Operating Costs attributable to the Leased Premises as aforesaid for the full
period for which such year-end calculation is made, pro-rated for the portion of
the Term which occurs during such full period (but without regard to the actual
expenditures incurred during such actual pro-rated period).
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Notwithstanding the definition of Operating Costs in the Lease, it is
hereby agreed that Tenant shall be required to pay 100% of all Operating Costs
which are incurred by Landlord after normal mall operating hours in order to
accommodate Tenant's extended operating hours (such as costs related to parking
lot and other lighting, security and similar costs resulting from such after
hours operations), except in the case where other tenants are also open during
such hours, in which case such costs shall be divided on a prorata basis between
all tenants, including Tenant, open during such extended hours. Any payments by
Tenant or such other tenants for any such items of cost shall be deducted from
Operating Costs prior to the computation of Tenant's share of Operating Costs.
Notwithstanding the definition of Operating Costs in the Lease, it is
hereby agreed that Tenant shall not be required to pay as part of Tenant's
portion of Operating Costs, those costs relating to the following:
(a) The cost of air conditioning the enclosed common areas of the food
court/entertainment area of which the Lease Premises are a part; and
(b) Any capital improvement items (as opposed to a repair or replacement),
except to the extent that such capital improvement (as opposed to a repair or
replacement), results in a decrease in Operating Costs. To the extent any
capital improvement which meets the foregoing requirement of resulting in a
decrease in Operating Costs is made, Landlord shall amortize the cost of such
capital improvement over the useful life thereof (determined in accordance with
generally accepted accounting principles consistently applied) and is authorized
to include within Operating costs only the amortized portion of such capital
improvement attributable to that calendar year; and
(c) The cost of any repairs and/or replacements to the extent (a) reserves
previously established therefor have been charged and collected as Operating
Costs, or (b) depreciation of the item being repaired and/or replaced has been
charged and collected as Operating Costs.
Tenant shall have the right to audit Landlord's books and records
regarding Tenant's share of Operating Costs. If any audit made by Tenant shows
Landlord's original statement overstates Operating Costs in an amount equal to
or greater than two (2%) of the amount of Operating Costs reported by Landlord's
statement for the period of the audit, the expenses of the audit shall be paid
by Landlord, otherwise, the expenses of the audit shall be paid by Tenant. If
the total amount paid by Tenant for any full (or partial) calendar year shall
exceed the actual amount due from Tenant for such full (or partial) calendar
year, such excess shall be credited against the next payment for Operating
Costs, Minimum Rent, Percentage Rent or other charges due from Tenant to
Landlord pursuant to this paragraph.
Operating Costs shall be based on actual expenditures by Landlord plus
applicable depreciation and reserves.
Section 2.5 Cap on Taxes and Operating Expenses.
Notwithstanding the provisions of Sections 2.3 and 2.4 hereof, it is
hereby agreed that, through and
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including the end of the first full Lease Year, Tenant's prorata share of Taxes,
Insurance Costs and Operating Costs (which by definition excludes Taxes but
includes Insurance Costs) shall not exceed the lesser of: (1) the product of the
square footage of the Leased Premises multiplied by $2.00 (the "First Year
Cap"), or (2) Tenant's prorata share of Taxes and Operating Costs for the first
full Lease Year determined in accordance with the provisions of Sections 2.3 and
2.4 hereof.
Following the expiration of the first full Lease Year, Landlord shall
determine, commencing with the first day of the first full Lease Year, what
portion of the First Year Cap is attributable to Tenant's prorata share of Taxes
and Tenant's prorata share of Insurance Costs. The balance remaining after
deducting Tenant's prorata share of Taxes and Insurance Costs, as so determined,
from the First Year Cap, shall constitute the "First Year Operating Cost Cap"
for the first full Lease Year (i.e., the First Year Cap, less Tenant's prorata
share of Taxes and Insurance Costs, shall equal the First Year Operating Cost
Cap).
Tenant's prorata share of Operating Costs (other than Insurance Costs),
commencing on the first day of the second full Lease Year, shall be equal to the
lesser of: (1) the First Year Operating Cost Cap, increased each Lease Year,
commencing with the second Lease Year, and each Lease Year thereafter, by six
percent (6%) per Lease Year (compounded), prorated for any partial Lease Year,
or (2) Tenant's prorata share of Operating Costs (other than Insurance Costs)
for each such Lease Year determined in accordance with the provisions of Section
2.4 hereof.
Tenant's prorata share of Taxes and Insurance Costs, commencing on the
first day of the second full Lease Year, shall be equal to Tenant's prorata
share of Taxes and Insurance Costs for each such Lease Year determined in
accordance with the provisions of Sections 2.3 and 2.4 hereof.
Any delay by Landlord in making the determinations required of Landlord in
this Section shall not relieve Tenant from its obligation to pay any adjustments
due from Tenant once such determinations are made.
Section 2.6 Utilities Charges. Tenant shall pay promptly, as and when the
same become due and payable, all water bills, rents, rates and charges, all
sewer bills and rents and all charges for electricity, gas, heat, telephone,
air-conditioning, ventilating, lighting systems and other utilities supplied to
the Leased Premises, whether by Landlord, a governmental unit or utility
company. If any such utilities are not separately metered or assessed or are
only partially separately metered or assessed and are used in common with other
tenants in the Shopping Center, Tenant will pay to Landlord, in addition to
Tenant's payments of Operating Costs and separately metered charges, a
proportionate share of such charges for utilities so used in common based on
Landlord's reasonable estimate of the amount of usage of each such common user,
which estimate, if reasonable and fairly allocated, shall be conclusive. Tenant
shall have a separate air conditioning system for Tenant's sole use, which will
be metered through Tenant's separate electric meter.
Landlord may install re-registering meters and Tenant shall pay to
Landlord any and all charges shown
- 18 -
to be due thereby (Landlord thereafter making returns to the proper public
utility company or governmental unit), as long as Tenant is thereby charged the
rates it would be charged for the same services if metered directly to the
Leased Premises by such companies or governmental units.
Any of the aforesaid charges due Landlord shall be due and payable at the
same time that Minimum Rent is payable, or, if separately billed, within thirty
(30) days after billings therefor are rendered to Tenant.
Except if same is as a direct result of Landlord's gross negligence or
willful misconduct, Landlord shall have no liability to Tenant for the quality,
quantity, failure or disruption of any utility service, and in no event shall
such failure or disruption constitute constructive eviction or entitle Tenant to
an abatement of Rent or other charges.
III.
CONSTRUCTION OF LEASED PREMISES
Section 3.1 Construction. After Substantial Completion of Landlord's Work
by Landlord and correction of any defects in Landlord's Work of which Tenant has
notified Landlord in writing pursuant to this Section 3.1, Tenant agrees to
perform (or cause to be performed), at Tenant's sole cost and expense, the
Tenant's Work specified in Exhibit B, if any. The Leased Premises shall be
constructed by Landlord and Tenant in accordance with the provisions of Exhibit
B. Landlord and Tenant each represent and warrant to the other that both
Landlord's Work and Tenant's Work, respectively, shall be performed in a good
and workmanlike manner in substantial compliance with the plans and
specifications therefor approved, if applicable, by the other and in compliance
with all applicable governmental requirements. Both Landlord and Tenant shall
have the option to inspect and approve the other's Work to insure that no
defects exist for a period of thirty (30) days following written notice of the
completion of the other's Work. If Landlord or Tenant reasonably determine that
any defects exist, Landlord or Tenant, as applicable, shall notify Landlord or
Tenant, as applicable, in writing, no later than fifteen (15) days following the
expiration of such thirty (30) day period, specifying the defects and Landlord
or Tenant, as applicable, shall thereafter promptly correct the defect(s), at
Landlord's or Tenant's, as applicable, sole cost and expense. Except as set
forth in Section 12.6 with respect to latent defects, any defects in Landlord's
Work not raised by Tenant in the notice to Landlord provided for hereunder,
shall be deemed forever waived by Tenant and, except as provided elsewhere in
this Lease, any defects in Tenant's Work not raised by Landlord in the notice to
Tenant provided for hereunder, shall be deemed forever waived by Landlord.
IV.
USE OF LEASED PREMISES
Section 4.1 Use of Leased Premises. Tenant agrees to use the Leased
Premises only for the permitted use(s) expressly set forth in Section 1.1 (e)
(i) and for no other purpose.
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Notwithstanding anything in this Lease to the contrary, should Tenant
determine that a multi-screen cinema is no longer economically feasible at this
location, Tenant shall have the right, from time to time, to convert the Leased
Premises to any use permitted by law and typically found in shopping centers and
which, in Landlord's reasonable opinion, is in harmony with other businesses
then operating within the Shopping Center and not (a) in violation of any
exclusives or restrictions granted by Landlord to any then existing tenant of
the Shopping Center, and (b) in violation of any restrictive covenant in this
Lease or then in effect between Landlord and any other tenant in the Shopping
Center. Tenant shall have the right, at Tenant's sole cost and expense, to alter
and remodel the Leased Premises for such purpose. Should Tenant wish to convert
the Leased Premises to a use not in harmony with other businesses then operating
within the Shopping Center, it shall obtain Landlord's prior consent, which
consent Landlord may grant or withhold in Landlord's sole discretion. In the
event Tenant elects to exercise the right to convert contained in this
paragraph, the exclusive use rights granted to Tenant under Section 1.1(e)(i)
shall cease and be null and void as if they had never existed. If Tenant elects
to exercise the rights granted Tenant in this paragraph, Landlord shall have the
right to cancel the Lease pursuant to Section 12.26 hereof.
Tenant covenants that, during the Term, no part of the Leased Premises or
improvements thereon shall be used in any manner whatsoever for any purposes
other than aforesaid and no part of the Leased Premises or improvements thereon
shall be used in violation of the laws, ordinances, regulations, codes or orders
of the United States, or of the state, commonwealth, county, and/or city or
other applicable governmental subdivisions where the Leased Premises are
located. To the extent that Tenant is not "grandfathered in", Tenant shall
comply with all applicable laws, ordinances, regulations, codes and orders now
in effect or hereafter enacted or passed during the Term insofar as the Leased
Premises and any signs of the Tenant are concerned, including, but not limited
to, zoning and/or similar ordinances, building, fire, health and safety codes,
and environmental, re-cycling and other conservation laws; and Tenant shall
make, at Tenant's own cost and expense (but subject to Landlord's prior approval
as provided in Section 7.2 hereof), all additions, deletions and alterations to,
and all mandated clean up of, the Leased Premises ordered or required by such
authorities, whether in order to meet the special needs of Tenant, or by reason
of the occupancy of Tenant, or otherwise. Without limiting the generality of the
foregoing, Tenant shall be obligated to eliminate any product or substance
currently permitted to be used, but hereafter banned (whether or not such future
ban is in the current contemplation of the parties or of applicable law), and to
take all steps necessary to comply with, and effect all work incidental or
appropriate to, or arising directly or indirectly as a result of, such
elimination, if but only if originally installed, used or provided by Tenant.
Tenant shall indemnify, defend and hold Landlord (and its partners,
principals, affiliates, directors, officers, employees, mortgagees, heirs,
successors and assigns, as applicable) harmless from and against all claims and
liability arising from a violation or breach of the foregoing obligations of
Tenant.
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Section 4.2 Continuous Operation by Tenant. Tenant agrees that the
Shopping Center's success is dependent, in part, on the continued operation of
Tenant's business for the benefit of all involved, and that maintenance of the
character and quality of the Shopping Center is enhanced by the continued
occupancy of the Leased Premises and the regular conduct of Tenant's business
therein. Tenant also acknowledges that a material inducement to Landlord to
enter into this Lease is the expectation of the receipt of Percentage Rent and
that Landlord would not have entered into this Lease without the provisions
hereof regarding Percentage Rent. Accordingly, Tenant agrees to open the Leased
Premises for business by the Commencement Deadline hereinabove provided and
operate one hundred (100%) percent of the Leased Premises during the entire
Term, under the name, if any, set forth in Section 1.1 (e) (ii) of this Lease or
such other name as Landlord may approve in writing, with due diligence and
efficiency so as to produce all of the Gross Sales which may be reasonably
produced by such manner of operation. Tenant shall show at all times in said
Leased Premises movies of such quantity, character and quality as shall be
reasonably designed to produce as much Gross Sales as reasonably possible;
provided, however, that the showing or other display of movies which are not
distributed to and showed and displayed by mainstream major movie theatre
companies in the United States and Puerto Rico is expressly prohibited. Subject
to any legal prohibition, Tenant shall conduct its business in the Leased
Premises during the operating hours specified in Section 1.1 (j). A failure to
open or vacation or cessation of operations by any other tenant(s) in the
Shopping Center shall not in any way release Tenant from Tenant's obligations
under this Lease, all such obligations being independent covenants.
Section 4.3 Additional Covenants of Tenant. Tenant's use of the Leased
Premises and the Common Areas shall be subject at all times during the Term to
those reasonable rules and regulations adopted from time to time by Landlord
(provided they are not in conflict with any of the express provisions hereof)
governing the use of the Common Areas, signs, exteriors of buildings, lighting
and other matters affecting other tenants in and the general management and
appearance of the Shopping Center. Tenant agrees to comply with all such rules
and regulations upon written notice to Tenant from Landlord.
Without limiting the generality of the foregoing, Tenant expressly agrees
to the following initial rules and regulations (provided they are not in
conflict with any of the express provisions hereof):
1. All deliveries to or from the Leased Premises shall be made only at
such times, in the areas and through the rear or other entrances designated for
such purposes by Landlord.
2. Merchandise shall not be displayed outside the Leased Premises, nor on
the sidewalks, loading areas or malls, if any, adjacent to the Leased Premises,
and the Leased Premises and all such areas shall not be obstructed and shall be
free from trash, litter, hazardous materials and any other obstructions. All
garbage and refuse shall be kept inside the Leased Premises, and shall be placed
outside of the Leased Premises only if prepared for collection in the manner and
at the times and places specified from time to time
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by Landlord (and, if required by law, properly separated for re-cycling or other
conservation or environmental purposes). If Landlord shall provide or designate
a service for picking up refuse and garbage, Tenant shall use same at Tenant's
cost provided that the service designated by Landlord is competitively priced.
Tenant shall pay the cost of removal of any of Tenant's refuse and garbage and
maintain its and any common loading areas in a clean manner reasonably
satisfactory to the Landlord. Tenant shall use any trash dumpster or compactor
Landlord designates, if any, for the general use of Tenant and others in a
designated area of the Shopping Center, and if Landlord does not provide same,
Tenant shall do so in a manner acceptable to Landlord.
3. No radio or television aerial or other device shall be erected on the
roof or exterior walls of the Leased Premises or the building in which the
Leased Premises are located, and no roof, wall or other penetrations of any kind
shall be made by, under the direction or with the actual or assumed knowledge of
Tenant.
4. No loud speakers, televisions, phonographs, radios, tape players or
other devices shall be used in a manner so as to be heard or seen outside the
Leased Premises, nor shall Tenant solicit business or distribute advertising or
promotional material in the Common Areas.
5. The plumbing and drainage facilities shall not be used for any purpose
other than that for which they are constructed; no foreign substance of any kind
shall be thrown therein or otherwise dumped on or about the Shopping Center; and
the expense of any breakage, stoppage, mandatory clean-up or damage resulting
from a violation of this provision shall be borne by Tenant. All grease traps
(and all plumbing lines leading from such grease traps into the main sewer lines
of the Shopping Center), if any, shall be installed, regularly cleaned and
maintained by Tenant in accordance with applicable law and with Landlord's
requirements.
6. Tenant, at its expense, shall contract for termite and pest
extermination services covering the Leased Premises, or shall participate, at
Landlord's election and Tenant's expense, in a common monthly exterminating
program provided that the service designated by Landlord is competitively
priced. Tenant shall not permit to be used or stored on or about the Leased
Premises any extermination or other substance which is now or hereafter deemed
hazardous or environmentally suspect other than commercially available cleaning
substances and substances used in limited quantities necessary to facilitate the
operation and maintenance of Tenant's business in the Leased Premises. If Tenant
uses or maintains any such materials on or in the Leased Premises and the same
are hazardous or environmentally suspect, Tenant agrees to handle, store,
transport and dispose of all such materials at Tenant's sole cost and expense in
accordance with all then-existing Commonwealth, state and federal rules and
laws.
7. Tenant shall keep any display windows or signs in or on the Leased
Premises well lighted during such hours and days that the Shopping Center is
lighted by Landlord, or as otherwise may be designated by Landlord.
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8. Tenant shall keep and maintain the Leased Premises (including, without
limitation, exterior and interior portions of all windows, doors, all other
glass and the frames therefor) in a neat, clean and well finished and maintained
condition.
9. Tenant at its expense shall participate in any window cleaning program
that may be established by Landlord for all or substantially all other stores in
the Shopping Center provided that the service designated by Landlord is
competitively priced.
10. INTENTIONALLY OMITTED.
11. Tenant shall pay before delinquency all license or permit fees and
charges of a similar nature for the conduct of its business in the Leased
Premises.
12. Tenant shall store and/or stock in the Leased Premises only such
merchandise as Tenant is permitted to offer for sale in the Leased Premises
pursuant to this Lease.
13. Tenant shall not conduct or permit any fire, bankruptcy, auction or
"going out of business" sale (whether real or fictitious) in the Leased
Premises, or utilize any unethical method of business operation.
14. Tenant shall not perform any act or carry on any practice which may
damage, mar of deface the Leased Premises or any other part of the Shopping
Center.
15. Tenant shall not place a load on any floor in the Leased Premises, or
in any area of the Shopping Center, exceeding the floor load which such floor
was designed to carry, nor shall Tenant install, operate or maintain therein any
heavy item or equipment except in such manner as to achieve a proper
distribution of weight or as is common in businesses such as Tenant's business.
16. Tenant shall not install, operate or maintain in the Leased Premises
or in any other area of the Shopping Center any electrical equipment which does
not bear underwriter's approval, or which would overload the electrical system
or any part thereof beyond its capacity for proper and safe operation as
determined by Landlord. No machine tow motor or gas or propane operated
equipment shall be permitted.
17. Tenant shall not suffer, allow or permit any vibration, noise, light,
odor (excluding those normally associated with movie theatres) or other
emanation to emanate from the Leased Premises, or from any machine or other
installation therein, or otherwise suffer, allow or permit the same to
constitute a nuisance or otherwise interfere with the safety, comfort or
convenience of Landlord or any of the other occupants of the Shopping Center or
their customers, agents or invitees or any others lawfully in or upon the
Shopping Center. Upon notice by Landlord to Tenant that any of the aforesaid is
occurring, Tenant agrees to forthwith eliminate or control the same to
Landlord's reasonable satisfaction (excluding those normally associated with
movie theaters).
18. Tenant shall not use or occupy the Leased Premises in any manner or
for any purpose which would impair the present or future value of the Leased
Premises and/or the Shopping Center.
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19. Tenant shall not install, utilize, introduce, store, display, sell, or
distribute any dangerous or environmentally sensitive materials [including,
without limitation, fireworks, asbestos (or asbestos containing materials),
PCB's, urea formaldehyde, hydrocarbons, CFC's, or the like] other than
commercially available cleaning substances and substances used in limited
quantities necessary to facilitate the operation and maintenance of Tenant's
business in the Leased Premises. If Tenant uses or maintains any such materials
on or in the Leased Premises and the same are hazardous or environmentally
suspect, Tenant agrees to handle, store, transport and dispose of all such
materials at Tenant's sole cost and expense in accordance with all then-existing
Commonwealth, state and federal rules and laws.
20. Under no circumstances shall Tenant violate any "exclusives" [i.e.,
rights, if any, of any tenant or tenants to be the only tenant(s) in the
Shopping Center to sell any particular product or provide any particular
service] now or hereafter granted by Landlord to other tenants, provided that
nothing herein will prevent Tenant from conducting its business consistent with
the specifically permitted use(s) and other provisions of this Lease and
provided further that Landlord notifies Tenant of the existence of such
"exclusives".
21. Tenant shall not use or occupy the Leased Premises or do or permit
anything to be done thereon in any manner which shall prevent Landlord and/or
Tenant from obtaining at standard rates any insurance required or desired, or
which would invalidate or increase the cost to Landlord of any such insurance,
or which might cause structural injury to any building, or which would
constitute a public or private nuisance or which would violate any present or
future laws, regulations, ordinances or requirements (ordinary or extraordinary,
foreseen or unforeseen) of the federal, state, commonwealth, county or municipal
governments, or of any departments, subdivisions, bureaus, agencies or offices
thereof, or of any other governmental, public or quasi-public authorities now
existing or hereafter created having jurisdiction over the Leased Premises or
the Shopping Center.
22. Tenant shall only operate a limited number (i.e., 8 or less) of coin
or token operated vending machines or similar devices (including, without
limitation, pay telephones, pay lockers, pay toilets, scales, amusement devices
and machines for sale of beverages, foods, candy, cigarettes or other
merchandise and/or commodities) on the Leased Premises or in any part of the
Shopping Center.
23. Tenant shall not modify, alter, improve, obstruct or otherwise utilize
for any purpose any unenclosed portions of the Leased Premises for any purpose
whatsoever (including, but not limited to, the sale or display of Tenant's
merchandise, or the placing of signs or exhibits of any kind), provided that
such portions may be used by Tenant, its employees and customers, if reasonably
necessary for purposes of ingress and egress to and from the enclosed portions
of the Leased Premises.
24. Tenant shall not sell, dispense or distribute any alcoholic beverages.
25. Tenant shall not show, display, advertise, sell, dispense or
distribute any movies, performances or
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merchandise from the Lease Premises which are not distributed to, shown,
displayed, advertised and dispensed by mainstream major movie theatre companies
in the United States and Puerto Rico in connection with their normal business
activities.
Section 4.4 Signs, Awnings and Canopies. Landlord may erect and maintain
such signs, awnings and canopies as it, in its sole discretion, may deem
appropriate in the Shopping Center. Tenant may erect and maintain only such
signs as Landlord may approve in writing. Tenant shall submit to Landlord
detailed drawings of its proposed signs for review and written approval by
Landlord prior to erecting said signs on the Leased Premises. Without limiting
the generality of the foregoing, all of Tenant's signs shall comply with Exhibit
C attached hereto and made a part hereof whether or not same conflict with
Landlord's sign criteria for other tenants of the Shopping Center.
Notwithstanding anything in this Lease to the contrary, Tenant may erect the
signs described in Exhibit C hereto, subject to the provisions thereof. The
terms of Exhibit C hereto shall control in the event of a conflict between the
terms of the body of this Lease and those contained in Exhibit C.
Tenant shall keep insured and maintain such signs in good condition,
repair and operating order (including, but not limited to, replacing any lights
as needed) at all times. If any damage (other than damage caused by the
negligence of Landlord or Landlord's employees, agents or contractors; provided,
however, that Landlord's liability in each such case shall be limited to the
coverage, if any, afforded by Landlord's liability insurance) is done to
Tenant's signs, Tenant shall commence to repair same within fifteen (15) days
following written notice from Landlord or, in addition to its other remedies,
Landlord may, at its option, repair same at Tenant's expense.
Except as set forth in Exhibit C hereto, Tenant shall not place or permit
to be placed or maintained on any door, exterior wall or interior window (if
such sign can be seen from outside the Leased Premises) or exterior window of
the Leased Premises or within any display window space in the Leased Premises,
or within five (5') feet of the front of the Leased Premises (in the case of an
open storefront), or within the entrance to the Leased Premises, any sign,
awning or canopy or advertising matter or other thing of any kind, and shall not
place or maintain any decoration, lettering or advertising matter on the
interior glass (if same can be seen from outside the Leased Premises) or
exterior glass of any window or door of the Leased Premises, without first
obtaining Landlord's prior written consent in each instance. In addition to its
other remedies, Landlord shall have the right, without notice to Tenant and
without any liability for damage to the Leased Premises reasonably caused
thereby, to remove any items displayed or affixed in violation of the foregoing.
Tenant further agrees to maintain any such signs, awnings, canopies, decoration,
lettering, advertising matter or other things as may be approved by Landlord in
good condition, operating order and repair at all times. All signs of Tenant
visible from the Common Areas of the Shopping Center shall be in good taste and
shall conform to the standards of design, motif and decor from time to time
established by Landlord for the Shopping Center. Except as set forth in Exhibit
C hereto, no flashing or revolving signs shall be permitted. No hand lettered
signs shall be permitted. Tenant must install professionally lettered name signs
on its service doors, if any.
Section 4.5 Retail Restriction Limit. The parties acknowledge that the
realization of the benefits of this Lease are dependent upon Tenant maximizing
its Gross Sales, and that self competition is inconsistent with the generation
of maximum Gross Sales. The parties further acknowledge that the Minimum Rent
was negotiated together with and giving consideration to the
- 25 -
Percentage Rent and that self competition by Tenant will deprive Landlord of a
bargained for consideration. Accordingly, Tenant covenants and agrees that,
during the Term, neither Tenant, nor any person or entity controlling,
controlled by or in common control with Tenant [nor any corporation or other
entity wherein fifty percent (50%) or more of its equity interest is owned by
Tenant or any or all of Tenant's equity owners, or equity owners of such equity
owners (at any and all tiers), or any parties affiliated with, controlling,
controlled by or in common control with any or all of them], will, directly or
indirectly, engage in any business similar to or in arguable competition with
that for which the Leased Premises are let within a radius of five (5) miles of
the Shopping Center. Mark B. Davis, Luis Alberto Rubi and Mark H. Greene, the
three (3) individual principals of Landlord, agree that no entity of which any
of them is also a principal, including Landlord, and in which any of them owns a
controlling interest and has the ability to control decisions of such entity as
owner of a controlling interest, that such entity, including Landlord, will not
lease any premises to another movie theater within a radius of five (5) miles of
the Shopping Center; provided that the foregoing shall not apply if at the time
of such lease Tenant is not then conducting business in the Leased Premises as a
movie theater. If the covenant contained in this Section is breached, then, in
addition to the rights and remedies provided elsewhere in this Lease for
Tenant's default, Landlord may, at its option, require that all gross sales
generated by any violative theatre (which gross sales Tenant shall thereafter
report monthly to Landlord) be included as part of Tenant's Gross Sales in
calculating the Percentage Rent due under this Lease. For purposes hereof, a 50%
or more direct, familial or indirect equity interest or voting interest shall be
deemed to be a controlling interest. This restriction shall not apply to the
acquisition by Tenant, Landlord or an entity of which any of the three (3)
principals listed above owns a controlling interest, of an existing competing
business (as to Tenant) or an existing competing premises (as to Landlord or any
one of such principals) within a radius of five (5) miles of the Shopping
Center.
V.
INSURANCE REQUIRED OF TENANT
Section 5.1 Insurance Required of Tenant.
(a) Tenant shall obtain and provide, on or before the earlier of
Landlord's Tender of Possession or Tenant's entering the Leased Premises for any
purpose, and keep in force at all times thereafter, the following insurance
coverages with respect to the Leased Premises:
(i) Commercial General Liability Insurance relating to the Leased
Premises and its appurtenances on an occurrence basis with a minimum
single limit of at least Five Million Dollars ($5,000,000.00).
(ii) Fire and Lightning, Extended Coverage, Vandalism and Malicious
Mischief and Flood (if flood insurance is required by Landlord, or any
mortgagee or governmental authority and if obtainable) Insurance in
amounts adequate to cover the full replacement cost [with commercially
reasonable deductibles not to exceed five percent (5%) of the replacement
cost of the property which Tenant is required to insure hereunder] of all
of Tenant's personal property, decorations, trade fixtures, furnishings,
equipment and all contents therein.
(iii) Boiler (if applicable) or Machinery Insurance covering all
pressure vessels, boilers, heating and air-conditioning equipment, or
similar equipment, if any, in,
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on, adjoining, above or beneath the Leased Premises, in the minimum amount
of One Million Dollars ($1,000,000.00).
(iv) Worker's Compensation Insurance covering all persons employed,
directly or indirectly, in connection with Tenant's store, as well as in
connection with any of Tenant's Work or any Tenant repair or alteration
authorized by this Lease or consented to by Landlord, and all employees
and agents of Tenant with respect to whom death or injury claims could
otherwise be asserted against Landlord or Tenant, in the minimum amount of
One Million Dollars ($1,000,000.00) or as otherwise required by applicable
law.
(v) INTENTIONALLY OMITTED.
(vi) Such other insurance as may be reasonably required by Landlord
from time to time.
(b) Before undertaking Tenant's Work and other alterations, additions,
improvements or construction, Tenant shall obtain at its expense a builders risk
and public liability insurance policy insuring Tenant and Landlord (evidenced by
an insurance certificate) against any liability which may arise on account of
such proposed Tenant's Work and other alterations, additions, improvements or
construction on an occurrence basis with the minimum limits set forth in Exhibit
B attached hereto.
(c) All of the aforesaid insurance shall be written in the name of Tenant,
with Landlord and Landlord's mortgage lender named as additional insureds, as
their interests may appear, and shall be written by one or more responsible
insurance companies satisfactory to Landlord and in form satisfactory to
Landlord; all such insurance may be carried under a blanket policy covering the
Leased Premises and any other of Tenant's stores; and all such insurance shall
contain endorsements providing that such insurance may not be cancelled or
amended with respect to Landlord (or its designees) except upon thirty (30)
days' prior written notice to Landlord (and any such designees) by the insurance
company. Tenant shall be solely responsible for payment of all premiums and
neither Landlord nor Landlord's lender shall be required to pay any premium for
such insurance. In the event of payment of any loss covered by any such policy,
Landlord and Tenant shall be paid simultaneously by the insurance company for
their respective losses. The minimum limits of the comprehensive general
liability policy of insurance required of Tenant hereunder shall in no way limit
or diminish Tenant's liability hereunder. Tenant shall deliver to Landlord at
least fifteen (15) days prior to the time such insurance is first required to be
carried by Tenant, and thereafter at least fifteen (15) days prior to the
expiration of each such policy, either a duplicate original or a certificate of
insurance for all policies procured by Tenant in compliance with its obligations
hereunder, together with evidence satisfactory to Landlord of the payment of the
premiums therefor. If Tenant fails to obtain and provide any or all of the
aforesaid insurance, then, in addition to its other remedies, after ten (10)
days notice to Tenant [provided Tenant does not provide all such insurance
within such ten (10) period], except in the case of emergency, in Landlord's
sole discretion, Landlord may, but shall not be required to, purchase such
insurance on behalf of Tenant and add the cost of such insurance, as additional
rent, to the next installment of Minimum Rent.
(d) INTENTIONALLY OMITTED.
(e) Tenant agrees to notify Landlord in writing not less than thirty (30)
days prior to the date Tenant opens for business in the Leased Premises of the
replacement cost of all personal property, movable trade fixtures and contents.
- 27 -
Section 5.2 Fire Insurance Rate and Requirements.
(a) Tenant agrees, at its own cost and expense, to comply with all of the
rules and regulations of the fire insurance rating organization having
jurisdiction and any similar body. If, at any time and from time to time, as a
result of any failure by Tenant to comply with the foregoing sentence, or of any
act of omission or commission by Tenant, its employees, agents, contractors or
licensees, or as a result of the use to which the Leased Premises are put
(notwithstanding that such use may be for the purposes hereinbefore permitted or
that such use may have been consented to by Landlord), the insurance rate(s)
applicable to the Leased Premises, or the building in which same are located, or
to any other premises in said building, or to any adjacent property owned or
controlled by Landlord, or an affiliate of Landlord, and/or to the contents in
any or all of the aforesaid properties (including, but not limited to, rent
insurance relating thereto) shall be higher than that which would be applicable
for the occupancy legally permitted therein, Tenant agrees that it will pay to
Landlord, on demand, 100% of such portion of the premiums for all Landlord's
insurance policies in force with respect to the aforesaid properties (including,
but not limited to, rent insurance relating thereto) and their contents as shall
be attributable to such higher rate(s). If Tenant installs any electrical
equipment that overloads the lines in the Leased Premises or the building in
which the Leased Premises are located, Tenant shall, at its own cost and
expense, promptly make whatever changes are necessary to remedy such condition
and to comply with all requirements of the Landlord and the board of fire
insurance underwriters and any similar body and any governmental authority
having jurisdiction thereof. For purposes of this paragraph, any finding or
schedule of the fire insurance rating organization having jurisdiction thereof
shall be deemed to be conclusive (provided same is final and unappealable
administratively or judicially).
(b) In the event that this Lease so permits and Tenant engages in the
preparation of food or sells package foods or engages in the use, sale or
storage of inflammable or combustible material, Tenant shall install chemical
extinguishing devices approved by the fire insurance rating organization and
shall keep such devices under service as required by such organization.
(c) If gas is used in the Leased Premises, Tenant shall install at its
expense gas cut-off devices (manual and automatic) required by Landlord and the
fire insurance rating organization.
Section 5.3 Waiver of Subrogation. Neither party to this Lease shall be
liable for any damage by fire or other peril includable in the coverage afforded
by the standard form of fire insurance policy with extended coverage endorsement
attached, no matter how caused, it being understood that the damaged party will
look solely to its insurer for reimbursement, provided that this waiver of
liability shall apply only to the extent that the party incurring such loss is
actually reimbursed for such loss by the proceeds of insurance. Landlord's and
Tenant's policies of insurance shall contain a waiver of subrogation confirming
the foregoing. Any waiver of rights required by this Section shall be null and
void if such waiver shall be unobtainable, or result in a breach of the
insurance contract or in material increase in the cost of insurance of the
waiving party, unless the other party shall pay such increase within ten (10)
days after notice thereof.
The foregoing provision shall apply as between Tenant and any other tenant
of the Shopping Center whose premises equal or exceed 20,000 square feet, and
their respective employees, agents, invitees, licensees, visitors and
contractors, as if Tenant and such other tenants directly contracted between
each other for such purpose, but solely to the extent that such other
- 28 -
tenant complies with this waiver of subrogation section and obtains and
maintains a reciprocal waiver from its insurer (or pursuant to its self
insurance) in effect in favor of Tenant as contemplated in this Section 5.3.
Section 5.4 Insurance Required of Landlord. Throughout the Term of this
Lease, Landlord shall maintain comprehensive public liability insurance,
property damage and all-risk hazard insurance on the Common Areas, buildings,
appurtenances and other improvements constituting the Shopping Center, but not
on Tenant's Work (or that of other tenants of the Shopping Center) or other
improvements or personal property within the Leased Premises (or the premises of
other tenants of the Shopping Center). Such insurance shall (i) be carried with
reputable companies licensed to do business in Puerto Rico; (ii) have liability
limits of at least $3,000,000 for each occurrence, bodily injury and property
damage combined; (iii) provide full replacement cost for the buildings and
improvements covered thereunder; and (iv) be subject to commercially reasonable
deductibles.
VI.
REPAIRS AND MAINTENANCE
Section 6.1 Repairs by Landlord. Within a reasonable period of time after
receipt of written notice from Tenant, Landlord shall make necessary (a)
structural repairs to the Leased Premises, including the roof of the Leased
Premises for the first five (5) Lease Years, but not including the roof of the
Leased Premises for periods after the first five (5) Lease Years, and (b)
repairs to the sidewalks, malls, parking areas, curbs and all other portions of
the Common Areas. Notwithstanding the foregoing, Landlord shall not be required
(and Tenant shall be obligated instead) to make any and all such repairs where
same are made necessary by any act or omission or negligence of Tenant, any
subtenant or concessionaire of Tenant (this clause not being deemed a consent
thereto), or their respective employees, agents, invitees, licensees, visitors
or contractors.
If Landlord shall fail to carry out its maintenance and repair obligations
hereunder within a reasonable time after written notice from Tenant, then Tenant
shall have the right upon additional notice to Landlord to conduct such
maintenance and make such repairs and to deduct the actual cost thereof in fact
paid by Tenant to third parties from the next ensuing installment or
installments of Minimum Rent.
Section 6.2 Repairs and Maintenance by Tenant. Tenant shall make and pay
for all repairs to the Leased Premises and all equipment and systems serving
only the Leased Premises and shall replace all things which are necessary to
keep the same in a good state of repair and operating order, such as, but not
limited to, all fixtures, electrical, plumbing and mechanical systems and
equipment serving only the Leased Premises, furnishings and store signs of
Tenant and the roof of the Leased Premises after Lease Year five (5). Without
limiting the generality of the foregoing (but limited solely to systems serving
only the Leased Premises), Tenant shall maintain, replace and keep in good
repair and operating order all air-conditioning, ventilating, plumbing,
sprinklering, heating and electrical installations, ceilings, interior walls and
load bearing components, and carpeting and floor surfaces serving the Leased
Premises and all exterior entrances, glass and show-windows (and frames and
moldings thereof), partitions, doors, floor surfaces, fixtures, equipment and
appurtenances thereof in good order, condition and repair, and in a reasonably
satisfactory condition of cleanliness, including, but not limited to, reasonably
periodic painting of the interior of the Leased Premises, and Tenant shall make
all other necessary repairs and replacements in and to the Leased
- 29 -
Premises. Tenant shall at its expense replace all broken or damaged glass or
substitutes therefor, as the case may be. Further, Tenant, at its sole cost and
expense, shall engage a contractor, satisfactory to Landlord in all respects, to
provide monthly servicing of Tenant's heating, ventilating and air-conditioning
systems, for preventive and actual maintenance purposes. Anything to the
contrary herein notwithstanding, neither Tenant, nor any contractor, employee or
agent of Tenant, shall be permitted access to the roof (nor shall Tenant install
anything requiring any roof penetration) without Landlord's prior written
approval (which may be conditioned, among other things, on the use of a
particular contractor provided that the contractor designated by Landlord is
competitively priced), and any such access shall be conditioned on Tenant being
solely responsible (as between Landlord and Tenant only) for any and all damages
to the roof caused by or attributable to persons entering upon the roof for or
on behalf of Tenant. It is expressly understood that, notwithstanding any other
provisions in this Lease to the contrary, although Landlord shall effect all
roof repairs, the Tenant shall be solely responsible for the direct reasonable
cost of repairing any areas of the roof above its Leased Premises caused by a
forcible entry into said Premises for the purpose of committing a criminal act
or caused by any other reason (other than casualty not otherwise the
responsibility of Tenant and normal wear and tear). Tenant agrees to promptly
pay, as additional rent, the full cost of any of the aforesaid repairs to the
roof within ten (10) days after being furnished bills for said cost by the
Landlord.
If (i) Tenant does not effect the foregoing repairs, maintenance and
replacements properly as required hereunder and to the reasonable satisfaction
of Landlord, or (ii) Landlord, in the exercise of its sole discretion,
determines that emergency repairs are necessary, or (iii) repairs or
replacements to the Shopping Center and/or Common Areas or to the Leased
Premises are made necessary by any act or omission or negligence of Tenant, its
agents, employees, subtenants, assignees, concessionaires (this clause not being
deemed a consent thereto), contractors, invitees, licensees or visitors, then,
in any of such events, Landlord, in addition to its other remedies, after ten
(10) days written notice to Tenant, except in the case of (ii) above, in which
case no notice shall be required [and except if Tenant makes such repairs within
such ten (10) day period], may make such repairs without liability to Tenant for
any loss or damage that may accrue to Tenant's merchandise, fixtures or other
property or to Tenant's business by reason thereof, and, upon completion
thereof, Tenant shall pay Landlord's costs for making such repairs, upon
presentation of a bill therefor. Said bill shall include, among other things,
Interest from the date such repairs were paid for by Landlord to the
contractor(s) making such repairs.
Notwithstanding the foregoing, Landlord shall be responsible for repairs
occasioned directly by Landlord's or any of Landlord's agents, employees or
contractors negligence; provided, however, that Landlord's liability in each
such case shall be limited to the coverage, if any, afforded by Landlord's
liability insurance.
Section 6.3 Inspection. Landlord and its representatives shall have the
right to enter the Leased Premises at any time during normal business hours (and
during other hours if an emergency situation should exist, as determined by
Landlord), and from time to time (with or without giving notice), during the
Term, for the purpose of conducting inspections and making repairs therein.
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VII.
ADDITIONS AND ALTERATIONS; ADDITIONAL RENT
Section 7.1 By Landlord. Except as provided in Section 2.4 hereof, in the
event Landlord, in its sole discretion, shall hereafter determine during the
Term to erect additional or remove structures, add or remove stories to existing
buildings, enclose or remove open courts or sidewalks and create or eliminate
malls in the Shopping Center (or any portions thereof as may be designated by
Landlord), enlarge or reduce the Shopping Center by addition(s) to the Shopping
Center of land and/or buildings or by the diminution thereof, Tenant hereby
consents thereto and to the performance of all work necessary to effect the same
provided same does not block or deny access to the Leased Premises by Tenant's
patrons. The design, materials and performance of necessary work therefor shall
be in the sole and unrestricted discretion of Landlord.
If at any time (i) Landlord is required by any laws, ordinances, rules or
regulations of any governmental agency having jurisdiction over the Shopping
Center to provide additional parking, or (ii) Landlord proposes to increase the
total rentable building space within the Shopping Center which would require
additional parking in the Shopping Center, Landlord may elect to provide such
additional parking by constructing decked or elevated parking facilities.
Section 7.2 By Tenant. Tenant shall make no material changes, alterations
or improvements to the interior or exterior of the Leased Premises or the
structure of the building without Landlord's prior written consent, which, as to
non-structural, interior alterations, Landlord will not unreasonably withhold.
After receipt of such consent, but prior to commencement of any such work,
Tenant shall obtain Landlord's prior written approval of the plans and
specifications therefor and shall cause Landlord's reasonable requirements for
bonding, insurance and other contractor requirements (as specified in Exhibit B
attached hereto) to be satisfied. Any work effected by Tenant under the
provisions of this Section shall not interfere with the use by the other tenants
of their premises in the Shopping Center.
VIII.
DAMAGE, DESTRUCTION OR CONDEMNATION OF THE LEASED PREMISES
Section 8.1 Damage or Destruction.
(a) If all or any part of the Leased Premises shall be damaged or
destroyed by fire or other casualty insured under the standard fire insurance
policy with approved standard extended coverage endorsement applicable to the
Leased Premises, Landlord shall, except as otherwise provided herein, repair
and/or rebuild the same with reasonable diligence, but Landlord's obligation
hereunder shall be limited to the performance of Landlord's Work, if any, in
accordance with Exhibit B hereof (or, if no such work is required by Landlord,
then Landlord shall restore the Leased Premises to their condition as of the
date of Landlord's Tender of Possession, reasonable wear and tear excepted).
Nothing hereinabove contained shall impose upon Landlord any liability or
responsibility to repair, rebuild or replace any property belonging to Tenant.
If the Leased Premises shall become untenantable as a result of such damage or
destruction, the Minimum Rent and other sums payable hereunder shall abate and
the Break Point shall be proportionately reduced based on the period of time the
Leased Premises shall be untenantable. Unless this Lease is terminated by
Landlord as hereinafter provided, upon completion of Landlord's repairs and
rebuilding, Tenant shall promptly repair, redecorate and refixture the Leased
Premises and restock the contents thereof in a manner and to at least a
- 31 -
condition equal to that existing prior to its destruction or casualty. Tenant
agrees to exercise its best efforts to reopen for business in the Leased
Premises as soon as practicable unless this Lease is terminated by Landlord as
hereinafter provided.
(b) Notwithstanding anything else to the contrary in this Section or
elsewhere in this Lease, Landlord, at its sole option, may terminate this Lease
on thirty (30) days written notice to Tenant given at any time after the
occurrence of any of the following:
1. The Leased Premises shall be damaged or destroyed during the
last two (2) years of the Term or any extended Term provided
Landlord does not intend to rebuild the Leased Premises within
the twelve (12) month period following such damage or
destruction or if Landlord does intend to rebuild the Leased
Premises within such twelve (12) month period if Tenant does
not extend this Lease to a term of ten (10) years from the
time of the completion of the recon- structed Leased Premises
(provided, however, that in no event shall Landlord be
required to rebuild anything other than Landlord's Work, it
being the intention of the parties that Landlord's obligation,
if any, to rebuild the Leased Premises shall be limited to
Landlord's Work); or
2. Any or all of the buildings or Common Areas of the Shopping
Center are damaged (whether or not the Leased Premises are
damaged) to such an extent that the Shopping Center cannot be
operated as an economically viable unit.
(c) Except to the extent specifically provided for in this Lease, unless
this Lease is terminated as herein provided or unless Tenant is unable to occupy
any part of the Leased Premises, none of the Minimum Rent and other sums payable
by Tenant, nor any of Tenant's other obligations under any provisions of this
Lease, shall be affected by any damage to or destruction of the Leased Premises
by any cause whatsoever.
(d) The term "cost of replacement" as used above shall be determined by
the company or companies insuring Landlord against the casualty in question, or
if there shall be no insurance, then by Landlord's architect.
(e) Tenant shall give to Landlord and to all mortgagees of which Tenant
has been provided written notice, prompt written notice of any damage to or
destruction of any portion of the Leased Premises resulting from fire or other
casualty.
Section 8.2 Condemnation. If the entire Leased Premises shall be
appropriated or taken under the power of eminent domain by any public or
quasi-public authority, or conveyance shall be made in lieu thereof, this Lease
shall terminate and expire as of the date of such taking or conveyance.
Anything in this Lease to the contrary notwithstanding, in the event more
than fifteen (15%) percent of the Leased Premises, more than twenty (20%)
percent of the then existing paved parking spaces of the Shopping Center or more
than thirty five (35%) percent of the then existing paved parking spaces serving
the Leased Premises as described in Section 2.4, shall be appropriated or taken,
or conveyance made in lieu thereof, either party shall have the right to cancel
and terminate this Lease as of the date of such taking upon giving thirty (30)
days' written notice to Tenant of such election.
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If more than fifty (50%) percent of the leasable floor space within the
Shopping Center shall be so taken, regardless of whether or not the Leased
Premises shall have been partially or completely taken, either party shall have
the right to cancel and terminate this Lease on thirty (30) days' written
notice.
In the event of any such cancellation, the parties shall thereupon be
released from any further liability under this Lease (except for obligations due
and payable on or before the effective date of such cancellation or obligations
which survive or are intended by their nature to survive such cancellation).
In the event a portion of the Leased Premises is appropriated or taken or
conveyed as aforesaid, and this Lease is not terminated in accordance herewith,
the Leased Premises shall be deemed reduced by the portion of space appropriated
or taken or conveyed, effective as of the date title thereto vests in the
applicable authority, and, as of such date, the Minimum Rent payable hereunder,
and the Break Point set forth herein, shall each be reduced to the respective
amounts realized by multiplying each such amount by a fraction, the numerator of
which shall be the number of square feet contained in the Leased Premises
immediately after such appropriation or taking, and the denominator of which
shall be the number of square feet contained in the Leased Premises immediately
prior to such appropriation or taking. If requested by Landlord or Tenant, the
party receiving the request shall execute such document(s) as the requesting
party may reasonably request to confirm the foregoing reductions in the Leased
Premises, the Minimum Rent and the Break Point.
Except as provided below, all compensation awarded or paid upon such a
total or partial appropriation, taking or conveyance of the Leased Premises
shall belong to and be the sole property of Landlord without any participation
whatsoever by Tenant. Tenant shall take no acts which will in any way diminish
Landlord's recovery.
Tenant shall have the right, however, to pursue an independent action for
business interruption damages, relocation expenses, the unamortized cost of
Tenant's improvements which Tenant is permitted to remove from the Leased
Premises at the expiration of this Lease and similar damages, as long as same
shall not diminish or adversely affect Landlord's claims.
Provided the conditions of this paragraph are met, Landlord and Tenant
shall each support the other's claim against the condemning authority.
IX.
INTENTIONALLY OMITTED.
X.
FINANCING
Section 10.1 INTENTIONALLY OMITTED.
Section 10.2 Subordination/Non-Disturbance/Attornment.
This Lease shall be a prior and superior to any mortgage encumbering the
Shopping Center. Tenant agrees to acknowledge and abide by any collateral
assignment of this Lease by Landlord and to attorn to any mortgagee(s) who shall
succeed to Landlord's rights under this Lease.
Tenant shall within ten (10) days of the written request of Landlord or
any mortgagee of the Shopping Center, execute whatever instruments may be
reasonably required by Landlord or any such mortgagee, which shall contain such
provisions,
- 33 -
excluding subordination, but including attornment, as Landlord or any such
mortgagee shall reasonably request.
Landlord agrees that it will obtain and deliver to Tenant within ninety
(90) days from the date hereof, from the holder of any mortgage to which this
Lease is presently subject and subordinate, a written agreement in form and
content reasonably satisfactory to Tenant which subordinates such mortgage to
this Lease pursuant to the terms of this Section.
Landlord hereby consents to the mortgaging of Tenant's interest in this
Lease and all of its personal property and assets within the Leased Premises
which Tenant has the right to remove under Section 12.8 hereof on the
termination or expiration of this Lease in favor of Tenant's current lender or
in favor of another lender which provides financing to Tenant, provided that
such financing is made, on its face, expressly subject and subordinate in all
respects to Landlord's interest in this Lease and in the Leased Premises and to
any and all fee mortgages. Landlord agrees to execute such reasonable consents
and estoppels as Tenant and/or Tenant's lender may reasonably request in
connection with such financing provided same are consistent with the provisions
of this Section and provided further that such consents grant Tenant's lender
only the right to notice and opportunity to cure defaults by Tenant under this
Lease and, in the event such lender succeeds to the rights of Tenant under this
Lease, permits such lender, subject to the prior cure of all preexisting
defaults under this Lease and compliance with all the terms and provisions of
this Lease, to succeed to Tenant's rights and obligations under the Lease and to
thereafter assign its rights and obligations under the Lease in accordance with
the terms of this Lease. Landlord further agrees to use its good faith efforts
to cause the holder(s) of any fee mortgage encumbering the Shopping Center to
join in such consents and estoppels as Tenant or its lender may reasonably
request.
In this Lease, the terms "mortgage" and "mortgagee" shall include within
their meanings (i) the terms "deed of trust" and "trustee" thereunder, if
applicable; as well as (ii) an "agreement for deed" or any other instrument to
secure debt and the holder of any such agreement for deed or other security
instrument, if applicable.
Further, without in any way limiting the foregoing, Landlord agrees that,
if requested by Tenant's mortgagee, it will execute and deliver an Estoppel and
Consent in substantially the form of Exhibit D attached hereto and will use its
good faith diligent efforts to cause the holders of any fee mortgage(s) to
execute and deliver an Estoppel and Consent in substantially the form of Exhibit
E attached hereto.
Section 10.3 Financial Statements. Within ten (10) days following
Landlord's written request of Tenant, Tenant shall provide Landlord with a full
and complete copy of Tenant's (and all guarantors') last available annual
financial statements and such other interim financial statements as shall then
be available to Tenant (and such guarantors). Landlord may disclose such
statements to Landlord's mortgagees or ground lessors, potential mortgagees or
ground lessors, potential purchasers and/or to such other parties having an
interest in or considering the acquisition of an interest (direct or indirect,
as owner or mortgagee) in the Shopping Center or in Landlord, as Landlord may
designate. Any financial statement released by Landlord to any third party shall
be released on condition that such party shall keep such financial statement
confidential.
Section 10.4 INTENTIONALLY OMITTED.
Section 10.5 INTENTIONALLY OMITTED.
- 34 -
XI.
DEFAULT
Section 11.1 Default. Tenant shall be in default hereunder if (a) Tenant
fails to pay when due Rent or any other charges due under this Lease and such
failure is not cured within fifteen (15) days after notice by Landlord to
Tenant; or (b) the Leased Premises shall be abandoned, deserted or vacated and
not re-opened within fifteen (15) days of Landlord's notice thereof; or (c)
Tenant fails to take possession of the Leased Premises and initially open for
business to the public by the Commencement Deadline as required hereunder
(unless the Commencement Deadline is extended in writing by Landlord in its sole
discretion); or (d) Tenant fails to open or remain open on the days and hours
required by this Lease and fails to cure such failure within fifteen (15) days
of Landlord's notice thereof; or (e) Tenant "Transfers" (as hereinafter defined)
its interest in this Lease in violation of the provisions hereof and such
Transfer is not voided within fifteen (15) days after Landlord's notice thereof;
or (f) there occurs any event specified in the first paragraph of Section 11.2
hereof; or (g) Tenant fails to observe and perform any of the other terms,
covenants and/or conditions of this Lease and such failure shall continue for
more than thirty (30) days after written notice from Landlord to Tenant (unless
such failure reasonably requires more than thirty (30) days to cure, in which
case Tenant shall not be deemed in default hereunder if, within such thirty
(30)-day period, Tenant commences to cure such failure and thereafter Tenant
prosecutes such cure diligently and without interruption to completion).
The Leased Premises shall be conclusively deemed abandoned (for purposes
of clause (b) above) by Tenant upon (i) unexcused absence from the Leased
Premises by Tenant or its agents for more than ten (10) consecutive days or
twenty (20) days in the aggregate during any Lease Year, or (ii) removal,
without Landlord's prior written approval, of all or a substantial portion of
Tenant's trade fixtures, equipment or inventory from the Leased Premises unless
same is replaced within ten (10) days of such removal.
Section 11.2 Bankruptcy. If at any time during the Term there shall be
filed, by or against Tenant or any successor tenant then in possession or any
guarantor of either under this Lease, in any court pursuant to any statute
either of the United States or of any state or commonwealth, a petition (i) in
bankruptcy, (ii) alleging insolvency, (iii) for reorganization, (iv) for the
appointment of a receiver, (v) for an arrangement under any federal or state or
commonwealth bankruptcy code, or (vi) for any similar creditor's or debtor's
rights, Tenant shall be in immediate default hereunder without the necessity of
any notice or cure period being given (except in the event of an involuntary
filing against Tenant, no default shall occur unless such filing is not
dismissed within 60 days of such filing), and thereupon Tenant shall immediately
quit and surrender the Leased Premises to Landlord, but Tenant shall continue to
be liable for the payment of Rent and all other sums due hereunder.
In the event Landlord may not terminate Tenant's rights under this Section
11.2 by reason of protection afforded Tenant under the applicable bankruptcy
act, and Tenant is in default of any of the other terms, covenants or conditions
of this Lease, then the duly-appointed trustee in bankruptcy of the
Tenant-debtor (the "Trustee") may assume this Lease only after he undertakes the
following:
1. cures any default, or provides adequate assurance that he will
promptly cure such default;
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2. compensates or provides adequate assurance that he will
promptly compensate Landlord for any actual pecuniary loss
resulting from such default; and
3. provides adequate assurance of future performance.
Adequate assurance of future performance includes, but is not limited to,
adequate assurance: (1) of the source of Rent and other considerations due under
the Lease; (2) that any Percentage Rent due under the Lease will not decline
substantially; (3) that assumption or assignment of the Lease will not breach
any provisions, including, but not limited to, radius, location, use or
exclusivity provisions, in any other lease, financing agreement or master
agreement relating to the Shopping Center of which the Leased Premises are a
part; and (4) that assumption or assignment of the Lease will not disrupt
substantially any tenant mix or balance in the Shopping Center of which the
Leased Premises are a part.
To assign the Lease, the Trustee must first assume the Lease in accordance
with the bankruptcy code and provide adequate assurance of future performance by
the assignee, and must not be in default of any of the other terms hereunder.
Section 11.3 Landlord's Rights on Default. In addition to any other
remedies or rights of Landlord in this Lease or by law or equity provided, in
the event of any default by Tenant (beyond any applicable grace, notice and/or
cure period specifically granted herein, if any), Landlord may:
a. terminate this Lease (which shall only occur if Landlord so
specifies a termination in writing), re-enter the Leased Premises and take
possession thereof and remove all persons and property therefrom, and
Tenant shall have no further claim or right to possession hereunder;
and/or
b. bring suit for the collection of Rent and other sums due under
this Lease, and for damages (including, without limitation, attorneys'
fees and the cost of repairing and reletting the Leased Premises) with or
without entering into possession of the Leased Premises or terminating the
Lease. Commencement of any such action by Landlord shall not be construed
as an election to terminate this Lease and shall not absolve or discharge
Tenant from any of its obligations or liabilities for the remainder of the
Term; and/or
c. re-enter and retake possession of the Leased Premises from Tenant
by summary proceedings or otherwise. To the extent permitted by law,
Tenant waives any right of redemption or repossession. Commencement of any
action by Landlord for re-entry, or any such actual re-entry, shall not be
construed as an election to terminate this Lease and shall not absolve or
discharge Tenant from any of its obligations or liabilities for the
remainder of the Term or otherwise. If, in the event of a re-entry,
Landlord relets the Leased Premises, Tenant shall continue to be liable
for the payment of any deficiencies in Minimum Rent and other sums due
under this Lease after such reletting. In the event of any re-entry,
Landlord shall have the right, but not the obligation, to remove any
personal property from the Leased Premises and place the same in storage
at a public warehouse or on any sidewalk at the sole expense and risk of
Tenant or any other owner thereof; and/or
d. INTENTIONALLY OMITTED.
Section 11.4 Damages Upon Default or Termination. If Landlord elects to
exercise any of its remedies for Tenant's default under the provisions of the
above Section, whether or not
- 36 -
Landlord elects to terminate this Lease, Landlord may recover from Tenant
damages computed in accordance with the following formula, in addition to its
other remedies:
a. any unpaid Rent and other sums due under this Lease which have
accrued at the time of such exercise; plus
b. the unpaid Rent and other sums due under this Lease for the
balance of the Term after the time of such exercise (in which event, if
the Leased Premises are thereafter re-leased to one or more new tenants,
Landlord shall promptly pay Tenant all net rental amounts realized by
Landlord on account of such re-letting, in maximum amounts equal to the
amount Tenant had theretofore actually paid to Landlord as damages
hereunder for the applicable period for which such damage payment is
made); plus
c. any other amount necessary to compensate Landlord for all 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, without limitation, the
cost of repairing, modifying or modernizing the Leased Premises, new
tenant allowances, reasonable brokerage fees and reasonable attorneys'
fees and costs; plus
d. at Landlord's election, such other amounts as may be permitted
from time to time by the laws of the state or commonwealth; plus
e. Interest on all of the foregoing from the date due until paid in
full.
Section 11.5 Landlord's Self-Help. In addition to Landlord's other
remedies (including, but not limited to, Landlord's rights of self-help set
forth elsewhere in this Lease), if Tenant at any time fails to perform any of
its obligations under this Lease beyond any applicable grace, notice and/or cure
period specifically granted herein, if any, Landlord shall have the right, but
not the obligation, upon giving Tenant at least two (2) days' prior written
notice of its election to do so (in the event of any emergency, however, no
prior notice being required), to perform such obligations on behalf of and for
the account of Tenant and to take all such action necessary to perform such
obligations.
In such event, Landlord's costs and expenses incurred therein shall be
paid for by Tenant forthwith, with Interest. The performance by Landlord of any
such obligation shall not constitute a release of Tenant or waiver of Landlord.
Section 11.6 Non-Waiver Provisions. The failure of Landlord or Tenant to
insist upon a strict performance of any of the terms, conditions and covenants
herein shall not be deemed to be a waiver of any rights or remedies that
Landlord or Tenant may have and shall not be deemed a waiver of any subsequent
breach or default in the terms, conditions and covenants herein contained,
except only as may be expressly waived in writing.
The maintenance of any action or proceeding to recover possession of the
Leased Premises, or to recover any installment or installments of Rent or any
other moneys that may be due or become due from Tenant to Landlord, shall not
preclude Landlord from thereafter instituting and maintaining subsequent actions
or proceedings for the recovery of possession of the Leased Premises or of any
other moneys that may be due or become due from Tenant. Any entry, re-entry or
termination by Landlord shall not be deemed to absolve or discharge Tenant from
full financial liability hereunder.
- 37 -
The acceptance by Landlord of payment from Tenant (or any other person or
entity) of less than the full amount owed shall not be deemed an accord or
satisfaction or otherwise be construed as other than a payment on account
regardless of any notation or endorsement prepared by Tenant (or such other
person or entity) to the contrary, unless (and only unless) Landlord, in a
separate document, specifically and voluntarily agrees to such an accord and
satisfaction.
Section 11.7 Other Leases. Landlord shall not be obligated to apply a
consistent enforcement policy throughout the Shopping Center and the election of
Landlord to pursue any or all of its rights and remedies hereunder shall not be
precluded or otherwise affected by its election not to pursue any such rights or
remedies in the case of identical, similar or other defaults of other tenants in
the Shopping Center.
Section 11.8 Landlord's Default; Inability to Perform. In the event
Landlord shall be in default hereunder in any respect, such default shall not
give rise to any rights or remedies of Tenant unless and until such default
shall continue for more than thirty (30) days after Landlord's actual receipt of
written notice thereof from Tenant (or, as to defaults not reasonably
susceptible of being cured within such 30-day period, unless and until Landlord
fails to commence the cure thereof within such 30- day period and fails
thereafter diligently to prosecute the same to completion). Further, if Landlord
is delayed or prevented from performing any of its obligations under this Lease
by reason of a strike or other labor troubles, weather or any other similar
cause beyond Landlord's control, the period of such delay or such prevention
shall be deemed added to the time herein provided for the performance of any
such obligation by Landlord.
Section 11.9 Attorneys Fees and Costs. If either party shall at any time
be in default hereunder, and if the other party shall deem it necessary to
engage attorneys to enforce its rights hereunder, the prevailing party shall be
reimbursed by the other party for the reasonable expenses incurred thereby,
including, but not limited to, court costs and reasonable attorneys' fees
through all appeals, whether or not suit be filed.
Section 11.10 Specific Performance; Injunction. Both parties shall have
the right to obtain a judgment of specific performance, an injunction and/or
restraining order and shall have all other equitable remedies available under
applicable law in the event of default.
Section 11.11 Remedies Cumulative. All remedies of hereunder are
cumulative and not mutually exclusive and may be exercised in addition to all
other remedies available at law and in equity.
XII.
OTHER PROVISIONS
Section 12.1 Definition and Liability of Landlord. The term "Landlord" as
used in this Lease means only the owner from time to time of the building in
which the Leased Premises are located [or the owner from time to time of a
leasehold interest in said building and/or in the land thereunder (if Landlord's
interest is that of a lessee under a ground lease)], so that in the event of the
sale of said building (or leasehold interest) or an assignment of this Lease, or
a new demise of said building (and/or land and/or leasehold), Landlord named
herein [and any successor thereto other than the then owner (or then ground
lessee, as appropriate)] shall be and hereby is entirely freed and relieved of
all obligations of Landlord hereunder subsequently accruing.
- 38 -
It is specifically understood and agreed that there shall be no personal
(or entity) liability of Landlord (nor Landlord's agents, if any) in respect of
any of the covenants, conditions or provisions of this Lease. In the event of a
breach or default by Landlord of any of its obligations under this Lease beyond
the applicable grace and/or cure period, or if Landlord shall otherwise be
liable to Tenant for any reason whatsoever, Tenant shall look solely to the
interest, if any, of the applicable Landlord in the Leased Premises for the
satisfaction of Tenant's remedies.
Section 12.2 Relationship of the Parties. Nothing contained in this Lease
shall be deemed or construed as creating the relationship of principal and agent
or of partnership or joint venture between the parties hereto, it being
understood and agreed that neither the method of computing Rent (including, but
not limited to, Percentage Rent), nor any other provision contained herein or
any acts of the parties hereto, shall be deemed to create any relationship
between the parties other than that of landlord and tenant.
Section 12.3 INTENTIONALLY OMITTED.
Section 12.4 Indemnity. Tenant agrees to indemnify, defend and save
Landlord harmless from and against any and all claims and demands for, or in
connection with, any accident, injury or damage whatsoever caused to any person
or property arising, directly or indirectly, from any act or omission or breach
of this Lease of Tenant or any concessionaire or subtenant (this clause not
being deemed a consent thereto) or any of their respective licensees, servants,
agents, employees, contractors or invitees, and from and against any and all
costs, expenses and liabilities incurred in connection with any such claims or
demands and/or proceedings brought thereon (including, but not limited to, costs
and reasonable attorneys' fees through all appeals). In case Landlord shall,
without fault or contractual assumption hereunder on its part, be made a party
to any litigation commenced against Tenant, Tenant shall protect and hold
Landlord harmless and pay all costs, expenses and reasonable attorney's fees
incurred or paid by Landlord in connection with such litigation.
Landlord agrees to indemnify, defend and save Tenant harmless from and
against any and all claims and demands for, or in connection with, any accident,
injury or damage whatsoever caused to any person or property in the Common Areas
of the Shopping Center arising, directly or indirectly, from the negligence of,
or breach of this Lease by, Landlord or any of Landlord's agents, employees or
contractors (provided, however, that Landlord's liability in each such case
shall be limited to the coverage, if any, afforded by Landlord's liability
insurance), and from and against any and all costs, expenses and liabilities
incurred in connection with any such claims or demands and/or proceedings
brought thereon (including, but not limited to, costs and reasonable attorneys'
fees through all appeals). In case Tenant shall, without fault or contractual
assumption hereunder on its part, be made a party to any litigation commenced
against Landlord, Landlord shall protect and hold Tenant harmless and pay all
costs, expenses and reasonable attorney's fees incurred or paid by Tenant in
connection with such litigation (provided, however, that Landlord's liability in
each such case shall be limited to the coverage, if any, afforded by Landlord's
liability insurance).
Section 12.5 Property in Leased Premises. All leasehold improvements, such
as electrical, plumbing and other fixtures and heating and air-conditioning
equipment, and all other construction and installation to be done by Tenant as
set forth in Exhibit B hereto (excluding Tenant's theatre seats, movie screens
and music speakers, equipment and trade fixtures, whether
- 39 -
affixed or unaffixed to the Premises, which Tenant may remove), as well as all
other personal property furnished or paid for by Landlord (whether as initially
installed or as replacements thereof), shall when installed automatically attach
to the freehold and/or become and remain the property of Landlord.
Tenant shall pay before delinquency all taxes assessed against Tenant's
fixtures, furnishings, leasehold, improvements, equipment and stock-in-trade
placed in, on or about the Leased Premises. Any such taxes paid by Landlord on
behalf of Tenant shall be due and payable from Tenant to Landlord within ten
(10) days after billings therefor are rendered to Tenant.
Section 12.6 Damage to Property or Persons. Except as provided in Section
12.4, Landlord shall not be liable for any loss of or damage to property of
Tenant or of others located in the Leased Premises or the Shopping Center, by
theft or otherwise, nor for any loss or damage whatsoever to Tenant's business,
inventory, fixtures, equipment, furniture, walls, ceilings or floor coverings or
any other property of Tenant or others, whether or not Tenant could remove same
at the end of the Term as hereinafter provided, resulting from fire, explosion,
falling plaster, steam, gas, electricity, wind, water, rain or leaks from any
part of the Leased Premises or from the pipes, appliances or plumbing, or from
the roof, walls, glass frames, doors, street or subsurface or from any other
place or by dampness or by or from any other cause of whatsoever nature. Unless
the maintenance and repair of any item is specifically the on-going
responsibility of Landlord hereunder, Landlord shall not be liable for any
injury or damage caused by other tenants or any person(s) either in the Leased
Premises or elsewhere in the Shopping Center, or by occupants of property
adjacent to the Shopping Center, or by the public, or by operations in the
construction of any private, public or quasi-public work. Landlord shall be
liable for any latent defect in construction of the Leased Premises or of
Landlord's Work thereto, if any, for a period of one (1) year following
Landlord's Tender of Possession of the Leased Premises to Tenant.
Section 12.7 Assignment or Subletting. Tenant shall not assign, sublet,
mortgage or hypothecate this Lease or Tenant's interest in and to the Leased
Premises or any part thereof or permit any other party to manage the Leased
Premises or control the operation thereof (herein collectively or individually
referred to as a "Transfer"), without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Consent by Landlord
to any specific Transfer shall not constitute a waiver of the necessity for such
consent to any subsequent Transfer. Consent shall not be assumed to have been
given or be deemed to have been given under any circumstances, except only if
specifically given in writing, or if Landlord fails to reject Tenant's request
for a consent within thirty (30) days following written notice from Landlord to
Tenant requesting such consent, in which case such consent shall be deemed
irrevocably granted. Without limiting the generality of the foregoing,
acceptance of Rent or other payments paid by any third party in respect of this
Lease shall not be deemed to be an implied or other consent to a Transfer to
such third party.
If the Tenant is a trustee, corporation, partnership or other business
entity, any change in the underlying ownership (legal, equitable or beneficial)
of, and/or (in the case of a corporation) in the power to vote fifty-one (51%)
percent or more of the outstanding capital stock of, Tenant, whether such change
of ownership is by sale, assignment, operation of law (e.g., merger or
consolidation) or otherwise, shall be deemed a Transfer and shall be subject to
the provisions of this Section.
Any Transfer by Tenant in accordance with this Section shall be only for
the purpose and use hereinabove specified and for no
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other purpose, and in no event shall any Transfer be deemed a novation or
otherwise release or relieve Tenant from any obligations under this Lease unless
agreed to in writing by Landlord (which agreement Landlord may grant or withhold
in its sole and unfettered discretion). Any permitted transferee shall assume in
writing Tenant's obligations hereunder and shall deliver to Landlord an
assumption agreement in form reasonably satisfactory to Landlord within ten (10)
days after the effective date of the Transfer. Tenant agrees to pay Landlord's
reasonable attorney's fees incurred in connection with the review and/or
preparation of any documents in connection with any Transfer up to a maximum of
$1,000.
Any attempted Transfer in violation of the provisions of this Section
shall not be binding upon Landlord and shall confer no rights upon any third
person.
Landlord shall promptly consent to an Transfer proposed by Tenant in
accordance with the provisions of this Lease provided that either (i) Tenant
continues to manage the theater and other operations at the Leased Premises, or
(ii) the proposed transferee or its senior management has substantial experience
in the ownership and operation of movie theatres, and in the case of both (i)
and (ii) above, the proposed transferee demonstrates by presentation to Landlord
of financial statements and projections that it has the financial capacity to
perform the obligations of Tenant hereunder, notwithstanding the fact that
Tenant nonetheless remains liable to Landlord under the Lease.
Notwithstanding anything in this Lease to the contrary, Tenant shall have
the right to assign this Lease or sublet the Leased Premises, without Landlord's
consent, to a parent, subsidiary, merged or consolidated company as a result of
a consolidation or merger with Tenant, or to a company acquiring all or
substantially all of Tenant's assets provided that, in any such case, Tenant
(and/or the resulting entity of any merger or consolidation) shall remain fully
liable hereunder, and such internal assignment shall not be deed a Transfer
under this Lease.
Section 12.8 Surrender of Premises and Holding Over. At the expiration or
earlier termination of the tenancy hereby created, Tenant shall surrender the
Leased Premises (and all portions thereof and property which Tenant is required
to maintain herein) in good, "broom-clean" condition, reasonable wear and tear
alone excepted, and Tenant shall surrender all keys for the Leased Premises to
Landlord at the place then fixed for the payment of Rent and shall inform
Landlord of all combinations on locks, safes and vaults, if any, in the Leased
Premises. Tenant's obligation to observe and perform this covenant shall survive
the expiration or other termination of the Term. If Tenant shall default in so
surrendering the Leased Premises, Tenant's occupancy subsequent to such
expiration or earlier termination, whether or not with the consent or
acquiescence of Landlord, shall be deemed to be that of a tenancy at will and in
no event from month-to-month or from year-to-year, and it shall be subject to
all the terms, covenants and conditions of this Lease applicable thereto, except
that Minimum Rent shall be twice the amount payable in the last year of the Term
(in which case the Break Point shall likewise double), and no other extension or
renewal of this Lease shall be deemed to have occurred by such holding over.
At the expiration or sooner termination of this Lease, (i) Tenant may
remove (or shall remove if requested by Landlord in writing) its theatre seats,
signs, movie screens and music speakers, and (ii) Tenant shall remove any and
all moveable trade fixtures, equipment and other unattached items (excluding
Tenant's theatre seats, movies screens and music speakers which Tenant may
remove) which Tenant, at its expense, may have
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installed, stored or left in the Leased Premises or elsewhere in the Shopping
Center, including, but not limited to, counters, shelving, showcases, chairs and
unattached movable machinery (excluding Tenant's theatre seats, movie screens
and music speakers which Tenant may remove) purchased or provided by Tenant and
which are susceptible of being moved without damage to the Leased Premises; and
if removable only by causing damage, then removable only if any such damage is
immediately and fully repaired or restored as set forth below. Tenant shall not
remove any plumbing or electrical fixtures or equipment, heating or
air-conditioning equipment, floor coverings (including, but not limited to,
wall-to-wall carpeting), walls, ceilings, lights, bathroom fixtures, wall
coverings, storefronts, doors or storage room partitions, all of which shall be
deemed to constitute a part of the freehold and/or leasehold interest of
Landlord, as set forth above, nor shall Tenant remove any other items of
personal property that were furnished or paid for by Landlord (whether as
initially installed or as replacements thereof). Landlord shall have the right
to inspect the Leased Premises within ninety (90) days prior to the expiration
or sooner termination of this Lease; and prior to the expiration of the Term,
Tenant shall repair any damage to and/or replace and/or remove any of the
above-mentioned items (and repair any damages to the Leased Premises caused by
such removal and restore the affected portions of the Leased Premises to their
original condition, reasonable wear and tear alone excepted). In the event
Tenant does not repair or replace same properly as required hereunder to the
reasonable satisfaction of Landlord within thirty (30) days after written notice
thereof from Landlord to Tenant, then, in addition to its other remedies,
Landlord may make such repairs and replacements without liability to Tenant and
Tenant shall pay Landlord's reasonable costs for making such repairs and
replacements upon presentation of a bill therefor. Said bill shall include
Interest from the date the costs of such repairs and replacements were paid to
the contractor(s) making such repairs and replacements. If Tenant shall fail to
remove its trade fixtures or other property as provided in this Section, such
fixtures and other property not removed by Tenant shall be deemed conclusively
abandoned by Tenant and at the option of Landlord shall become the property of
Landlord, or at Landlord's option may be removed by Landlord at Tenant's expense
plus Interest, or placed in storage at Tenant's expense, or sold or otherwise
disposed of, in which event the proceeds of such sale or other disposition,
after deduction for the above expenses, shall belong to Tenant. The foregoing
and all other obligations of Tenant hereunder shall survive the expiration or
earlier termination of this Lease.
Section 12.9 INTENTIONALLY OMITTED.
Section 12.10 Tenant's Liens. The interest of Landlord shall not be
subject to liens for improvements or otherwise made by or on behalf of or at the
direction of Tenant. Tenant shall discharge any lien filed against the Shopping
Center, and any part thereof, for work done or materials or labor furnished with
respect to the Leased Premises by or for the benefit of Tenant or at its request
within ten (10) days after Tenant receives notice that such lien has been filed.
If Tenant fails to keep this covenant beyond any applicable grace, notice and/or
cure period specifically granted herein, if any, in addition to any other
remedies available to Landlord under this Lease or otherwise, Landlord may at
its option discharge such lien, in which event Tenant agrees immediately to pay
Landlord a sum equal to the amount of the lien thus discharged plus Landlord's
internal administrative costs, reasonable attorney's fees, expenses and damages
thereby caused Landlord, plus Interest.
Prior to commencing any work on the Leased Premises that is required or
permitted hereunder (including, without limitation, any work required or
permitted under Articles III, VI, VII or
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VIII or under Section 12.8 of this Lease), the cost of which is expected to
exceed $25,000.00, Tenant shall obtain, at its own cost and expense, and shall
submit to Landlord originals of, payment and performance bonds (in favor of
Landlord and Tenant as dual obligees) issued by reputable bonding companies
acceptable to Landlord securing the payment in full of all wages and materials
due in connection with, and otherwise the lien-free completion of, all such
work.
Section 12.11 Interest. Whenever this Lease refers to "Interest", same
shall be computed at the rate of 12% per annum or the maximum rate permitted
under the circumstances by the State's or Commonwealth's law, whichever is less.
All sums of any kind and character not paid by Tenant or Landlord on their due
date shall bear Interest from such due date until paid in full. Express
provisions herein which require or permit the imposition of Interest in specific
instances shall not be deemed a limitation upon the generality of this clause.
Section 12.12 Late Payments. Should Tenant fail to pay within ten (10)
days of when due any installment of Rent or any other sum payable to Landlord
under the terms of this Lease, then, at Landlord's option, if not prohibited by
applicable law, a one-time per occurrence late charge equal to five (5%) of the
amount due may be imposed to compensate Landlord for its administrative costs in
dealing with such late payments; and Interest shall accrue on all such sums from
and after thirty (30) days following the date on which any such sums shall
become due and payable and such Interest shall be paid by Tenant to Landlord at
the time of payment of such sums.
Section 12.13 Consents. Any consent or approval of Landlord or Tenant
required under this Lease shall not be unreasonably withheld or delayed.
Section 12.14 INTENTIONALLY OMITTED.
Section 12.15 Notices. Whenever notice shall or may be given to either of
the parties by the other, each such notice shall be in writing and shall be
given by registered or certified mail (with return receipt requested), or by a
recognized overnight delivery service (such as Federal Express), in any such
case at the respective address(es) of the parties as contained in Section 1.1
(h) above, or to such other address(es) as either party may from time to time
designate in writing to the other. Any notice under this Lease shall be deemed
to have been given upon actual receipt thereof. A notice properly given on
behalf of Landlord by Landlord's management company or manager, or by an
attorney representing Landlord or its manager or management company, shall be
deemed for all purposes to be a notice from Landlord and a notice properly given
on behalf of Tenant by an attorney representing Tenant shall be deemed for all
purposes to be a notice from Tenant.
Section 12.16 No Broker. The parties each represent and warrant to the
other that no real estate brokers, salesmen or finders are involved in this
transaction for which a commission is or may be claimed. In the event a claim
for brokerage in connection with this transaction is made by any broker,
salesman or finder claiming to have dealt through or on behalf of one of the
parties hereto (the "Indemnitor"), said Indemnitor shall indemnify, defend and
hold the other party hereunder harmless from all liabilities, damages, claims,
costs, fees and expenses whatsoever (including reasonable attorneys' fees and
court costs) with respect to such claim for brokerage. The provisions of this
Section shall survive the termination of the Term.
Section 12.17 Registration. The parties hereto agree that at Tenant's
request and option at any time after this Lease is executed, this Lease will be
elevated to a public document by
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deed of elevation (the "Deed") which will be presented to the appropriate
registry of the Commonwealth for registration, all at Tenant's sole cost and
expense (including payment of all legal, notarial, recording and any other fees
and expenses incidental thereto). Tenant shall have the right to select the
Notary, subject to Landlord's reasonable approval. If this Lease is so recorded,
Tenant hereby covenants and agrees that it will, promptly upon the expiration or
any other termination of this Lease pursuant to the terms hereof for any reason
other than the default of Landlord, at Tenant's sole cost and expense (including
payment of all legal, notarial, recording and any other fees and expenses
incidental thereto), do all things necessary to cancel this Lease of record.
Tenant shall have the right to select the Notary, subject to Landlord's
reasonable approval.
If the Registrar of Property refuses to record the Deed for any reason
that constitutes a Landlord's Defect (as hereinafter defined), Landlord, at its
cost and expense, shall take all necessary and reasonable steps to correct such
defect with all reasonable diligence. In the event that, at any time during the
period from the date of this Lease to the date that is one hundred eighty (180)
days after the date Tenant takes possession of the Leased Premises, Tenant
presents the Deed to Landlord for execution and, within twenty (20) days after
such execution, either (a) Tenant requests a leasehold policy of title insurance
from Chicago Title Insurance Company (the "Title Company") insuring Tenant's
interest in the Leased Premises pursuant to the Lease and as otherwise
hereinafter described (the "Policy") and the Title Company refuses to issue the
Policy for any reason that constitutes a Landlord's Defect, or (b) Tenant
presents the Deed to the Registry of Property and the Registrar of Property
refuses to either accept the Deed for registration or later refuses to record
the Deed, subject only to the Permitted Exceptions (as hereinafter defined),
because of any Landlord's Defect (even if the Registrar's notification of such
defects is issued after such 180-day period), and Tenant notifies Landlord of
such refusal by the Title Company or the Registrar of Property, as the case may
be (including with such notice, if applicable, a copy of the Registrar's notice
of defects), within five (5) business days from Tenant's receipt of such
refusal, then, if Landlord, with Tenant's full cooperation, is unable to cure,
at its cost and expense, Landlord's Defects within sixty (60) days from the date
of such notice by Tenant, Tenant may (but shall not be required to) terminate
this Lease by giving one hundred eighty (180) days prior written notice to
Landlord, whereupon this Lease shall terminate and neither Landlord nor Tenant
shall have any rights or obligations hereunder or with respect to the Leased
Premises whatsoever. Notwithstanding the foregoing, in the event that Landlord's
cure of Landlord's Defects, using its good faith efforts and with all reasonable
diligence, requires more than sixty (60) days (including, without limitation, if
Landlord is challenging the Registrar's grounds for its refusal to record the
Deed), Landlord shall have such additional time as may be reasonably required to
cure Landlord's Defects if, within such sixty (60) day period, Landlord
commences to cure Landlord's Defects and thereafter prosecutes such cure
diligently to completion; provided, however, that if during such sixty (60) day
period or such additional time, Tenant's possession of the Leased Premises is
threatened because the Deed has not been recorded, subject only to Permitted
Exceptions, as a result of Landlord's Defects, then Landlord's time to cure
Landlord's Defects (assuming Tenant has corrected any defects preventing such
recordation that are not Landlord's Defects) shall be the period during which
the presentation of the Deed at the Registry ("asiento de presentacion") shall
remain in effect (barring any voluntary withdrawal of the Deed from the Registry
by Tenant prior to the legally scheduled expiration date of such presentation
("asiento de presentacion"); it being understood that Tenant shall not be
required to take any actions with respect to any Landlord's Defect in order to
extend such
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expiration date). With respect to any lien, encumbrance or claim recorded in, or
presented for recordation to, the Registry other than as a voluntary action of
Landlord, whether as a result of or in connection with a judicial proceeding or
otherwise (e.g., a "lis pendens" or "anotacion preventiva de demanda"), Tenant's
possession of the Leased Premises shall not be deemed to be threatened unless
and until: (i) in case of a judicial claim, a judgment is issued against
Landlord and such judgment becomes firm, final and unappealable, and (ii) in all
cases, such lien, encumbrance, claim or judgment will result in the Tenant
losing possession or use for its intended purposes of all or part of the Leased
Premises. Tenant's election not to terminate this Lease as aforesaid shall not
relieve Landlord of its obligation to cure Landlord's Defects using all
reasonable diligence, nor shall it constitute a waiver of any rights Tenant may
have against Landlord at law or in equity.
As used herein the term "Landlord's Defect" means any reason for the
refusal of the Title Company to issue the Policy or for the refusal of the
Registrar of Property to record the Deed that does not relate to the form of the
Deed or to the payment of the premium for the Policy or to the cost of execution
and recordation of the Deed.
Landlord shall execute any and all documents reasonably required by Tenant
to correct any defects that are not Landlord's Defects and that impede the
issuance of the Policy and/or the recordation of the Deed, all at Tenant's cost
and expense.
The Policy shall be a leasehold policy of title insurance insuring
Tenant's interest in the Leased Premises created by the Lease, subject only to
the Permitted Exceptions, but in any case insuring Tenant against loss
associated with any objection by the Registrar to the Deed and any accompanying
document(s), as well as any loss associated with the Registrar's refusal to
record the Deed.
The term "Permitted Exceptions", as used herein, means (1) the standard
printed exceptions on the customary form of title insurance policy used in the
Commonwealth of Puerto Rico (endorsed or amended, however, in accordance with
good local commercial practice and in no event adversely affecting the coverage
described above regarding registration), (2) mortgages or other encumbrances
created by Tenant upon its leasehold interest, (3) those matters shown on
Exhibit F attached hereto and made a part hereof, (4) such easements,
restrictions and other rights (excluding mortgages) hereafter voluntarily
created by Landlord that do not interfere with Tenant's rights under the Lease
or Tenant's use of the Leased Premises, and (5) any mortgage(s) of Landlord's
interest in the Shopping Center with respect to which Tenant fails to satisfy
its obligations under Section 10.2 of the Lease. It is expressly understood and
agreed that to satisfy the requirements hereof, the Policy must affirmatively
insure that Tenant's interest in the Leased Premises under the Deed is in fact
superior to all mortgages of Landlord's interest in the Shopping Center other
than those described in clause (5) of the preceding sentence.
Section 12.18 Entire and Binding Agreement; Survival. This Lease contains
all of the agreements between the parties hereto, supersedes all prior and/or
contemporaneous agreements and understandings and it may not be modified in any
manner other than by an agreement in writing signed by all the parties hereto or
their successors in interest. The terms, covenants and conditions contained
herein shall inure to the benefit of and be binding upon Landlord and Tenant and
their respective permitted successors and assigns, except as may be otherwise
expressly provided in this Lease.
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All obligations of Tenant and/or Landlord which are or may be intended by
their nature to be performed and/or complied with after the expiration or
earlier termination of this Lease shall survive such expiration or termination.
Express provisions herein which require or permit survival in specific
instances, or as to specific obligations, shall not be deemed a limitation upon
the generality of this survival clause.
Section 12.19 Provisions Severable. If any term or provision of this Lease
or the application thereof to any person or circumstance shall, to any extent,
be determined by appropriate judicial authority to be illegal, invalid or
unenforceable, the same shall be struck from this Lease as if never included
herein; but the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
illegal, invalid or unenforceable, shall not be affected thereby and each term
and provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
Section 12.20 Captions. The captions contained herein are for convenience
of reference only and shall not be deemed a part of this Lease, nor construed as
in any manner limiting or amplifying the terms and provisions of this Lease to
which they relate.
Section 12.21 Governing Law; Negotiated Agreement. This Lease shall be
construed and governed in accordance with the laws of the State or Commonwealth
in which the Leased Premises are located. All of the parties to this Lease have
participated (or have had the opportunity to participate) fully in the
negotiation and preparation hereof, and, accordingly, this Lease shall not be
more strictly construed against any one of the parties hereto.
Section 12.22 Irrevocable Offer. In consideration of Landlord's
administrative expense in considering this Lease and the terms of Tenant's
proposed tenancy hereunder, Landlord's reservation of the Leased Premises
pending such consideration and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Tenant's submission to
Landlord of this Lease, duly executed by Tenant, shall constitute Tenant's
irrevocable offer to continue for thirty (30) days from and after receipt by
Landlord of said Lease duly executed by Tenant or until Landlord shall deliver
to Tenant written notice of rejection of Tenant's offer, whichever shall first
occur.
Even though the first draft of this Lease was prepared by Landlord,
Landlord shall in no event be bound by the terms and conditions of this Lease,
nor obligated to reserve the Leased Premises for Tenant, unless and until
Landlord has fully executed this Lease and delivered a fully executed original
to Tenant.
Section 12.23 Time of Essence. All time specified herein shall be of the
essence hereof. Express provisions herein which recite in specific circumstances
that time shall be of the essence shall not be deemed a limitation upon the
generality of this paragraph.
Section 12.24 Hand Deletions. The physical deletion of any portion of this
Lease should not be construed as an intention that the opposite of such deleted
language should apply.
Section 12.25 Certain Definitions; Administrative Charges; Collection
Remedies.
(a) Unless otherwise specifically set forth in this Lease, "floor space"
and "Floor Space" shall mean, as the context would require, the number of square
feet in the Leased Premises or, if applicable, in other store premises in the
Shopping Center
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(excluding space on any mezzanines) as reasonably determined by Landlord. No
deduction or exclusion shall be made from floor space otherwise computed by
reason of stairs, elevators, escalators, interior partitions or other interior
construction or equipment in any such store premises.
(b) The term "Store Space" shall mean the number of square feet of the
aggregate floor space of all store space premises (including the Leased
Premises) which are leasable or saleable floor space in the Shopping Center,
whether or not leased or sold; excluding therefrom, however, in all cases space
leased (or being held for lease) to, or owned by (or being held for sale to),
any particular tenants or occupants (i) occupying (or expected to occupy) more
than 20,000 square feet ("Anchor Tenants"), and (ii) occupying (or expected to
occupy) an outparcel or pad as shown on Exhibit A attached hereto ("Outparcel
Tenants"), if any now or hereafter are designated by Landlord, from time to
time, as being such an Anchor Tenant or Outparcel Tenant. The determination as
to the size of the Store Space and of the Leased Premises shall be made
exclusively and conclusively by Landlord's architect or engineer, as Landlord
may determine.
(c) The terms "herein", "hereunder", "hereof" and the like shall refer to
this entire Lease (including, but not limited to, all Exhibits, Addenda and
documents executed by Landlord and Tenant or otherwise included as part of this
Lease); and the reference to "this Lease" shall include all such Exhibits,
Addenda and documents.
(d) Certain terms defined in various Sections of this Lease are summarized
below and the location of the Section in which each such term is so defined is
set forth opposite each such term below:
Defined Term Defined in Section:
------------ -------------------
Anchor Tenants 12.25
Break Point 1.1(d)
Commencement Date 1.2
Commencement Deadline 1.2
Common Areas 2.4
Excluded Property 2.4
Floor Space (or floor space) 12.25
Gross Sales 1.1(d)
Included Property 2.4
Interest 12.11
Landlord 12.1
Landlord's Work Ex.B, Par. 1
Lease Year 1.2
Leased Premises 1.1(a)
Minimum Rent 1.1(c) and 2.1
Operating Costs 2.4
Outparcel Tenants 12.25
Percentage Rent 1.1(d)
Rent 1.2
Security Deposit 1.1(g)
Shopping Center 1.1(a)
Store Space 12.25
Taxes 2.3
Tenant's Work Ex.B, Par. 2
Tender of Possession 1.2
Term 1.1(b)
Transfer 12.7
(e) Unless otherwise provided specifically to the contrary herein, if
Landlord advances any funds to cure any default by Tenant or performs any
obligation on behalf of Tenant which requires an expenditure, Tenant shall be
obligated to reimburse Landlord, immediately upon demand therefor, for all such
advances
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and expenditures, together with Interest thereon from the date such advances
were made until the date Landlord is reimbursed in full by Tenant.
(f) Landlord shall have the same remedies for Tenant's failure to make any
and all payments required to be made by Tenant hereunder [including, but not
limited to, Percentage Rent, Operating Costs, Taxes, all other charges and all
advances, damages, expenditures, late fees, administrative charges, additional
rent, security deposit reimbursements and Interest] as for failure to pay
Minimum Rent, as if, for purposes of such remedies, all of the foregoing were
deemed part of Minimum Rent. Specific references to this point elsewhere in this
Lease shall not limit the generality of this paragraph.
Section 12.26. Cancellation of Lease. Notwithstanding the foregoing or any
provision of this Lease to the contrary, if, at any time or from time to time
during the Term or any extended Term, Tenant shall notify Landlord that Tenant
intends to cease theatre operations in any substantial portion of the Leased
Premises, then Landlord may elect, by giving Tenant notice at any time within
the ninety (90) days following the date on which such notice was given, to
terminate the Lease as of a date not more than six (6) months later than the
date Landlord's notice is given, as fully as if that date had been specified for
the expiration of the Term. If Tenant shall not have first notified Landlord as
provided above, and Tenant shall at any time fail for ninety (90) consecutive
days to operate a theatre in substantially all of the Leased Premises, then
Landlord shall have the right specified above to terminate the Lease by giving
Tenant notice at any time within ninety (90) days following the date Landlord
first actually becomes aware of such cessation. For purposes of the preceding
sentence, any period of interruption due to repairs or alterations of the Leased
Premises, changing of fixtures, fire or other casualty or eminent domain shall
not be counted in determining whether Tenant has failed to operate a theatre in
the Leased Premises for the required amounts of time. If Landlord shall fail to
timely exercise such right (whether following notice from Tenant or following
Landlord first becoming aware of the cessation of such business without notice),
the right granted to Landlord herein shall terminate (as to such event, but not
as to a future cessation of business to which the right shall again apply) and
the Lease shall continue in full force and effect.
Section 12.27. Confidentiality. Subject to the provisions hereof regarding
the registration of this Lease, including Section 12.17 hereof, Landlord and
Tenant hereby agree that all monetary terms of this Lease and all information
discovered or learned by Landlord and/or Tenant pursuant to any audit permitted
under this Lease and all information and documentation in the possession of
either Landlord and/or Tenant related thereto, shall remain confidential and
shall not be revealed or disclosed to any person or party whatsoever, except (a)
by Tenant, to Tenant's attorneys, accountants or lenders, (b) by Landlord, to
Landlord's attorneys, accountants, mortgagees or ground lessors, potential
mortgagees or ground lessors, potential purchasers and/or to such other parties
having an interest in, or considering the acquisition of, an interest (direct or
indirect, as owner or mortgagee) in the Shopping Center or in Landlord, and (c)
by either party, if required in court proceedings.
Section 12.28. Representations and Warranties. (a)
Landlord represents and warrants to Tenant as set forth in this
Section 12.28(a).
(i) Landlord is a Puerto Rico special partnership duly formed,
validly existing and in good standing under the laws of the Commonwealth of
Puerto Rico, with full power and authority to
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acquire, develop and lease the Shopping Center, including but not limited to the
execution, delivery and performance of this Lease.
(ii) All necessary partnership action has been taken (including any
necessary partner approvals) for the execution and delivery of this Lease by the
undersigned representative of Landlord and the performance by Landlord of its
obligations hereunder.
(iii) This Lease has been duly executed and delivered by Landlord,
and constitutes the valid and binding obligation of Landlord, enforceable
against Landlord in accordance with its terms.
(iv) The execution, delivery and performance of this Lease and the
transactions contemplated herein do not and will not conflict with or result in
a breach of any of the terms, conditions or provisions of, or constitute a
default under, (i) the partnership agreement of Landlord, or (ii) any bond,
debenture, note or other evidence of indebtedness to which Landlord is a party
or by which Landlord or the Shopping Center are bound, or (iii) any contract,
indenture, mortgage, loan agreement, lease, joint venture agreement or other
agreement or instrument to which Landlord is a party or by which Landlord or the
Shopping Center are bound, or result in any violation by Landlord of any law,
order, rule or regulation of any court or governmental agency or body. Landlord
has no actual knowledge of any violation of any law, ordinance, governmental
rule or regulation or court decree to which it may be subject, or failure to
obtain and maintain in full force and effect any license, permit, certificate,
franchise or other governmental authorization necessary to the ownership,
construction and operation of the Shopping Center.
(v) Landlord owns good, marketable and indefeasible title to the
Shopping Center, free and clear of any mortgages and restrictions, covenants,
conditions, easements or other matters (except those which do not interfere with
Tenant's rights under this Lease or Tenant's use of the Leased Premises)
whatsoever, other than the Permitted Exceptions, leases of portions of the
Shopping Center other than the Leased Premises and those matters set forth in
Exhibit F attached hereto and made a part hereof.
(vi) Based solely on Landlord's Phase I Environmental Site
Assessment Report of the property on which the Shopping Center is constructed,
prepared by Law Environmental-Caribe, dated October 31, 1991, the Shopping
Center is in compliance with all environmental laws applicable to it, and there
is not now pending, nor, to the Landlord's actual knowledge, threatened, any
action, suit, investigation or proceeding against Landlord seeking to enforce
any right or remedy under any environmental laws. No notice has been serviced on
Landlord form any entity, governmental body, or individual claiming any
violation of any environmental law, regulation, ordinance or code, or demanding
payment or contribution for environmental damage or injury to natural resources.
(vii) The sole partners of Landlord are as follows:
Mark B. Davis, Luis Alberto Rubi, Mark H. Greene and Wal-Mart
Puerto Rico, Inc.
(b) Tenant represents and warrants to Landlord as set for forth in this
Section 12.28(b).
(i) Tenant is a Puerto Rico corporation duly formed, validly
existing and in good standing under the laws of the Commonwealth of Puerto Rico,
with full power and authority to execute, deliver and perform its obligations
under this Lease.
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(ii) All necessary corporate action has been taken (including any
necessary board of director and shareholder approvals) for the execution and
delivery of this Lease by the undersigned representative of Tenant and the
performance by Tenant of its obligations hereunder.
(iii) This Lease has been duly executed and delivered by Tenant, and
constitutes the valid and binding obligation of Tenant, enforceable against it
in accordance with the terms hereof.
(iv) The execution, delivery and performance of this Lease and the
transactions contemplated herein do not and will not conflict with or result in
a breach of any of the terms, conditions or provisions of, or constitute a
default under, (i) the articles of incorporation or by-laws of Tenant, or (ii)
any bond, debenture, note or other evidence or indebtedness to which Tenant is a
party or by which Tenant is bound, or (iii) any contract, indenture, mortgage,
loan agreement, lease, joint venture agreement or other agreement or instrument
to which Tenant is a party or by which Tenant is bound, or result in any
violation by Tenant of any law, order, rule or regulation of any court or
governmental agency or body. Tenant is not in violation of any law, ordinance,
governmental rule or regulation or court decree to which it may be subject, nor
has it failed to obtain and maintain in full force and effect any license,
permit, certificate, franchise or other governmental authorization necessary to
the performance of its obligations hereunder.
Section 12.29. Closing of Anchors. Landlord covenants and agrees that in
the event both Wal*Mart and Pueblo (or Xtra, as applicable) (or replacements
thereof) close for any reason (other than for remodeling, taking of inventory or
as a result of a casualty or condemnation) for a period longer than six (6)
months, Tenant, as long as Tenant is fully operating as of the date of the
second such closing, shall only be obligated to pay, in addition to all other
charges required under this Lease, but in lieu of but not exceeding Minimum
Rent, eight percent (8%) of its Gross Sales, commencing with the beginning of
the seventh (7th) month following the second of such closings and ending on the
date one of such closed anchors (or its replacement for substantially all of
such closed anchor's space) reopens or thirty-six (36) months from the date of
the second of such closings, whichever shall first occur. Full Minimum Rent
shall automatically be restored upon the re-opening of one of such closed
anchors (or its replacement). If Tenant is not so operating as of the date of
the second such closing, full Minimum Rent will continue to apply.
If one of such closed anchors does not so reopen (or is not so replaced)
within thirty-six (36) months from the date of the second of such closings,
Tenant shall have the option, exercisable only by written notice to Landlord if
properly given within thirty (30) days following the expiration of such 36-month
period, to (i) cancel the Lease, or (ii) keep the Lease in full force and
effect, in which latter case Tenant shall thereupon recommence the payment of
full Minimum Rent and shall have no further remedies with respect to said closed
anchor spaces. If no notice is given by Tenant within such 30-day period, Tenant
shall be deemed irrevocably to have elected option (ii) above.
Tenant will have no other right or remedy for the failure of any anchor
tenant (or other tenant) to operate.
During any period that Tenant is obligated to pay a percentage of Gross
Sales in lieu of Minimum Rent pursuant to the provisions hereof, Tenant shall
submit to Landlord, on or before the 15th day of each calendar month (or partial
calendar month), a written statement showing Tenant's Gross Sales for the
preceding calendar month, and together with such statement, shall
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pay to Landlord the full amount due to Landlord for such preceding calendar
month. Any rent paid during the abatement of Minimum Rent shall be classified as
"minimum rent" for purposes of computing the sum of percentage rent due in any
given Lease Year.
To permit time to complete the construction and initial lease-up and
tenant improvements in the Shopping Center, the rights granted to Tenant under
this Section shall not apply through and including December 31, 1996 (i.e., the
earliest date to which this Section shall apply shall be January 1, 1997).
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease on
the respective dates set forth below, this Lease being effective as of the later
of such dates.
In executing this Lease, Tenant hereby acknowledges that neither Landlord,
nor any Landlord representative, has made any representations to or agreements
with Tenant which are not contained in this Lease. Without limiting the
generality of the foregoing, Tenant acknowledges that neither Landlord, nor its
representatives, have made any promise or representation as to Tenant's
anticipated Gross Sales, income or expense, nor as to other tenancies, nor as to
any other matter not specifically incorporated into this Lease in writing.
Furthermore, Tenant acknowledges that it has read this Lease and fully
understands, agrees with and intends fully to be bound by all of the provisions
of this Lease, including, but not limited to, those provisions containing
waivers and/or indemnities by Tenant (including, but not limited to, Sections
3.1, 4.1, 5.3, 8.1, 8.2, 11.3, 12.4, 12.6, 12.8, 12.9, 12.13, 12.14, 12.16 and
Exhibit B, pars. 1 and 7).
TENANT:
THEATER ACQUISITIONS OF PUERTO
RICO, INC., a Puerto Rico
corporation
By: /s/ Carl Drew
----------------------------
CARL DREW
Senior Vice President
Date: July 14, 1994
LANDLORD:
PALMA REAL ASSOCIATES, S.E., a
Puerto Rico special
partnership
By: /s/ Mark B. Davis
----------------------------
MARK B. DAVIS
Managing Partner
Date: July 20, 1994
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STATE OF FLORIDA )
) SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this 14th day of July,
1994, by CARL DREW, as Senior Vice President of THEATER ACQUISITIONS OF PUERTO
RICO, INC., a Puerto Rico corporation, on behalf of said corporation. He is
personally known to me and did not take an oath.
My Commission Expires:
/s/ Lynn M. Johnson
NOTARY PUBLIC
STATE AND COUNTY AFORESAID
May 25, 1996
STATE OF FLORIDA )
) SS:
COUNTY OF PALM BEACH )
The foregoing instrument was acknowledged before me this _____ day of
July, 1994, by MARK B. DAVIS, as Managing Partner of PALMA REAL ASSOCIATES,
S.E., a Puerto Rico special partnership, on behalf of said special partnership.
He is personally known to me and did not take an oath.
My Commission Expires:
------------------------------
NOTARY PUBLIC
STATE AND COUNTY AFORESAID
- - -----------------------
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LIST OF EXHIBITS
EXHIBIT A - Shopping Center Site Plan and Legal
Description
-show "primary theatre parking area"
-show "Store Space"
-show "entrances and exits to Shopping
Center"
-show "outparcels"
-show locations of tenant's signs
EXHIBIT B - Description of Landlord's Work and
Tenant's Work
EXHIBIT C - Signage
EXHIBIT D - Landlord's Consent and Estoppel
EXHIBIT E - Fee Mortgagee's Consent and Estoppel
EXHIBIT F - List of Permitted Title Exceptions
EXHIBITS INTENTIONALLY OMITTED.
EXHIBIT B