LEASE AGREEMENT FOR SPACE TO BE CONSTRUCTED
IN THE MAYAGUEZ SHOPPING CENTER
THIS INDENTURE OF LEASE, made on this 10th day of August of 1995 by
MAYAGUEZ SHOPPING CENTER, S.E., a special partnership organized and existing
under the laws of the Commonwealth of Puerto Rico, herein called "Owner"
represented by its Principal Partners, Juan A. Albors Hernandez and Ada M.
Albors Hernandez and Reading Cinemas of Puerto Rico, Inc., a corporation
organized and existing under the laws of the Commonwealth of Puerto Rico, herein
called "Tenant" represented by its President, Mr. Robert Smerling.
WITNESSETH:
ARTICLE I
GRANT AND TERM
SECTION 1.10 Construction of New Building and Leased Premises
The Owner shall, at its own cost and expense, construct a new building as
part of the Mayaguez Shopping Center (said shopping center and any building now
or hereinafter forming part thereof hereinafter called "Commercial Center") to
contain the property leased to Tenant in accordance with the terms and
conditions of this lease.
Tenant shall lease from Owner certain new premises on the second floor of
the new building (the "New Building") that will be erected by Owner in the
Commercial Center, which new second floor premises consist of an approximate
area of (18,600) EIGHTEEN THOUSAND SIX HUNDRED SQUARE FEET, hereinafter referred
to as the Leased Premises, for the term and upon the terms and conditions set
forth in this Lease Agreement. The location of the Leased Premises within the
site plan of the Commercial Center, which is marked "Exhibit A", attached hereto
and made part hereof, shows the boundaries and location of the Leased Premises
as outlined in red therein.
On the date hereof Owner has shown the final construction plans (and
specifications) of the Leased Premises certified by the architect, and Tenant
within 30 days from the date hereof, after reviewing such final plans will
approve or object to the
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final design and the construction specifications of the Leased Premises that
shall be constructed at the Commercial Center for the use of Tenant. The
approval of Tenant shall not be deemed to constitute a waiver of Tenant to make
any claim against the Owner should the Leased Premises not be constructed in
accordance to the approved plans and specifications and/or in compliance with
applicable building codes and regulations.
Section 1.20 Description of Leased Premises
The Leased Premises that Owner shall construct will be on the second floor
of the Commercial Center and will provide to Tenant premises consisting of a
typical shell; that is, steel structure, back and side concrete walls or dryvit,
glass front wall and roof. Owner will provide in addition, inclined unfinished
floors and projection mezzanines. Owner will only provide the inclined
unfinished floors and projection mezzanines on each of the six auditoriums.
Owner will only provide the structural floor of the projection mezzanines; and
the walls to enclose the mezzanines shall be the responsibility and at the cost
of the Tenant. In addition, Owner will provide a twenty six feet six inches
(26'.6") clear elevation from the level floor of the Leased Premises to the
lowest part of the bottom of the framing system of the roof; three (3) hours
fire retardant protection beneath primary floor of Leased Premises and the
ceiling of the first floor retail space under the Leased Premises, electrical
(3-phase, 480 volts/2,000 amperes capacity, 500 kva substation) from which
Tenant will make the necessary connection for its own needs, and at least 2
inches water supply pipeline for bathrooms, rough-in sanitary facility, and
water supply for sprinklers, drinking water fountains, concession stands, and
for air conditioning to be installed by Tenant, and telephone facilities for at
least three (3) lines. Tenant will provide at its own cost and expense, all
other interior work for its use, such as air conditioning system, interior
electrical facilities, lighting, partitions for each auditorium, sprinklers
system, fire alarm system, bathrooms, interior ceiling, floor covering,
painting, fixtures and equipment. Tenant shall bear all cost of utility services
serving the Leased Premises, including, but not limited to, electric power,
water, sewer, gas, and telephone services. Tenant will submit to Owner for
approval the plans for any interior work to be done within the Leased Premises.
Such approval shall be deemed
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granted if Tenant has not received any objection by Owner within twenty (20)
days of submitting such plans.
Section 1.30 Purpose and Use
The Leased Premises shall be used by Tenant for the purpose of operating a
multi screen movie theater for the exhibiting of motion picture presentations,
other theater purposes, including without limitation, vaudeville, theatrical,
dramatic, operatic, and other performances and exhibitions, including those
broadcast or televised to or from the Leased Premises, for general auditorium
purposes and civic functions, for the sales of food, refreshments and other
beverages, records, tapes, books, magazines, toys, novelties and similar items
sold in connection therewith, maintain video and entertainment games limited to
only ten (10) machines for the entire lobby of the six theater auditoriums and
vending machines for the use of patrons of Tenant and for such other uses as are
customary and usual in connection with any of the foregoing or with the general
cinema business. With the written consent of the Owner, Tenant shall have the
right at any time to convert the use of the Leased Premises to any other lawful
use provided that such other contemplated use is not in conflict or violation of
any exclusive use agreement of space in the Commercial Center granted by the
Owner to any other Tenant. Tenant shall operate under the trade name: Cinevista
or any other trade name.
Section 1.31 OTHER THEATERS
Owner hereby grants and affords Tenant the exclusive privilege for the
operation of theater auditoriums for exhibiting of motion picture presentations
in or about the Commercial Center and in any expansion thereof. Owner covenants
and agrees that no part of the Commercial 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 movie theater, live performances of any
type, television broadcasts and / or the exhibition of any other entertainment
performances other than video games, except that in the food court there may be
installed television screens on the premises of the food-court broadcasting at
every moment during the operating hours of the food court, and may have
pay-per-view broadcasts, such as boxing, any type of sports, or any other
pay-
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per-view entertainment (other than first run motion pictures of the type which
may simultaneously be exhibited by Tenant in the Leased Premises) transmitted in
the television screens of the food court of the Commercial Center, and also
except for incidental activities by other Tenants and / or Owner such as live
performances, television broadcasts, pay-per- view broadcasts and or the
exhibition of any other entertainment performances.
Owner shall not permit the sale of ready-to-eat pop- corn for consumption
anywhere in the food court and in the Commercial Center, except within the
Leased Premises, excluding the sale of raw pop-corn for consumption out-side the
Commercial Center, and except as may be allowed on the date hereof by lease
contracts between Owner and existing tenants.
Section 1.40 Substantial Completion of Premises
The Owner expects to complete the construction of premises on or before
June 30, 1997 but this date shall be extended for all delays in construction
resulting from causes beyond the control of the Owner. Construction shall be
deemed to have been completed upon delivery by Owner to Tenant of the
appropriate use permit of the New Building. Possession of the Leased Premises
shall be permitted by Tenant prior to the completion of the Leased Premises upon
written notice of partial completion by Owner to Tenant for the purpose of
commencement of construction of Tenant's interior work. Upon Owner final
completion of the construction of the Leased Premises, Owner and Tenant shall
measure the Leased Premises to determine the actual gross leased area of the
Leased Premises and any amount payable under this lease determined on the basis
of the area of the Leased Premises shall be computed on the basis of the actual
measured gross leased area of the Lease Premises; that is, to the exterior of
the perimeter walls. If by December 31, 1997, Tenant has not been delivered the
appropriate use permits as aforesaid and has not been put in possession of the
Leased Premises, Tenant shall have the right to cancel this Lease at any time
after such date.
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Section 1.50 Use of Additional Areas
The use and occupation by the Tenant of the Leased Premises shall include
the use in common with others entitled thereto of the common areas, employees
parking areas, service roads, loading facilities, sidewalks, and customer car
parking areas, as they now or may hereinafter exist, and other facilities as may
be designated from time to time by the Owner, subject, however, to the terms and
conditions of this Lease Agreement and to reasonable rules and regulations for
the use thereof as prescribed from time to time by the Owner.
Section 1.60 Commencement and Ending Date of Term
The term of this Lease Agreement and Tenant's obligation to pay rent
hereunder shall commence 120 days after Tenant has been put in possession of the
Leased Premises, or on the date Tenant opens for business, whichever comes
first, and the original term of this lease shall be for 20 years after such
date. If Tenant is not open for business within said 120 day period as a result
of Tenant's inability to obtain a use permit for the Leased Premises resulting
from the actions or inactions of Owner, its employees, agents or contractors,
such 120 day period shall be extended by the period of such inability. Tender of
possession of the Leased Premises by the Owner to the Tenant shall be evidenced
by written notice given by the Owner to the Tenant, accompanied by a copy of any
necessary certificate of occupancy, stating that the New Building and the Leased
Premises have been substantially completed as herein provided and are ready for
occupancy by the Tenant. If the commencement date of the term of this lease
shall be a day other than the first day of a calendar month, then the original
term of this lease shall be deemed extended by the number of days between the
commencement date of this lease and the first day of the calendar month
following the commencement date of this lease, so that the original term of this
lease shall expire 20 years after such first day of the first calendar month
following the commencement date of this lease. In such case, the Tenant shall
pay pro rata rent, in advance, for the period from the effective date of this
lease to the first day of such following calendar month.
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On and after the first day of such following calendar month the Tenant shall pay
the rent as hereinafter provided in this lease.
Section 1.70 Term of the Original Lease
The term of this original lease shall be for a period of Twenty (20)
years.
Section 1.80 Renewal Options
Tenant will have the right to extend the original lease agreement for four
additional consecutive option periods of five years each.
Section 1.90 Lease Year Defined
The term "lease year" as used herein shall mean a period of twelve (12)
consecutive full calendar months. The first lease year shall begin on the date
of commencement of the term hereof if the date of commencement of the term
hereof shall occur on the first day of a calendar month; if not, then the first
lease year shall commence upon the first day of the calendar month next
following the date of commencement of the term hereof. Each succeeding lease
year shall commence upon the anniversary date of the first lease year.
ARTICLE II
RENT
Section 2.00 Minimum Rent
On the basis of Leased Premises consisting of 18,600 square feet, Tenant
agrees to pay to Owner at the office of Owner, or at such other place designated
by Owner within the Commonwealth of Puerto Rico, without any prior demand
therefor, and without any deduction or set-off whatsoever, and as fixed minimum
rent:
a. Tenant shall pay Owner in equal monthly installments, in advance, a
Minimum Annual Rent in the amount of $15,500.00 per month that is, ONE HUNDRED
EIGHTY SIX THOUSAND DOLLARS ($186,000.00) per year that is, $10.00 per square
foot per year for the first 10 years of the original term, and $17,050.00 per
month that is, TWO HUNDRED FOUR THOUSAND SIX HUNDRED DOLLARS ($204,600) per year
that is, $11.00 per square foot per year during the following five years, and
$17,825.00 per month that is, TWO HUNDRED THIRTEEN THOUSAND NINE HUNDRED
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DOLLARS ($213,900) per year that is, $11.50 per square foot per year during the
last five years of the original lease agreement.
b. Upon the expiration of the original term of this lease agreement,
Tenant agrees to pay for the first option period of five years, (if such option
is exercised by Tenant) a Minimum Annual Rent in the amount of $18,600.00 per
month that is, TWO HUNDRED TWENTY THREE THOUSAND TWO HUNDRED DOLLARS ($223,200)
per year that is, $12.00 per square foot per year.
c. Upon the expiration of the first option period, Tenant agrees to pay
for the second option period of five years, (if such option is exercised by
Tenant) a Minimum Annual Rent in the amount of $20,150.00 per month that is, TWO
HUNDRED FORTY ONE THOUSAND EIGHT HUNDRED DOLLARS ($241,800) per year that is,
$13.00 per square foot per year.
d. Upon the expiration of the second option period, Tenant agrees to pay
for the third and fourth option periods of five years each, (if such options are
exercised by Tenant), Minimum Annual rents applicable to each such option
periods to be determined by an independent real estate appraiser acceptable to
each party and in accordance with the market rents on the dates that the third
and fourth option periods are to commence.
Section 2.10 Taxes
Tenant shall pay its prorata share of taxes levied on the land, buildings
and improvements of the Commercial Center; said share (hereinafter "Prorata
Share") to be determined and ascertained by a fraction in which the numerator
shall be 18,600 square feet or Tenant's actual gross leased area and the
denominator shall be the Commercial Center's gross leasable area.
The additional rent provided for in this Section 2.10 shall be paid within
thirty (30) days after demand therefor by Owner. A tax bill submitted by Owner
to Tenant shall be sufficient evidence of the amount of taxes assessed or levied
against the real property to which such bill relates. Owner may choose to bill
Tenant monthly in proportion of said amount together with the monthly basic
rent. Any difference at the end of the six month period shall be adjusted and
credited or charged to the Tenant, as
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the case may be. Owner shall pay all such real estate taxes to the appropriate
taxing authorities within the maximum discount period. (See subdivision e of
Section 7.00 of ARTICLE VII for Tenant's real estate taxes maximum annual
reimbursement payment)
Section 2.20 Percentage Rent
Tenant shall also pay Owner in addition to the Minimum Annual Rent, a
Percentage Rent computed on the basis of Gross Sales for each Lease Year less
the Minimum Rent payable for such Lease Year, equal to 10% of Box Office
Receipts and 10% of Confection Receipts. The term Gross Sales as used herein is
defined to mean 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', whether sold from the Leased Premises or elsewhere if used in the
Leased Premises (excluding, however, tickets sold in the Leased Premises for use
at other theaters and not in fact used in the Leased Premises), and all
'Confection Receipts'. As used herein, the term 'Box Office Receipts' shall mean
all money received by Tenant from the sale of theater admissions' tickets to the
Leased Premises, whether such sales are effected by computer, cable, microwave
or other current or future technology and all money received by Tenant from
using the Leased Premises for general auditorium purposes and civic functions.
As used herein, the term 'Confection receipts' shall mean 50% of all money
received by Tenant from the sale of food, candies, beverages, records, tapes,
books, magazines, toys, novelties and any and all other items sold in or about
the Leased Premises. On video and entertainment games and vending machines
located in the Leased Premises that are owned by Tenant, all sales from such
videos and vending machines shall be included in the calculation of Confection
Receipts. In the event that such videos and/or vending machines are owned by an
unrelated third party and/or that any sales are conducted through
concessionaires, then only the commissions received by Tenant therefrom shall be
included in the calculation of Gross Sales. There shall be excluded from the
calculation of Gross Sales: (i) any sums collected or paid out for any sales or
rental excise tax or any other tax imposed or levied by any duly constituted
governmental authority, whether now or hereafter in force, (ii) any exchange of
goods or merchandise
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between the stores of Tenant made solely for the convenient operation of the
business of Tenant and not for the purpose of depriving Landlord of the benefits
of a sale, (iii) the amount of return to shippers or manufactures, (iv) the
amount of any cash or credit refund, (v) sales of fixtures, equipment or
properties that are not a part of Tenant's stock in trade, (vi) returned,
exchange or waived admission fees, (vii) sales to employees not to exceed 2% of
Gross Sales,, (viii) commissions fees paid by Tenant to tickets agencies and
(IX) employee or gift pass admissions not to exceed 2% of Gross Sales.
Tenant will register its sales using the cash registers that Tenant
commonly uses in its business which contains cumulative sales indicators.
The percentage rent shall be due sixty days after the last of each lease
year, partial lease year during the term of the lease or expiration or earlier
termination of this lease.
All of Tenant's books and records to the extent pertaining only to the
total gross sales generated in the business conducted on the Leased Premises
shall be open to inspections and audit by Owner's authorized representative upon
reasonable prior written notice to Tenant. Tenant shall submit to Owner the
following written statements.
(a) On or before the thirtieth (30)th day following each monthly
period of the lease term, a statement showing the amount of gross sales for the
month or fractional month preceding.
(b) On or before the sixtieth (60)th day following the end of each
lease year or partial lease year, a statement showing the amount of gross sales
during the lease year or partial lease year.
Each of these statements shall be (a) certified as correct by Tenant; (b)
accurate and in reasonable detail, satisfactory in scope to Owner; and (c) sent
to the place then fixed for payment of the rent.
Acceptance by Owner of payment of percentage rent shall be without
prejudice to Owner's rights to examine Tenant's books and records pertaining
only to the total gross sales, in order to verify the amount of Tenant's gross
receipts and without prejudice to Owner's right to cause an audit to be made as
provided below.
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At its option, at any reasonable time upon twenty (20) days written notice
to the Tenant and only once a year, Owner may cause an audit to be made of all
or any part of Tenant's business affairs and records, relating to the gross
sales generated in the business generated in the Leased Premises for the period
covered by any statement issued by Tenant. If the audit discloses a discrepancy
of four percent or more of the amount of gross sales, the Tenant shall reimburse
Owner for the reasonable cost of the audit. If after any examination or audit,
the audit accurately discloses that an additional sum is due as percentage rent,
Tenant agrees to pay such sum upon written demand.
Section 2.30 Past-Due Rent and Additional Rent
If Tenant shall fail to pay, after fifteen (15) days, when the same is due
and payable, any rent or any additional rent, or amounts or charges of the
character described in ARTICLE II hereof, such unpaid amounts shall bear
interest from the due date thereof to the date of payment at the rate of 200
basis points over the prime rate per annum quoted by The Chase Manhattan Bank,
N.A.
ARTICLE III
CONSTRUCTION, ALTERATION, RELOCATION, AND FINANCING OF IMPROVEMENTS AND
ADDITIONS THERETO
Section 3.00 Owner's Obligation
Owner shall construct the New Building and the Leased Premises as provided
in Sections 1.10 and 1.20 of this Lease Agreement. Tenant shall submit plans to
Owner for its written approval, prior to making any changes, modifications, or
alterations, in the Leased Premises. Without seeking Owner's prior consent,
Tenant is permitted to make additions, improvements and constructions in the
Leased Premises not exceeding in cost the sum of $100,000.00 per year. Any
repairs, alterations, or changes to the Leased Premises performed by Owner at
Tenant's request, shall be paid entirely by Tenant.
In making any alterations or modifications to the Leased Premises, Tenant
shall conserve the existing facilities to the greatest extent possible and shall
not affect the structure of the Leased Premises in any way. All sort of
modification, changes,
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reconstruction, etc., shall be done, whenever possible, using the back entrance
to the Leased Premises. Any work performed by Tenant shall be done with
commercially reasonable care and diligence, so as to cause the least nuisance,
noises, or inconveniences to other tenants of the Commercial Center. In respect
to such alterations and modifications, Tenant shall be exclusively responsible
for any damages to third persons, Owner, or their property and shall hold or
harmless and indemnity it for any damages caused, as provided in ARTICLE XI
except for those caused by willful or negligent act of Owner or any other third
person.
Section 3.10 Parking Facilities and Illumination
As part of the expansion of the Commercial Center, Owner will construct at
its own cost and expense within the Commercial Center a multi level garage
parking of approximately 187 spaces and an additional ground level parking of
approximately 183 spaces. Owner guarantees that under no circumstances the
parking will be reduced to less than 300 spaces. The illumination of the
parking, the interior common area facilities serving the Leased Premises and the
exterior common areas of the Commercial Center will be on at least 30 minutes
after the last show of every evening.
3.20 Changes and Additions to Buildings
Owner hereby reserves the right at any time to make alterations or
additions to and to build additional stories on the building in which the
premises are contained and to build adjoining the same. Owner also reserves the
right to construct other buildings or improvements in the Commercial Center from
time to time and to make alterations thereof or additions thereto and to build
additional stories on any such building or buildings and to build adjoining the
same and to construct double-deck or elevated parking facilities, provided,
however, that none of the foregoing shall interfere or interrupt the use of the
Leased Premises for the purposes contemplated under this lease.
Section 3.30 Right to Relocate
Except as otherwise stated in Section 3.10, Owner reserves the right at
any time to relocate the automobile parking areas, and other common areas on the
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Commercial Center as it now exists.
ARTICLE IV
CONDUCT OF BUSINESS BY TENANT
Section 4.00 Use of Premises
Tenant shall use commercially reasonable efforts to conduct continuously
in the Leased Premises the business above stated. Except as otherwise stated in
this lease, Tenant will not use or permit, or suffer the use of the Leased
Premises for any other business or purpose.
Section 4.10 Operation of Business
Tenant shall conduct its business in the Leased Premises during the
regular customary days and hours which are economically and commercially
feasible for such type of business in the city, or trade area in which the
Commercial Center is located.
ARTICLE V
OPERATION OF CONCESSIONS
CONCESSIONAIRE
Section 5.00 Consent of Owner
Except as otherwise permitted in this lease, without Owner's prior
consent, Tenant shall not permit any business to be operated in or from the
Leased Premises by any concessionaire of licensee. Failure to comply shall
constitute breach of this lease.
ARTICLE VI
PARKING AND COMMON USE AREAS AND FACILITIES
Section 6.00 Control of Common Areas by Owner
All automobile parking areas, driveways, entrances and
exits thereto, and other facilities furnished by Owner in or near
the Commercial Center, including employee parking areas, the truck
way or ways loading docks, package pick-up stations, pedestrian
sidewalks and ramps, landscaped areas, exterior stairways, first-
aid stations, comfort stations and other areas and improvements
provided by Owner for the general use, in common, of tenants, their
officers, agents, employees and customers, shall at all times be
subject to the exclusive control and management of Owner, and Owner
shall have the right from time to time to establish, modify and
enforce commercially
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reasonable rules and regulations with respect to all facilities and areas
mentioned in this Article. Owner shall have the right and obligation to
construct, maintain and operate adequate lighting facilities on all said areas
and improvements; to police the same; from time to time to change the area,
level, location and arrangement of parking areas and other facilities
hereinabove referred to; to restrict parking areas; to enforce parking charges
(by operation of meters or otherwise), with appropriate provisions for free
parking ticket validating by Tenants; to close all or any portion of said areas
or facilities to such extent as may, in the opinion of Owner's counsel, be
legally sufficient to prevent a dedication thereof or the accrual of any rights
to any person or the public therein; to close temporarily all or any portion of
the parking areas of facilities; to discourage non-customer parking; and to do
and perform such other acts in and to said areas and improvements as, in the use
of good business judgement, the Owner shall determine to be advisable. Owner
will operate and maintain the common facilities referred to above in such manner
as Owner, in its sole discretion, shall determine from time to time. Without
limiting the scope of such discretion, Owner shall have the full right and
authority to employ all personnel and to make all fair and commercially
reasonable rules and regulations pertaining to and necessary for the proper
operation and maintenance of the common areas and facilities. Notwithstanding
anything herein to the contrary, the rights afforded to Owner by this Section
6.00 are limited and restricted by the other provisions of this lease,
including, without limitation, Section 3.10, 3.20 and 3.30.
Section 6.10 License
Tenant is hereby granted the right to use all common
areas and facilities of the Commercial Center concurrently and
simultaneously used by other tenants of the Commercial Center not
within the Leased Premises during the time Tenant is in possession
of the Leased Premises and such right shall only be revoked and
terminated in the event Owner obtains possession of the Leased
Premises. If the amount of the common areas and facilities of the
Commercial Center is diminished by Owner or any other reason, Owner
shall not be subject to any liability nor shall Tenant be entitled
to any compensation or diminution or abatement of rent, nor shall
such diminution of such
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areas be deemed constructive or actual eviction.
ARTICLE VII
COST OF MAINTENANCE OF COMMON AREAS
Section 7.00 Tenant to Bear Pro Rata Share of Expense
(a) Subject to the limitations set forth in Section 7.00 (e), in
each lease year, Tenant will pay to Owner, in addition to the rentals specified
in Article II hereof, as further additional rent, subject to the limitation
hereinafter set forth, a proportion of the Commercial Center's operating cost,
hereinafter defined, based upon the ratio of the actual square feet of the gross
leased area of the Leased Premises to the total square feet of all the leasable
gross building space in the Commercial Center.
(b) For the purpose of this Section 7.00 the "Commercial Center's
operating cost" means the total fair and commercially reasonable cost and
expense incurred in operating and maintaining the common facilities, hereinafter
defined, actually used or available for use by Tenant and the employees, agents,
servants, customers and other invitee of Tenant, but specifically including,
without limitation, gardening and landscaping, the cost of public liability
insurance, administrative salaries and management fees (the management fees will
not exceed 5% of the total gross revenues of the Commercial Center), repairs,
painting, utilities, sanitary control, removal of trash, rubbish, cleaning and
other refuse, equipment used in such maintenance, the cost of personnel to
implement such services, to direct parking, and to police the common facilities,
the cost of lighting and guard services, but excluding any depreciation expenses
of any kind.
Property Insurance and Real Estate Taxes and Assessments are also part of the
operating expenses of the Commercial Center, but the pro rata share of property
insurance and real estate taxes shall be computed as stipulated on Section 2.10
and Section 11.00. Owner shall operate and maintain the Commercial Center in a
fair and commercially reasonable manner.
"Common facilities" means all areas, space, equipment and special services
provided by Owner for the common or joint use and benefit of the occupants of
the
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Commercial Center, their employees, agents, servants, customers and other
invites, including without limitation parking areas, access roads, driveways,
retaining walls, landscaped areas, truck service ways or tunnels, loading docks,
pedestrian malls, courts, stairs, ramps and sidewalks, elevators, comfort and
first aid stations, washrooms and parcel pick-up stations.
(c) The additional rent provided to be paid in this Section 7.00
shall be computed on a monthly basis, and shall be paid by Tenant promptly
within twenty (20) days upon receipt of monthly bills therefor from Owner
setting forth in reasonable detail charges and calculations, without any
deduction or set-off whatever.
(d) Changes in any particular floor area occurring during any month
shall be effective on the first day of the next succeeding month and the amount
of any floor area shall be in effect on the first day of each calendar month.
(e) Owner hereby guarantees that Tenant's pro-rata share of the
Commercial Center's operating cost as defined in paragraph (b) of Section 7 of
ARTICLE VII shall not be greater than $2.50 per square foot of Tenant's gross
leased area in the Leased Premises; that is, $46,500.00 annually on the basis of
Leased Premises of 18,600 square feet. The $2.50 per square foot maximum charges
for the Commercial Center's operating cost shall be adjusted annually by the
percentage increases (or equivalent) in the Puerto Rico Government Consumer
Price Index ("C.P.I.") at the end of each lease year over the "C.P.I." at the
beginning of the same lease year. Tenant shall pay the lesser of its pro-rata
share of actual expenses, or the $2.50 per square foot plus the cumulative
compounded annual C.P.I. increase as explained above.
(f) Tenant shall reimburse its corresponding share of the expenses
for the Commercial Center's Opening Activity based on its participation ratio as
set forth in Section 7.00 of ARTICLE VII, or $5,000.00, whichever is lower.
(g) Tenant or its agents, upon prior notice to Owner, may audit and
inspect, but only once a year, at the offices where the books and records of the
Commercial Center are maintained, Owner's records of operating expenses,
insurance and property taxes of
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the Commercial Center, provided such audit and inspection shall be made during
normal business hours and not unreasonably interfere with the general business
operations of Owner, provided, however, that if any such audit or inspection
discloses that the actual cost of operating expenses, insurance, and property
taxes of the Commercial Center is less than four (4%) or more than those
reported, Owner shall forthwith pay to Tenant the cost of such audit or
inspection together with the corresponding reimbursements of such excess cost
charged to Tenant.
ARTICLE VIII
SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS
Section 8.00 Installation by Tenant
All fixtures installed by Tenant shall be new or completely reconditioned.
Tenant shall not make or cause to be made any alterations, additions or
improvements to the exteriors of the Leased Premises or instal or cause to be
installed any, exterior signs, exterior sign, exterior lighting, shades or
awnings or make any changes to the store front without first obtaining Owner's
written approval and consent. Tenant shall present to the Owner plans and
specifications for such work at the time approval is sought.
Tenant shall have the right to instal a pylon sign within the premises of
the Commercial Center. Tenant shall submit to Owner evidence of permit approval
from "Administracion de Reglamentos y Permisos" (ARPE) allowing the installation
of such pylon sign. Tenant shall be responsible for the application of the
necessary permits with (ARPE) required to allow the installation of such pylon
sign. Tenant shall be responsible for the installation, maintenance and
electricity expenses of such pylon sign. Tenant shall operate the pylon sign
properly, well maintained and lighted every night. After the installation of
such pylon sign, Tenant, without the written consent of Owner, shall not remove
such pylon sign. At the end of this lease agreement and all its extension
rights, or at any termination date of this lease agreement, such pylon sign will
be considered a permanent addition to the Commercial Center, and ownership of
such pylon sign shall be transferred to Owner.
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Section 8.10 Removal and Restoration by Tenant
All alterations, decorations, additions and improvements made by the
Tenant, or made by the Owner on the Tenant's behalf by agreement under this
lease, shall remain the property of the Tenant for the term of the lease, or any
extension or renewal thereof. Such alterations, decorations, additions and
improvements shall not be removed from the premises prior to the end of the term
hereof without prior consent in writing from the Owner. Upon expiration of this
lease, or any renewal term thereof, the Tenant shall remove all such
alterations, decorations, additions and improvements, and restore the Leased
Premises as provided in Section 9.20 hereof. If the Tenant fails to remove such
alterations, additions, decorations and improvements and restore the Leased
Premises, then upon the expiration of this lease, or any renewal thereof, and
upon the Tenant's removal from the Leased Premises, all such alterations,
decorations, additions and improvements shall become the property of the Owner.
Section 8.20 Tenant Shall Discharge All Liens
Tenant shall promptly pay all its contractors and materialmen, so as to
minimize the possibility of a lien attaching to the Leased Premises, and should
any such lien from its contractors and/or materialmen be made or filed, Tenant
shall bond against or discharge the same within ten (10) days after written
request by Owner.
Section 8.30 Signs, Awnings and Canopies
Except as set forth in Section 8.00, no signs shall extend above the
parapet heights of the buildings or shall project more than 18 inches from the
front building line. If Tenant should install a previously approved canopy by
Owner it may erect signs thereon, provided such signs do not extend beyond the
edge of the canopy nor above the parapet height of the building. Notwithstanding
the above, Tenant will not place or suffer to be placed or maintained on any
exterior door, wall, or window of the Leased Premises any sign, awning, or
canopy, or advertising matter or other thing of any kind, and will not place or
maintain any decoration, lettering, or advertising matter on the glass of any
window or door of the Leased Premises without first obtaining Owner's
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written approval and consent. Tenant further agrees to maintain such sign,
awning, canopy, decoration, lettering, advertising matter or other thing as may
be approved in good condition and repair at all times.
ARTICLE IX
MAINTENANCE OF LEASED PREMISES
Section 9.00 Maintenance by Tenant
Tenant shall at all times keep the Leased Premises (including maintenance
of the exterior entrances, all glass and show window moldings) and all
partitions, walls, doors, fixtures, carpets, equipment, and appurtenances
thereof (including lighting and plumbing fixtures, escalators, elevators, and
any air conditioning system) in good order, condition, and repair (including
reasonably periodic painting), except for structural portions of the Leased
Premises, which shall be maintained by Owner, but if Owner is required to make
repairs to structural portions of the Leased Premises by reason of Tenant's
negligent acts or omission to act, Owner may add the reasonable cost of such
repairs to the rent which shall thereafter become due. In the case of the
air-conditioning system, all repairs, including replacements if necessary, are
to be made by Tenant at its cost.
Section 9.10 Maintenance by Owner
If Tenant refuses or neglects to repair the Leased Premises as required
hereunder as soon as reasonably possible after written demand, Owner 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
person thereof, and upon completion thereof, Tenant shall pay Owner's reasonable
costs for making such repairs plus ten percent (10%) for overhead, upon
presentation of bill therefore, as additional rent.
Section 9.20 Surrender of Premises
At the expiration of the tenancy hereby created, Tenant shall surrender
the Leased Premises in the same condition as the Leased Premises were in upon
delivery of possession thereto under this lease, reasonable wear and tear
excepted, and shall
18
surrender all keys for the Leased Premises to Owner at the place then fixed for
the payment of rent and shall inform Owner of all combinations of locks, safes
and vaults, if any, in the Leased Premises. Tenant shall remove all its trade
fixtures, and any alterations or improvements as provided in Section 8.10
hereof, before surrendering the premises as aforesaid and shall repair any
damage to the Leased Premises caused thereby. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination to the
term of this lease.
ARTICLE X
RULES AND REGULATIONS
Section 10.00 Rules and Regulations
The rules and regulations appended to this lease are hereby made a part of
this lease, and Tenant agrees to comply with and observe the same. Tenant's
failure to keep and observe said rules and regulations shall constitute a breach
of the terms of this lease in the manner as if the same were contained herein as
covenants. Owner reserves the right from time to time to amend or supplement
said rules and regulations and to adopt and promulgate additional rules and
regulations applicable to Leased Premises and the Commercial Center. Notice of
such additional rules and regulations, and amendments and supplements, if any,
shall be given to Tenant, and Tenant agrees thereupon to comply with and observe
all such rules and regulations, and amendments thereto and supplements thereof,
provided the same shall apply uniformly to all tenants of the Commercial Center
and that the same are fair and commercially reasonable.
ARTICLE XI
INSURANCE AND INDEMNITY
Section 11.00 Insurance
Subject to the limitations set forth in Section 7.00 (e), Tenant shall pay
it prorata share of property insurance for all Risks on the Commercial Center;
paid share, (prorata share) to be determined and ascertained by a fraction in
which the numerator shall be Tenant's actual gross leased area in the Leased
Premises and the denominator shall be the Commercial Center's gross leasable
area. Prorata share of liability insurance
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shall be paid as stipulated in Section 7.00 subdivision (a) of ARTICLE VII.
The additional rent provided for in this Section 11.00 shall be paid
within twenty (20) days after demand therefor by Owner, accompanied by a
statement setting forth in reasonable detail costs and calculations. Subject to
Section 7 (g), a premium bill submitted by Owner to Tenant shall be sufficient
evidence of the amount of insurance assessed or levied against the real property
to which such bill relates. Owner may choose to bill Tenant monthly in
proportion of said amount together with the monthly basic rent. Any difference
at the end of the six month period shall be adjusted and credited or charge to
the Tenant, as the case may be.
Section 11.10 Increase in Fire Insurance Premium
Tenant agrees that it will not keep, use, sell or offer for sale in or
upon the Leased Premises any article which may be prohibited by the standard
form of fire insurance policy. Tenant agrees to pay any reasonable increase in
premiums for fire and extended coverage insurance that may be charged during the
term of this lease on the amount of such insurance which may be carried by Owner
on said premises or the part of the building of the Commercial Center which they
are a part, resulting from the type of merchandise sold by Tenant in the Leased
Premises, whether or not Owner has consented to the same. Subject to Section 7
(g), in determining whether increased premiums are the result of Tenant's use of
the Leased Premises, a schedule reasonably satisfactory to Tenant, issued by the
organization making the insurance rate on the Leased Premises, showing the
various components of such rate, shall be conclusive evidence of the several
items and charges which make up the fire insurance rate on the Leased Premises.
In the event Tenant's occupancy causes any increase of premium for the
fire, boiler and\or casualty rates on the Leased Premises or any part thereof
above the rate for the standard form of the fire, boiler and / or casualty
insurance policy, the Tenant shall pay the additional reasonable premium on the
fire boiler and\or casualty insurance policies by reason thereof. The Tenant
also shall pay in such event, any additional premium on the rent insurance
policy that may be carried by the Owner for its
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protection against rent loss through fire. Bills for such additional premiums
shall be rendered by Owner to Tenant at such times as Owner may elect, and shall
be due from, and payable by Tenant, when rendered, and the amount thereof shall
be deemed to be, and be paid as additional rent. Owner recognizes and accepts
that the contemplated use of the Leased Premises is not prohibited by the
standard form of the fire, boiler, and / or casualty insurance policy.
Section 11.20 Indemnification of Owner
Tenant will indemnify Owner and save it harmless from and against any and
all claims, actions, damages, liabilities and expenses in connection with loss
of life, personal injury and\or damage to property arising from or out of any
occurrence in, upon or at the Leased Premises, or the occupancy or use by Tenant
of the Leased Premises or any part thereof, or occasioned wholly or in part by
any act or omission of Tenant, its agents, contractors, employees, servants,
lessees or concessionaires provided, however, that such indemnification shall
not take effect where the matter is otherwise covered by insurance and/or in the
case such claims, actions, damages, liabilities and/or expenses is caused by the
negligence or willful misconduct of Owner, its agents, contractors, employees,
or servants. In case Owner shall, without fault on its part, be made a party to
any litigation commenced by or against Tenant, then Tenant shall protect and
hold Owner harmless and shall pay all costs, expenses and reasonable attorney's
fees incurred or paid by Owner in connection with such litigation.
Section 11.30 Mutual Protection
For the mutual protection of Owner and Tenant, Tenant agrees to at all
times maintain in full force a policy as public liability and property damage
insurance with respect to the Leased Premises, in the minimum amounts of
$100,000 per person, $300,000 per accident and $50,000 for property damage.
Further Tenant shall, at its expense, maintain fire and extended insurance
coverage in amount adequate to cover the cost of replacement of all fixtures,
contents, decorations, and improvement installed by Tenant or which Tenant is
obligated to maintain and replace. All policies of insurance will name Owner,
any mortgagee of the Commercial Center, and, at no additional cost
21
to Tenant, any person, firm, or corporation designated by Owner, and Tenant as
insured, and shall contain a clause that the insurer will not cancel or change
the insurance without first giving Owner thirty days' written notice. The
insurance shall be carried with a creditable insurance company doing business in
Puerto Rico and a copy of the policy or a certificate of insurance shall be
delivered to Owner.
Tenant shall, at Tenant's expense, maintain a workmen's compensation
policy in the minimum amount necessary to meet the requirements of any
applicable workmen's compensation act, and a copy of the policy or a certificate
of insurance shall be delivered to Owner.
If Tenant fails to obtain or maintain any insurance required by this
lease, Owner shall have the option, after thirty days written notice to Tenant,
to obtain such insurance. Any sums thus advanced by Owner for Tenant's account
shall be secured as if they were rentals due under the terms of this lease, and
shall bear interest at the highest legal rate from the date of such expenditure.
ARTICLE XII
UTILITIES
Section 12.00 Utility Charges
Tenant shall be solely responsible for and promptly pay all charges for
water, sewer, gas, electricity or any other utility used or consumed at the
Leased Premises. Should Owner elect to supply the water, gas, electricity or any
other utility used or consumed in the Leased Premises, Tenant agrees to purchase
and pay for the same as additional rent at the applicable rates filed by the
Owner with the proper regulatory authority. In no event shall Owner be liable
for an interruption in the supply of any such utilities to the Leased Premises,
for reasons beyond Owner's control.
ARTICLE XIII
OFFSET STATEMENT, ATTORNMENT SUBORDINATION
Section 13.00 Offset Statement in Case of Sale of Commercial Center
Within thirty days after request therefor by Owner, or in
the event that upon any sale, assignment or hypothecation of the
Leased Premises and\or the land
22
thereunder by Owner an offset statement shall be required from Tenant; Tenant
agrees to deliver in recordable form a certificate to any proposed mortgagee or
purchaser, or to Owner, certifying (if such be the case) that this lease is in
full force and effect and that there are no defenses or offsets thereto, or
stating those claimed by Tenant.
Section 13.10 Attornment
Tenant shall, in the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under any mortgage made by
the Owner covering the Leased Premises or in case of sale to a third party,
attorn to the purchaser upon any such foreclosure or sale and recognize such
purchaser as the Owner under this lease, provided, however, that this attornment
is subject to the condition precedent that such purchaser consents and accepts
that so long as Tenant is not in default under the lease or any renewal thereof,
such purchaser shall not divest, impair, abrogate, modify or otherwise adversely
affect any interest or right whatsoever of Tenant under this lease.
Section 13.20 Subordination
Subject and contingent to Section 24.90, upon request of the Owner, Tenant
will subordinate its rights hereunder to the lien of any mortgage or mortgages,
or the lien resulting from any other method of financing or refinancing, now or
hereafter in force against the land and\or buildings hereafter placed upon the
land of which the Leased Premises are a part, and to all advances made or
hereafter to be made upon the security thereof.
ARTICLE XIV
ASSIGNMENT AND SUBLETTING
Section 14.00 Consent Required
Tenant will not sublet all or any part of the Leased Premises without
Owner's prior written consent. The consent by Owner to any subletting shall not
constitute a waiver of the necessity for such consent for any subsequent
subletting. This prohibition against subletting shall be construed to include a
prohibition against any subletting by operation of law. If the Leased Premises
or any part thereof be underlet
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or occupied by anybody other than Tenant, Owner may collect rent from the
undertenant or occupant, and apply the net amount collected to the rent herein
reserved, but no such underletting, occupancy or collection shall be deemed a
waiver of this covenant, or the acceptance of the under-tenant or occupant as
tenant, or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained. Notwithstanding any sublease,
Tenant shall remain fully liable on this lease and shall not be released from
performing any of the terms, covenants and conditions of this lease.
Section 14.10 Assignment of Lease
Tenant shall have the right to sell and assign this Lease with the prior
written approval of the Owner. Tenant shall notify Owner within 30 days before
any contemplated sale or assignment of this Lease. Such approval shall be
granted by the Owner if the contemplated purchaser, assignee or transferee of
this lease has experience in the cinema or theater industry, financial stability
and a good business reputation. Upon Owner's approval and consummation of such
sale and assignment, Tenant shall be released from any further obligation or
undertaking under this lease. Tenant shall notify Owner within 30 days before
any contemplated change in the effective voting control of Tenant, provided,
however, that no change in the effective voting control of Tenant nor any
transfer of the voting shares of Tenant shall be deemed or construed to
constitute an assignment, sale or transfer of this Lease.
ARTICLE XV
WASTE, GOVERNMENTAL REGULATIONS
Section 15.00 Waste or Nuisance
Tenant shall not commit or suffer to be committed any waste upon the
Leased Premises or any nuisance or other act or thing which disturbs the quiet
enjoyment of any other tenant in the New Building where the Leased Premises are
located, or in the Commercial Center.
Tenant shall not use or permit any part of the demised premises to be used
in such manner as to cause annoying noises or vibrations, or offensive odors.
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Section 15.10 Governmental Regulations
Tenant shall, at Tenant's sole cost and expense, comply with all of the
requirements of all municipal, state, federal and other applicable governmental
authorities, now in force, or which may hereafter be in force, pertaining to the
said Leased Premises all municipal ordinances and state and federal statutes now
in force or which may hereafter be in force, including permit for use.
ARTICLE XVI
ADVERTISING
Section 16.00 Solicitation of Business
Except as otherwise permitted in this lease, Tenant and Tenant's employees
and agents shall not solicit business in the parking or other common areas, nor
shall Tenant distribute any handbills or other advertising matter in automobiles
parked in the parking area or in other common areas. No sidewalks, parking
areas, roadways, means of ingress or egress or other common areas shall be used
for the sale, display or storage or merchandise or any other property of Tenant.
All business shall be conducted within the Leased Premises.
ARTICLE XVII
DESTRUCTION OF LEASED PREMISES
Section 17.00 Total or Partial Destruction
If the Leased Premises shall be damaged by fire, the elements, unavoidable
accident or other casualty, and are thereby rendered untenantable in whole,
Tenant may at its election, terminate this lease and the tenancy hereby created
by giving to Owner within the sixty (60) days following the date of said
occurrence, written notice of Tenant's election to do so and in the event of
such termination rent shall be adjusted as of such date, or if Tenant elects not
to terminate this lease, Owner shall repair such damage, at its own expense and
the rent shall be abated for the repair period. Such repair shall be performed
only with, and to the extent of the net compensation from hazard insurance
policies. If by reason of such occurrence the Leased Premises shall be rendered
untenantable only in part, Owner shall repair the damage, only with, and to the
extent
25
of the net compensation from hazard insurance policies and the fixed minimum
rent meanwhile shall be abated proportionately as to the portion of the Leased
Premises rendered untenantable. If the premises shall be rendered wholly
untenantable by reason of such occurrence, if Tenant elects not to terminate
this lease, Owner shall repair such damage, only with, and to the extent of the
net compensation from hazard insurance policies, and the fixed minimum rent
meanwhile shall abate until the Leased Premises have been restored and rendered
tenantable. When applicable, nothing in this Section 17.00 shall be construed to
permit the abatement in whole or any part of the percentage rent, but for the
purpose of Section 2.20 hereof the computation of percentage rent shall be based
upon the revised minimum rent as the same may be abated pursuant to this Section
17.00.
Section 17.10 Partial Destruction of Commercial Center
In the event that fifty percent (50%) or more of the rentable area of the
Commercial Center shall be damaged or destroyed by fire or other cause,
notwithstanding that the Leased Premises may be unaffected by such fire or other
cause, Tenant may terminate this lease and the tenancy hereby created by giving
to the other party five (5) days prior written notice of it's election to do so
which notice shall be given, if at all, within the sixty (60) days following the
date of said occurrence. Rent shall be adjusted as of the date of such
termination. If Tenant elects to continue operations in the unaffected Leased
Premises, then the maximum reimbursement amount of Tenant's pro-rata share of
operating expenses, insurance, and property taxes described in paragraph (e) of
Section 7 of ARTICLE VII shall be multiplied by 1.5 times and the new product of
such multiplication shall be the new maximum amount ("new amount") for Tenant's
pro-rata share of operating expenses, insurance, and property taxes. This new
amount shall be subject to the "C.P.I." increases as stated in paragraph (e) of
Section 7 of ARTICLE VII, and shall be in effect until the Commercial Center has
been rehabilitated in whole.
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ARTICLE XVIII
EMINENT DOMAIN
Section 18.00 Total Condemnation of Leased Premises
If the whole of the Leased Premises shall be acquired or condemned by
eminent domain for any public or quasi-public use or purpose, then the term of
this Lease shall cease and terminate as of the date of title vesting in such
proceeding and all rentals shall be paid up to that date and Tenant shall have
no claim against Owner nor the condemning authority for the value of any
unexpired term of this lease, except as set forth in Section 18.50.
Section 18.10 Partial Condemnation
If any part of the Leased Premises shall be acquired or condemned as
aforesaid, and in the event that such partial taking or condemnation shall
render the Leased Premises unsuitable for the business of the Tenant, then
Tenant shall have the right to terminate this lease as of the date of title
vesting in such proceeding. Except as set forth in Section 18.50, Tenant shall
have no claim against Owner nor the condemning authority for the value of any
unexpired term of this lease and rent shall be adjusted to the date of such
termination. In the event of a partial taking or condemnation which is not
extensive enough to render the premises unsuitable for the business of the
Tenant, then Owner may elect to restore the Leased Premises to a condition
comparable to its condition at the time of such condemnation less the portion
lost in the taking, and if that be the case, this lease shall continue in full
force and effect without any reduction or abatement of rent, except for the area
taken by such condemnation and to the extent of Tenant's loss of use of the
Leased Premises.
Section 18.20 Total Condemnation of Parking Area
If the whole of the common parking area in the Commercial Center shall be
acquired or condemned as aforesaid, then Tenant shall have the right to
terminate this Lease as of the date of title vesting in such proceeding unless
Owner may elect to provide other parking facilities substantially equal to the
previously existing ratio between the
27
common parking areas and the Leased Premises, and reasonably located. In the
event that Owner shall provide such other substantially equal parking
facilities, then this lease shall continue in full force and effect, without any
reduction or abatement of rent.
Section 18.30 Partial Condemnation of Parking Area
If any part of the parking area in the Commercial Center shall be acquired
or condemned as aforesaid, and if, as the result thereof the parking is reduced
to less than 250, then Tenant may elect to terminate this lease upon title
vesting in such proceeding, unless the Owner shall take immediate steps toward
restoring the parking spaces to at least 300, in which event this lease shall be
unaffected and remain in full force and effect without any reduction or
abatement of rent. Except as set forth in Section 18.50, in the event of
termination of this lease as aforesaid, Tenant shall have no claim against Owner
nor the condemning authority for the value of any unexpired term of this lease
and rent shall be adjusted to the date of said termination.
Section 18.40 Owner's Damages
In the event of any condemnation of taking as aforesaid, whether whole or
partial, except as stated in Section 18.50, the Tenant shall not be entitled to
any part of the award paid for such condemnation and Owner is to receive the
full amount of such award, the Tenant hereby expressly waiving any right or
claim to any part thereof.
Section 18.50 Tenant's Damages
Tenant shall have the right to claim and recover from the award of the
condemning authority, but not from Owner, such compensation, if any, with
respect to Tenant's investment in the leasehold improvements in the Leased
Premises, not otherwise received by Tenant, an amount obtained by multiplying
(i) the sum of all of Tenant's investment in the leasehold improvements in the
Leased Premises, by (ii) a fraction, the numerator of which is the number of
months from and including the date of the taking by condemnation or eminent
domain through the date of expiration of the original term of this lease, and
the denominator of which is the original term of this lease (240 months).
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Section 18.60 Condemnation of Less than a Fee
In the event of a condemnation of a leasehold interest in all or a portion
of the Leased Premises without the condemnation of the fee simple title also,
this lease shall not terminate and such condemnation shall not excuse Tenant
from full performance of all of its covenants hereunder, but Tenant in such
event shall be entitled to present or pursue against the condemning authority
its claim for and to receive all compensation or damages sustained by it by
reason of such condemnation, and Owner's right to recover compensation or
damages shall be limited to compensation for and damages if any, to its
reversionary interest; it being understood, however, that during such time as
Tenant shall be out of possession of the Leased Premises by reason of such
condemnation, the lease shall not be subject to forfeiture for failure to
observe and perform those covenants not calling for the payment of money. In the
event the condemning authority shall fail to keep the Leased Premises in the
state of repair required hereunder, or to perform any other covenant not calling
for the payment of money, Tenant shall have ninety (90) days after the
restoration of possession to it within which to carry out its obligations under
such covenant or covenants. During such time as Tenant shall be out of
possession of the Leased Premises by reason of such leasehold condemnation,
Tenant shall pay to Owner, in lieu of the minimum and percentage rents provided
for hereunder, and in addition to any other payments required of Tenant
hereunder, an annual rent equal to the average annual minimum and percentage
rents paid by Tenant for the period from the commencement of the term until the
condemning authority shall take possession, or during the preceding three full
calendar years, whichever period is shorter. At any time after such condemnation
proceedings are commenced, Owner shall have the right, at its option, to require
Tenant to assign to Owner all compensation and damages payable by the condemnor
to Tenant, to be held without liability for interest thereon as security for the
full performance of Tenant's covenants hereunder, such compensation and damages
received pursuant to said assignment to be applied first to the payment of rents
and all other sums from time to time payable by Tenant pursuant to the terms of
this lease as such sums fall due, and the remainder, if any, to be payable to
Tenant at the end of the
29
term hereof or on restoration of possession to Tenant, whichever shall first
occur, it being understood and agreed that such assignment shall not relieve
Tenant of any of its obligations under this lease with respect to such rents,
and other sums except as the same shall be actually received by Owner.
ARTICLE XIX
DEFAULT OF THE TENANT
Section 19.00 Right to Re-enter
In the event of any failure of Tenant to pay any rental due hereunder
within fifteen (15) days after the same shall be due, or any failure to perform
any other of the terms, conditions or covenants of this lease to be observed or
performed by Tenant for more than thirty (30) days after written notice of such
default shall have been given to Tenant, or if default cannot be reasonably
cured in 30 days, such longer period as is reasonably required to cure the
default so long as the curing of such default is diligently pursued, or if
Tenant or an agent of Tenant shall intentionally falsify any report required to
be furnished to Owner pursuant to the terms of this lease, or if Tenant or any
guarantor of this lease shall become bankrupt or insolvent, or file any debtor
proceedings or take or have taken against Tenant or any guarantor of this Lease
in any court pursuant to any statute either of the United States or of any State
a petition in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Tenant's or any such
guarantor's property, or if Tenant or any such guarantor makes an assignment for
the benefit of creditors, or petitions for enters into an arrangement provided
that in each of the foregoing instances such reorganization, bankruptcy,
insolvency or other proceeding or such receiver or trustee or such assignment is
not terminated, dismissed or vacated within sixty (60) days, or if Tenant shall
abandon said premises, or suffer this lease to be taken under any writ of
execution if not released within sixty (60) days, then the Owner besides other
rights or remedies it may have, shall have the immediate right to the extent
permitted by law of re-entry and may remove all persons and property from the
Leased Premises and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the
30
account of Tenant, all without service of notice or resort to legal process and
without being deemed guilty of trespass, or becoming liable for any loss or
damage which may be occasioned thereby.
SECTION 19.10 Right to Relet
Should Owner elect to re-enter, as herein provided, or should it take
possession pursuant to legal proceedings or pursuant to any notice provided for
by law, it may either terminate this lease or it may from time to time without
terminating this lease, make such alterations and repairs as may be reasonably
necessary in order to relet the Leased Premises, and relet said premises or any
part thereof for such term or terms (which may be for a term extending beyond
the term of this lease) and at such rental or rentals and upon such other terms
and conditions as Owner in its sole discretion may deem advisable; upon each
reletting all rentals received by the Owner from such reletting shall be
applied, first, to the payment of any indebtedness other than rent due hereunder
from Tenant to Owner; second, to the payment of any costs and expenses of such
reletting, including brokerage fees and attorney's fees and of costs of such
alterations and repairs; third, to the payment of rent due and unpaid hereunder,
and the residue, if any shall be held by Owner and applied in payment of future
rent as the same may become due and payable hereunder. If such rentals received
from such reletting during any month be less than that to be paid during that
month by Tenant hereunder, Tenant shall pay any such deficiency to Owner. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of said premises by Owner shall be construed as an election on its
part to terminate this lease unless a written notice of such intention be given
to Tenant or unless the termination thereof by decree of a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Owner may
at any time thereafter elect to terminate this lease for such previous breach.
Should Owner at any time terminate this lease for any breach, in addition to any
other remedies it may have, it may recover from Tenant all damages it may incur
by reason of such breach, including the cost of recovering the Leased Premises,
reasonable attorney's fees, and including the worth at the time of such
termination of the excess, if any, of the amount
31
of rent and charges equivalent to rent reserved in this lease for the remainder
of the stated term over the then reasonable rental value of the Leased Premises
for the remainder of the stated term, all of which amounts shall be immediately
due and payable from Tenant to Owner. In determining the rent which would be
payable by Tenant hereunder, subsequent to default, the annual rent for each
year of the unexpired term shall be equal to the average annual minimum and
percentage rents paid by Tenant from the commencement of the term to the time of
default, or during the preceding three full calendar years, whichever period is
shorter.
SECTION 19.20 Waiver of Jury Trial
The parties hereto shall and they hereby do waive trial by jury in any
action, preceding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this lease, the relationship of Owner and Tenant, Tenant's use or
occupancy to the Leased Premises, and / or any claim of injury or damage.
SECTION 19.30 Waiver of Rights of Redemption
Tenant hereby expressly waives any and all rights of redemption granted by
or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Owner obtaining possession of the
Leased Premises, by reason of the violation by Tenant of any of the covenants or
conditions of this lease, or otherwise.
ARTICLE XX
ACCESS BY OWNER
SECTION 20.00 Right of Entry
Upon reasonable prior written notice and during a time which causes the
least interruption to Tenant's business, Owner or Owner's agents shall have the
right to enter the Leased Premises at all times to examine the same, and to show
them to prospective purchasers of the Commercial Center, and to make such
repairs, alterations, improvements or additions as Owner may deem necessary or
desirable, and Owner shall be allowed to take all material into and upon said
premises that may be required therefor without the same
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constituting an eviction of Tenant in whole or in part and the rent reserved
shall in no way abate while said repairs, alterations, improvements, or
additions are being made, by reason of loss or interruption of business of
Tenant, or otherwise, except that abatement of rent shall be granted to the
extent that the foregoing causes Tenant's loss of use of the Leased Premises.
During the six months prior to the expiration of the term of this lease of any
renewal term, Owner may exhibit the premises to prospective tenants or
purchasers and place upon the premises the usual notices "To Let" or "For Sale"
which notices Tenant shall permit to remain thereon without molestation. If
Tenant shall not be personally present to open and permit an entry into said
premises at the time of an emergency, may enter the same by a master key, or may
forcibly enter the same, without rendering Owner or such agents liable therefor,
and without in any manner affecting the obligations and covenants of this lease.
Nothing herein contained, shall be deemed or construed to impose upon Owner any
obligation, responsibility or liability whatsoever, for the care, maintenance or
repair of the building or any part thereof, except as otherwise herein
specifically provided.
SECTION 20.10 Excavation
If an excavation shall be made upon land adjacent to the Leased Premises,
or shall be authorized to be made, Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the Leased Premises
for the purpose of doing such work as Owner shall deem necessary to preserve the
wall or the building of which the Leased Premises form a part from injury or
damage and to support the same by proper foundations, without any claim for
damages or indemnification against Owner or diminution or abatement of rent,
except that abatement of rent shall be granted to the extent that such
excavation causes Tenant's loss of use of the Leased Premises.
ARTICLE XXI
TENANT'S PROPERTY
SECTION 21.00 Taxes on Leasehold
Tenant shall pay its pro-rata share of additional or increased taxes
levied after the base year on the land, buildings and improvements on the
Commercial Center. For the
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purpose herein, the base year shall constitute the year on which the lease
commences pursuant to Section 1.60. Tenant share shall be determined and
ascertained by multiplying the increase in taxes by a fraction in which the
numerator shall be Tenant's actual gross leased area and the denominator of
which shall be the Commercial Center gross leasable area.
SECTION 21.10 Loss and Damage
Owner shall not be liable for any damage to property of Tenant or of
others located on the Leased Premises, nor for the loss of or damage to any
property of Tenant or of others by theft or otherwise. Owner shall no be liable
for any injury or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water, rain leaks from any part of the
Leased Premises or from the pipes, appliances or plumbing works or from the
roof, street, or sub-surface or from any other place or by dampness or by any
other cause of whatsoever nature. Owner shall not be liable for any such damage
caused by other tenants or persons in the Leased Premise, occupants of adjacent
property, of the Commercial Center, or the public, or caused by operations in
construction of any private, public, or quasi-public work. All property of
Tenant kept or stored on the Leased Premises shall be so kept or stored at the
risk of Tenant only and Tenant shall hold Owner harmless from any claims arising
out of damage to the same, including subrogation claims by Tenant's insurance
carrier. Tenant shall insure its property at its own expense, against all risks.
None of the foregoing shall release Owner from any claim damage or loss caused
by the negligence or willful misconduct of Owner, its agents, contractors,
employees or servants.
SECTION 21.20 Notice by Tenant
Tenant shall give immediate notice to Owner in case of fire, flood, accidents,
or any natural disaster in the Leased Premises or in the building of which the
premises are a part of defects herein or in any fixtures or equipment.
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ARTICLE XXII
HOLDING OVER, SUCCESSORS
SECTION 22.00 Holding Over
Any holding over after the expiration of the term hereof, with the consent
of the Owner, shall be construed to be a tenancy from month to month at the
rents herein specified (prorated on a monthly basis) and shall otherwise be on
the terms and conditions herein specified, so far as applicable.
SECTION 22.10 Successors
All rights and liabilities herein given to, or imposed upon, the
respective parties hereto shall extend to and bind the several respective heirs,
executors, administrators, successors, and assigns of the said parties; and if
there shall be more than one tenant, they shall all be bound jointly and
severally by the terms, covenants and agreements herein. No rights, however,
shall inure to the benefit of any assignee of Tenant unless the assignment to
such assignee is permitted under this lease.
ARTICLE XXIII
QUIET ENJOYMENT
SECTION 23.00 Owner's Covenant
Upon payment by the Tenant of the rents herein provided, and upon the
observance and performance of all the covenants, terms and conditions on
Tenant's part to be observed and performed, Tenant shall peaceably and quietly
hold and enjoy the Leased Premises for the term hereby demised without hindrance
or interruption by Owner or any other person or persons lawfully or equitably
claiming by, through or under the Owner, subject, nevertheless, to the terms and
conditions of this lease.
ARTICLE XXIV
MISCELLANEOUS
SECTION 24.00 Waiver
The waiver by any party herein of any breach of any term, covenant or
condition herein contained shall not be deemed to be a waiver of such term,
covenant or condition or any subsequent breach of the same or any other term,
covenant or condition
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herein contained. The subsequent acceptance of rent hereunder by Owner shall not
be deemed to be a waiver of any preceding breach by Tenant of any term, covenant
or condition of this lease; other than the failure of Tenant to pay the
particular rental so accepted, regardless of Owner's knowledge of such
proceeding breach at the time of acceptance of such rent. No covenant, term or
conditions of this lease shall be deemed to have been waived by any party
herein, unless such waiver be in writing by such party.
SECTION 24.10 Accord and Satisfaction
No payment by Tenant or receipt by Owner of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompany any check or payment as rent be deemed an accord
and satisfaction, and Owner may accept such check or payment without prejudice
to Owner's right to recover the balance of such rent or pursue any other remedy
in this lease provided.
SECTION 24.11 Recording
Each party agrees, that at the request of the other, to jointly raise this
Lease to the category of a public deed and that such deed be recorded in the
corresponding Registry of Property and for such purpose the parties agree to
re-execute this instrument in public deed form as above stated and to perform
such other acts which may be necessary to satisfy the recording requirements.
The fees and expenses incidental to the preparation, recording and cancellation
of such public deed shall be borne by the party making such request.
SECTION 24.12 Leasehold Mortgage
Tenant shall have the right to mortgage its leasehold interest in this
Lease. Tenant shall notify to Owner his intention to mortgage its leasehold
interest in this Lease at least 20 days before the execution of such mortgage.
Any mortgagee acquiring this lease by foreclosure or otherwise may assign and
transfer this lease subject to all covenants, clauses and conditions herein
contained, provided, however, that thereafter any further mortgage or assignment
of this lease is subject to the prior written approval of Owner. Such approval
shall be based upon such factors as experience of such assignee
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or operator in the cinema or theater industry, business reputation and financial
stability. Whoever acquires title to the Lease, through foreclosure or
otherwise, shall do so subject to all the terms and conditions thereof and more
specifically to all use and purpose limitations contained therein.
SECTION 24.20 Entire Agreement and Rules and Regulations
This lease and the Exhibits attached hereto and forming a part
hereof, set forth all the covenants, promises, agreements,
conditions, and understandings between Owner and Tenant concerning
the Leased Premises and there are no covenants, promises
agreements, conditions, or understandings, either oral or written,
between them other than are herein set forth. Except as herein
otherwise provided, no subsequent alteration amendment, change or
addition to this lease shall be binding upon Owner or Tenant unless
reduced to writing and signed by them.
SECTION 24.30 No Partnership
Owner does not, in any way or for any purpose, become a partner of Tenant
in the conduct of its business, or otherwise, or joint adventurer or a member of
a joint enterprise with Tenant.
SECTION 24.40 Force Majeure
Anything in this agreement to the contrary notwithstanding, providing such
cause is not due to the willful act or neglect of the Owner, the Owner shall not
be deemed in default with respect to the performance of any of the terms,
covenants and conditions of this lease if same shall be due to any strike,
lockout, civil commotion, war-like operation, invasion, rebellion, hostilities,
military or usurped power, sabotage, governmental regulations or control,
inability to obtain any material service or financing, through Act of God or
other cause beyond the control of the Owner. In the event that either party
shall be delayed or hindered in or prevented from the performance of any act
required hereunder by reason of strikes, lock-outs, labor troubles, inability to
procure materials, failure of power, restrictive governmental laws or
regulations, riots, insurrection, war or other reason of a like nature not the
fault of the party delayed in performing work or doing acts required under the
terms of this lease, the performance
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of such act shall be excused for the period of the delay and the period for the
performance of any such act shall be extended for a period equivalent to the
period of such delay. The provisions of this Section 24.40 shall not operate to
excuse Tenant from prompt payment of rent, additional rent, or any other
payments required by the terms of this lease.
SECTION 24.50 Notices
Any notice, demand, request or other instrument which may be or are
required to be given under this lease shall be in writing, and shall be
delivered in person or sent by United States certified mail postage prepaid or
by tested telex or telecopy and shall be addressed (a) if to Owner, at the
address first hereinabove given or at such other address as Owner may designate
by written notice, and (b) if to Tenant, at the Leased Premises or at such other
address as Tenant shall designate by written notice.
SECTION 24.60 Tenant Defined, Use of Pronoun
The word "Tenant" shall be deemed and taken to mean each and every person
or party mentioned as a Tenant herein, be the same one or more; and if there
shall be more than one Tenant, any notice required or permitted by the terms of
this lease may be given by or to any one thereof, and shall have the same force
and effect as if given by or to all thereof. The use of the neuter singular
pronoun to refer to Owner or Tenant may be an individual, a partnership, a
corporation, or a group of two or more individuals or corporations. The
necessary grammatical changes required to make the provisions of the lease apply
in the plural sense where there is more than one Owner or tenant and to either
corporations, association, partnerships, or individuals, males or females, shall
in all instances be assumed as though in each case fully expressed.
SECTION 24.70 Broker's Commission
Each of the parties represents and warrants that there are no claims for
brokerage commissions or finder's fees in connection with the execution of this
lease, except as listed below, and each of the parties agrees to indemnify the
other against, hold it harmless from, all liabilities arising from any such
claim (including, without limitation, the cost of counsel fees in connection
therewith) except as follows:
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SECTION 24.80 Partial Invalidity
If any term, covenant or condition of this lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this lease, or the application of such term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or enforceable, shall not be affected thereby and each term,
covenant or condition of this lease shall be valid and be enforced to the
fullest extent permitted by law.
Section 24.90 Non Disturbance
Owner agrees, on a best efforts basis, to procure from any mortgagee or
lienholder, holding a lien upon the land, Commercial Center, the Leased Premises
and or any part thereof, their consent and acceptance that so long as Tenant is
not in default under the lease or any renewal thereof, no foreclosure of the
lien of said mortgage or any other proceeding in respect thereof, shall divest,
impair, abrogate, modify or otherwise adversely affect any interest or right
whatsoever of Tenant under this lease. Said consent and acceptance shall be made
in an instrument in recordable form to be filled for record in the appropriate
Registry of Property of Puerto Rico.
SECTION 24.91 No Option
The submission of this lease for examination does not constitute a
reservation of or option for the Leased Premises and this lease becomes
effective as a lease only upon execution and delivery thereof by Owner and
Tenant. The rights and obligations of Owner and Tenant under this lease shall
become effective and in full force and effect at the above stated date.
SECTION 24.92 CONSENTS
Whenever in this lease express provision is made that Tenant is required
to procure Owner's permission, consent or approval, such permission, consent or
approval shall be on the basis of commercially reasonable standards and shall
not be unreasonably withheld or delayed.
SECTION 24.93 ATTORNEYS' FEES AND EXPENSES
If either party hereto brings an action to enforce the terms hereof or
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declare rights hereunder, the prevailing party in such action shall be entitled
to reasonable attorneys' fees, costs and expenses of suit at trial and through
all appeals.
SECTION 24.94 FINANCING OF NEW BUILDING
Tenant recognizes that Owner has to obtain financing for the construction
of the New Building. Owner covenants and agrees with Tenant to use all its best
efforts to procure and obtain the necessary financing for the construction of
the New Building. In the event that Owner fails to obtain such financing within
one (1) year from the date hereof, this lease shall terminate and, except as
hereinafter stated, the rights and obligations of Owner and Tenant shall be of
no further force or effect. Notwithstanding the foregoing, if at any time
thereafter the New Building is constructed and/or Owner shall otherwise intend
or plan to lease space in the Commercial Center for the operation of a movie
theater, Tenant, its successors and assigns, are hereby granted an irrevocable
exclusive right of first refusal to lease space in the Commercial Center for the
operation of a movie theater under terms substantially the same as this lease.
Such right of first refusal shall survive the termination of this lease.
IN WITNESS WHEREOF, Owner and Tenant have signed
this lease as of the day and year first above written, at San Juan, P. R.
MAYAGUEZ SHOPPING CENTER, S.E.
By: /s/ Juan A. Albors Hernandez
--------------------------------
Juan A. Albors Hernandez
Principal Partner
By: /s/ Ada M. Albors Hernandez
--------------------------------
Ada M. Albors Hernandez
Principal Partner
Reading Cinemas of Puerto Rico, Inc.
By: /s/ Robert Smerling
--------------------------------
Mr. Robert Smerling
President
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RULES AND REGULATIONS
TENANT AGREES AS FOLLOWS:
(1) All loading and unloading of goods shall be done only at such
times, in the areas, and through the entrances, designated for such purposes by
Owner.
(2) The delivery or shipping of merchandise, supplies and fixtures
to and from the Leased Premises shall be subject to such reasonable rules and
regulations as in the reasonable judgment of Owner are necessary for the proper
operation of the Leased Premises or Commercial Center, and uniformly applied.
(3) All garbage and refuse shall be kept in the kind of container
specified by Owner, and shall be placed outside of the premises prepared for
collection in the manner and at the times and places specified by Owner. If
Owner shall provide or designate a service for picking up refuse and garbage,
Tenant shall use same at Tenant's cost. Tenant shall pay the cost of removal of
any of Tenant's refuse or rubbish.
(4) No radio or television or other similar device shall be
installed without first obtaining in each instance Owner's consent in writing.
No aerial shall be erected on the roof or exterior walls of the premises, or on
the grounds, without in each instance, the written consent of Owner. Any aerial
so installed without such written consent shall be subject to removal without
notice at any time.
(5) No loud speakers, televisions, phonographs, radios or other
devices shall be used in a manner so as to be head or seen outside of the
premises without the prior written consent of Owner.
(6) The outside areas immediately adjoining the premises shall be
kept clean and free from dirt and rubbish by Tenant to the satisfaction of
Owner, and Tenant shall not place or permit any obstructions or merchandise in
such areas.
(7) Tenant and Tenant's employees shall park their cars only in
those portions of the parking area designated for that purpose by Owner. Tenant
shall furnish Owner with State automobile license numbers assigned to Tenant's
car or cars, and cars of Tenant's employees, within five (5) days after taking
possession of the premises and shall thereafter notify Owner of any changes
within five (5) days after such
41
changes occur. In the event that Tenant or its employees fail to park their cars
in designated parking areas as aforesaid, then Owner at its option shall charge
Tenant Ten Dollars ($10.00) per day per car parked in any area other than those
designated, as and for liquidated damage.
(8) The plumbing facilities shall not be used for any other purpose
than that for which they are constructed, and no foreign substance of any kind
shall be thrown therein, and the expense of any breakage, stoppage, or damage
resulting from a violation of this provision shall be borne by Tenant, who
shall, or whose employees, agents or invites shall have caused it.
(9) Tenant shall use at Tenant's cost such pest extermination
contractor as Owner may direct and at such intervals as Owner may require.
(10) Tenant shall not burn any trash or garbage of any kind in or
about the Leased Premises.
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EXHIBIT "A" Omitted from 10-K filing.
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