OCEAN VIEW PLAZA
A Shopping Center by
LANDGRANT
WITH
CINEMA STAR LUXURY THEATERS, INC.,
a California corporation
dba CINEMA STAR THEATERS
TABLE OF CONTENTS
ARTICLE PAGE
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1 Fundamental Lease Provisions. . . . . . . . . . . . . . . . . . . . . . . .
2 Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 Term of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4 Rental. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 Definition of "Net Sales" . . . . . . . . . . . . . . . . . . . . . . . . .
6 Possession and Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7 Taxes, Insurance and Title of Premises. . . . . . . . . . . . . . . . . . .
8 Common Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 Mechanics' Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10 Tenant's Right to Make Improvements, Property, and Fixtures . . . . . . . .
11 Repairs, Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . .
12 Indemnity and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .
13 Occupancy Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . .
14 Defaults by Tenant; Remedies. . . . . . . . . . . . . . . . . . . . . . . .
15 Defaults by Landlord; Remedies. . . . . . . . . . . . . . . . . . . . . . .
16 Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17 Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 Reconstruction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 Sale or Mortgage by Landlord. . . . . . . . . . . . . . . . . . . . . . . .
21 Subordination; Attornment . . . . . . . . . . . . . . . . . . . . . . . . .
22 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23 Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . .
25 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26 General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 Conditions to Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXHIBITS
Site Plan of the Shopping Center . . . . . . . . . . . . . . . . . . . . . . . . A
Description of the Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . B
Construction of Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . C
Tenant's Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . D
Subordination Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . E
Confirmation of Term of Lease. . . . . . . . . . . . . . . . . . . . . . . . . . F
LEASE AGREEMENT
This Lease Agreement ("Lease"), effective as of April 15, 1998
("Effective Date"), is executed by and between the Landlord and Tenant
identified below.
IN CONSIDERATION OF THE RENTS AND COVENANTS hereinafter set forth, the
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the
Premises upon the following terms and conditions:
ARTICLE 1
FUNDAMENTAL LEASE PROVISIONS
1.1 PARTIES
LANDLORD: The Landlord of the Premises is LANDGRANT CORPORATION, a
California corporation. All required notices and other communications shall be
sent to: LandGrant Corporation, 12625 High Bluff Drive, Suite 212, San Diego,
California 92130. Telephone Number (619) 481-0094.
TENANT: The Tenant of the Premises is Cinema Star Luxury Theaters, Inc., a
California corporation.
Tenant shall open for business under the trade name "Cinema Star Theaters," and
shall thereafter have the right to use any trade name under which Tenant is
doing business from time to time.
All required notices and other communications shall be sent to: Cinema Star
Luxury Theaters, Inc., Attn: Jim Villanueva, 431 College Boulevard, Oceanside,
California 92057.
Telephone Number: (760) 630-2011
1.2 PREMISES
The Premises made subject to this Lease shall be the tenant building of
approximately 50,000 square feet (but not less than 45,000 square feet) to be
constructed as a part of Landlord's Work in accordance with Exhibit C hereto
("Building" or "Building Improvements") and the parcel on which the Building
will be located as said parcel shall be agreed between Landlord as described in
Section 2.1 hereof ("Tenant Parcel"). The Premises are located on the northwest
corner of Mission Avenue and Canyon Drive in Ocean View Plaza, Oceanside,
California ("Shopping Center").
1.3 TERM
LEASE TERM: Twenty-five (25) Years
COMMENCEMENT DATE: See Section 3.1
RENT START DATE: See Section 4.1
OTHER: Five (5) five (5) year Options to Extend [see Addendum]
1.4 RENT
MINIMUM ANNUAL RENTAL: The Minimum Annual Rental is Nine Hundred Thousand
Dollars ($900,000.00), which is computed as $18.00 per square foot of Floor Area
of the Building Improvements. Minimum Annual Rental is payable as stated in
Section 4.1.
COST OF LIVING ADJUSTMENTS: Adjusted periodically during the Lease Term
on the anniversary of the Commencement Date as follows:
Years 2 thru 5 $1,000,000.00 ($20.00 per square foot of Building)
Years 6 thru 10 $1,100,000.00 ($22.00 per square foot of Building)
Years 11 thru 15 $1,210,000.00 ($24.20 per square foot of Building)
Years 16 thru 20 $1,331,000.00 ($26.62 per square foot of Building)
Years 21 thru 25 $1,464,100.00 ($29.28 per square foot of Building)
Notwithstanding anything to the contrary contained in this Lease,
Tenant's obligation to pay Minimum Annual Rental hereunder shall be abated for
one (1) full month following the Rent Start Date. It is expressly understood
that Tenant shall pay all other charges under this Lease during said one (1)
month period, and that Tenant shall be obligated to commence payment of Minimum
Annual Rental in full beginning on the first day following such one (1) month
period.
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PERCENTAGE RENTAL: Tenant shall pay as Percentage Rental nine percent (9%)
of its "Net Sales" above Twelve Million Dollars ($12,000,000.00) per year, all
as more specifically described in Section 4.3 hereof.
ADDITIONAL RENTAL: Any and all sums of money or charges required to be
paid by Tenant pursuant to the provisions of this Lease shall be paid as
"Additional Rent".
1.5 SECURITY DEPOSIT AND FIRST MONTH'S MINIMUM ANNUAL RENTAL
Tenant shall pay a Security Deposit of Seventy Five Thousand Dollars
($75,000.00) upon execution of the Lease, Said amount shall be held in an
interest bearing account, and shall, absent default by Tenant, be applied
against the payment of Minimum Annual Rental due on the thirty-seventh (37th)
month following the Rent Start Date, all as more particularly described in
Section 4.7 hereof.
1.6 USE OF PREMISES
Tenant shall initially open for business as a Cinema Star Theater
exhibiting commercial motion pictures and selling items typically found in
Cinema Star Theaters in California, and shall thereafter use the Premises for
any legal commercial use not in violation of zoning or other governmental laws,
rules and regulations, or the CC&R's (as defined in Section 7.1 hereof), and not
be in violation of any then-existing agreements between Landlord and any other
tenants or owners in the Shopping Center ("Permitted Use"). Tenant shall have
the non-exclusive right to use the Tenant Parcel for parking for customers of
Tenant's business in the Building. Tenant shall use the Premises for no other
use or purpose. Tenant shall also have the non-exclusive right to use the
remainder of the Shopping Center for parking by its customers and employees, and
other tenants/owners of the Shopping Center shall have a non-exclusive right to
use the Tenant Parcel all as more particularly described in the Declaration
defined in Section 7.1 hereof.
1.7 EXHIBITS TO LEASE. The following drawings and special provisions are
attached hereto as exhibits and made a part of this Lease:
EXHIBIT A - General site plan of the Shopping Center which Landlord and
others intend to construct or cause to be constructed on real property located
in the City of Oceanside, County of San Diego and State of California. Said
site plan shows, among other things, the principal improvements of which the
Shopping Center will be composed, subject to the provisions of Section 8.7
hereof.
EXHIBIT B - Description of the Premises.
EXHIBIT C - Construction of Improvements.
EXHIBIT D - Tenant's Estoppel Certificate
EXHIBIT E - Subordination Agreement
EXHIBIT F - Confirmation of Term of Lease
1.8 CONSTRUCTION OF LEASE PROVISIONS. The foregoing provisions of this Article
1 summarize for convenience only certain key terms of the Lease delineated more
fully in the Articles and Sections referenced therein. In the event of a
conflict between the provisions of this Article 1 and the balance of the Lease,
the latter shall control.
ARTICLE 2
PREMISES
2.1 DEMISE AND DESCRIPTION. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord, at the rental and upon the covenants and conditions
hereinafter set forth, the commercial space referred to herein as the "Premises"
in Article 1 hereto. Landlord and Tenant shall agree on the size and
configuration of the Tenant Parcel which shall be approximately 315,000 square
feet, and Landlord shall have the agreed-upon Tenant Parcel segregated as a
separate tax lot as more particularly provided in Section 7.2 hereof. The
Building shall be constructed in accordance with Exhibit C, and shall be subject
to measurement upon completion as provided in Section 4.1 hereof.
2.2 FLOOR AREA. The term "Floor Area" as used throughout this Lease shall mean
and include the square footage of all areas for exclusive use and occupancy by
any tenant of Landlord or other Owner in the Shopping Center, measured from the
exterior surface of building walls and extensions thereof, in the case of the
perimeter of the Premises, and from the center line of demising partitions
between the Premises and those adjacent tenants. In addition, if Tenant is
operating a restaurant or other food service facility and utilizing outdoor
seating areas, "Floor Area" shall include the square footage of such outdoor
seating area. The Floor Area shall include, without limitation, restrooms,
mezzanines, warehousing or storage areas, clerical or office areas and any
employee areas.
Page 2
ARTICLE 3
TERM OF LEASE
3.1 DEFINITIONS. This Lease shall be effective as of the "Effective Date"
which is defined as the earlier of the date Landlord and Tenant execute the
Lease or the date Tenant enters onto the Premises with Landlord's consent. The
term of this Lease ("Lease Term") shall commence on the "Commencement Date"
defined herein and shall continue thereafter
Page 3
for the period specified in Article 1, unless sooner terminated as hereinafter
provided in this Lease. The "Commencement Date" means the first day of the
month following the earlier of (a) ninety (90) days after Landlord delivers to
Tenant the Notice of Substantial Completion described in Section 3.2 or (b) the
date Tenant opens for business, unless otherwise stipulated in Exhibit F.
Notwithstanding the foregoing, the ninety (90) day period referenced in clause
(a) hereof shall be extended one day for each day after Landlord's delivery to
Tenant of the Notice of Substantial Completion that the completion of Tenant's
Work is delayed as a result of a breach by Landlord of its obligations
hereunder, or an event described in Section 26.5 hereof, provided, however, that
the Commencement Date shall not be extended as aforesaid until Landlord has
received written notice from Tenant describing the delay. Except as otherwise
specifically stated in this Lease or in any subsequent amendments hereto, the
terms and conditions of this Lease shall remain in effect during any extension,
renewal or holdover of the original Lease Term.
3.2 DELIVERY AND ACCEPTANCE OF THE PREMISES. Landlord agrees to deliver to
Tenant, and Tenant agrees to accept from Landlord, possession of the Premises
forthwith upon delivery by Landlord to Tenant of the Notice of Substantial
Completion defined in paragraph 1g of Exhibit C. Notification by Landlord's
architect ("Project Architect") of the substantial completion of the Premises in
accordance with said Exhibit C shall be conclusive and binding upon the parties
hereto. Tenant shall commence the construction of Tenant's Work as described in
Exhibit C promptly upon substantial completion of the Premises and shall
diligently prosecute such construction to completion and shall open the Premises
for business concurrently with the date specified for commencement of Minimum
Annual Rental.
Landlord intends to commence construction of Landlord's Work in accordance
with the Construction Schedule attached hereto as Schedule 2 to Exhibit C
("Construction Schedule") and covenants and agrees to diligently and in good
faith pursue the completion of Landlord's Work on or before the date reflected
on said schedule. "Commence construction" for purposes hereof shall mean that
Landlord has begun grading of the Premises, and is reflect on the Construction
Schedule as "Mobilize and Start Construction." In the event Landlord has not
commenced construction on or before July 1, 1999, Tenant shall have the right,
but not the obligation, upon written notice to Landlord, to begin and complete
construction of Landlord's Work, and in such event Landlord shall reimburse
Tenant for the reasonable Construction Cost (as defined in Exhibit C) incurred
by Tenant for such work in an amount not to exceed Landlord's Construction
Contribution defined in Exhibit C hereto, with interest thereon from the date
Tenant has commenced construction until the date of payment. Tenant's right to
begin construction as provided hereinabove shall be delayed one day for every
day Landlord is delayed from commencing construction as a result of an
occurrence described in Section 26.5 hereof, or that Landlord is delayed in such
commencement by Tenant's acts or failures to act.
Landlord intends to deliver the Notice of Substantial Completion in
accordance with the Construction Schedule. However, in the event Landlord has
not delivered the Notice of Substantial Completion to Tenant on or before
November 15, 1999, Tenant shall have the right, but not the obligation, to take
over and complete construction of Landlord's Work, and in such event Landlord
shall reimburse Tenant for the reasonable Construction Cost incurred by Tenant
for such work in an amount not to exceed the difference between (i) the Landlord
Construction Contribution with interest thereon from the date Tenant commences
completion of Landlord's Work until the date of payment, at the interest rate
specified in Section 14.7 hereof, and (ii) the amount of Construction Costs
incurred by Landlord prior to the date Tenant commenced construction pursuant
hereto. Tenant's right to begin construction as provided hereinabove shall be
delayed one day for every day Landlord is delayed from commencing construction
as a result of an occurrence described in Section 26.5 hereof, or that Landlord
is delayed in such commencement by Tenant's acts or failures to act..
3.3 CONFIRMATION OF FLOOR AREA AND OF TERM OF LEASE AND CERTIFICATE OF
OCCUPANCY. Tenant will execute and deliver to Landlord within ten (10) days
after Tenant opens for business a certificate substantially in the form of
Exhibit F (the "Confirmation of Term of Lease"), indicating thereon any
exceptions thereto which may exist at that time. Failure of Tenant to execute
and deliver the Confirmation of Term of Lease shall constitute an acceptance of
the Premises and an acknowledgment by Tenant that the statements included in
Exhibit F are true and correct, without exception. Within the earlier of ten
(10) days after completion of construction of Tenant's Work, as described in
Exhibit C, or ten (10) days after Tenant's opening for business, Tenant shall
deliver to Landlord the Certificate of Occupancy for the Premises issued by the
appropriate governmental agency.
3.4 OPTION TO EXTEND TERM. Landlord hereby grants to Tenant the option to
extend the term of the Lease for five (5) additional periods of five (5) years
each ("Option Terms"), subject to the following conditions:
(a) METHOD OF EXERCISE OF OPTION. Tenant shall exercise each option by
delivering to Landlord written notice of its intent to exercise the applicable
option not earlier than six (6) months, and not later than four (4) months,
prior to commencement of the applicable Option Term. Tenant shall have no right
to exercise its option during any time when Tenant is in default under the
Lease.
(b) COMMENCEMENT OF OPTION TERM. If the option is exercised pursuant to
subparagraph a hereof, the Option Term shall commence upon the expiration of the
preceding term, whether it be the initial term or an Option Term.
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(c) MINIMUM ANNUAL RENTAL. Minimum Annual Rental during each Option Term
shall be as follows:
Option Years 26 thru 30 $1,610,500.00 ($32.21 per square foot of Building)
Option Years 31 thru 35 $1,771,500.00 ($35.43 per square foot of Building)
Option Years 36 thru 40 $1,948,500.00 ($38.97 per square foot of Building)
Option Years 41 thru 45 $2,143,500.00 ($42.87 per square foot of Building)
Option Years 46 thru 50 $2,358,000.00 ($47.16 per square foot of Building)
(d) NO LANDLORD'S WORK. In the event Tenant exercises the option, Tenant
agrees to take the Premises in an "as is" condition with no obligation on the
part of the Landlord to undertake any work with regard to the Premises.
(e) NO ASSIGNMENT. The option granted herein shall be personal to the
original Tenant, may be exercised only by the original Tenant while it is
occupying the Premises, and may not be exercised by or assigned to any party
(including, but not limited to, any sublessee or lender) except to a transferee
otherwise permitted or approved by Landlord pursuant to Article 13 hereof.
(f) FAILURE TO TIMELY EXERCISE. Tenant's failure to timely exercise the
option for any Option Term shall nullify the option for all subsequent Option
Terms.
(g) GENERAL. All terms and conditions of the Lease shall remain in full
force and effect during any Option Term, except that the provisions of this
Section 3.4 shall control over any inconsistent provisions of the Lease.
3.5 SURRENDER OF THE PREMISES. Tenant will surrender possession of the
Premises to Landlord at the expiration of the Lease Term or the earlier
termination of this Lease.
ARTICLE 4
RENTAL
4.1 MINIMUM ANNUAL RENTAL. Tenant agrees to pay as rental for the use and
occupancy of the Premises the Minimum Annual Rental specified in Article 1;
although the Minimum Annual Rental is based on the Floor Area of the Building,
it shall be the total Minimum Annual Rental due for both the Building and
Tenant's Parcel. Minimum Annual Rental shall be calculated by multiplying the
Minimum Annual Rental per square foot listed in Sections 1.4 and 3.4(c) hereof
times the square feet of the Floor Area determined as provided in paragraph 9 of
Exhibit C hereto.
Tenant shall pay Minimum Annual Rental in twelve (12) equal monthly
installments during each year, in advance, on the first day of each calendar
month, without setoff, deduction, prior notice or demand, commencing on a date
("Rent Start Date") which shall be the earlier of (a) ninety (90) days after
Landlord delivers to Tenant the Notice of Substantial Completion described in
Section 3.2 or (b) the date Tenant opens for business, unless a different date
is specified in Article 1 or Exhibit F. Notwithstanding the foregoing, the
ninety (90) day period referenced in clause (a) hereof shall be extended one day
for each day after Landlord's delivery to Tenant of the Notice of Substantial
Completion that the completion of Tenant's Work is delayed as a result of a
breach by Landlord of its obligations hereunder, or an event described in
Section 26.5 hereof, provided, however, that the Rent Start Date shall not be
extended as aforesaid until Landlord has received written notice from Tenant
describing the delay. In the event Landlord and Tenant have not agreed or
settled upon the actual measurement of the Floor Area of the Building as of the
Rent Start Date, then until such time as the actual Floor Area has been
determined, Tenant shall pay Minimum Annual Rental in the amounts set forth in
Section 1.4, and if the Floor Area is determined at such later date to be
greater than the Floor Area specified in Section 1.2, Tenant shall pay the
additional amount due within thirty (30) days following the date of
determination, and if the Floor Area is determined to be less than the Floor
Area specified in Section 1.2, Landlord shall credit the amount of such
overpayment against Tenant's account hereunder. Should the rental period
commence on a day other than the first day of a calendar month, then the rental
for such first fractional month shall be computed on a daily basis for the
period from the date of commencement to the end of such calendar month and at an
amount equal to one three-hundred sixtieth (1/360th) of the said annual rental
for each such day, and thereafter shall be computed and paid as aforesaid.
4.2 [Intentionally Deleted.]
4.3 PERCENTAGE RENTAL. In addition to the Minimum Annual Rental and other
sums hereinabove specified, Tenant shall pay as Percentage Rental the product of
the percentage set forth in Section 1.4 multiplied by the amount by which
Tenant's Net Sales (as the term "Net Sales" is defined in Section 4.8) made from
or upon the Premises during each calendar year exceeds Twelve Million Dollars
($12,000,000.00) (hereinafter "Breakpoint") for such calendar year (hereinafter
"Percentage Rental"). Said Percentage Rental shall be computed each calendar
quarter and, on or before the twentieth (20th) day of the calendar month
immediately following the close of each calendar quarter, Tenant shall pay to
Landlord the product of the percentage set forth in Section 1.4 multiplied by
the amount by which Tenant's Net Sales made during such
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calendar quarter exceeds Three Million Dollars ($3,000,000.00)
[Breakpoint DIVIDED BY 4]. Notwithstanding the foregoing, in the event at any
time during the original Lease Term or any Option Term then in effect, Tenant
is entitled to a full or partial abatement of Minimum Annual Rental pursuant
to any provisions of this Lease, then the dollar amount of the Breakpoint
shall be reduced in the same proportion that Minimum Annual Rental is so
abated.
On or before February 1 of each calendar year Tenant shall deliver to Landlord a
statement certified by Tenant as accurate indicating the total Net Sales of
Tenant during said calendar year and the amounts paid to Landlord as Percentage
Rental; and thereupon an adjustment shall be made with respect to said rental as
follows: If Tenant shall have paid to Landlord an amount greater than Tenant is
required to pay as Percentage Rental for such calendar year under the terms
hereof, Tenant shall be entitled to a credit against Tenant's next payment of
Percentage Rental for the amount of such overpayment; or, if Tenant shall have
paid an amount less than the Percentage Rental required to be paid hereunder,
then Tenant shall pay such difference to Landlord concurrently with Tenant's
delivery of the annual statement.
During any partial calendar year, Tenant shall pay Percentage Rental quarterly
as described hereinabove, but such quarterly payments shall not be subject to
reconciliation at the end of the calendar year.
4.4 STATEMENT OF NET SALES. Tenant agrees to furnish or cause to be furnished
to Landlord a statement of Net Sales of Tenant within twenty (20) days after the
close of each calendar month, and an annual statement, including a monthly
breakdown of Net Sales within thirty (30) days after the close of each calendar
year. Such statements shall include, among other appropriate items, Tenant's
Gross Sales (as the term "Gross Sales" is defined in Section 4.8), and all
deductions or exclusions therefrom and Tenant's Net Sales. Such statements
shall be signed by Tenant. Tenant shall record at the time of sale, in the
presence of the customer, all receipts from sales or other transactions, whether
cash or credit, in a cash register or registers having a sealed and continuous
tape which cumulates and consecutively numbers all purchases. Tenant shall keep
(a) full and accurate books of account and records in accordance with Generally
Accepted Accounting Principles consistently applied, including, without
limitation, a sales journal, general ledger, and all bank account statements
showing deposits of Gross Sales revenue, (b) all such cash register receipts
with regard to Gross Sales and Net Sales, credits, refunds and other pertinent
transactions made from or upon the Premises (including the Gross Sales of any
subtenant, licensee or concessionaire) and (c) detailed original records of any
exclusions or deductions from Gross Sales (including any exclusions or
deductions from Gross Sales of any subtenant, licensee or concessionaire). Such
books, receipts and records shall be kept for a period of three (3) years after
the close of each calendar year and shall be available for inspection and audit
by Landlord and its representatives at the Premises at all times during regular
business hours. In addition, upon request of Landlord, Tenant agrees to furnish
Landlord a copy of Tenant's State and Local Sales and Use Tax Returns, if
required in the State where the Shopping Center is situated. The receipt by
Landlord of any statement or any payment of Percentage Rental for any period
shall not bind it as to the correctness of the statement or the payment.
Landlord shall, within three (3) years after the receipt of any such statement,
be entitled to an audit of such Gross Sales and Net Sales (including the Gross
Sales and Net Sales of any subtenant, licensee or concessionaire). Such audit
shall be conducted either by Landlord or by a certified public accountant to be
designated by Landlord during normal business hours at the principal place of
business of Tenant. If it shall be determined as a result of such audit that
there has been a deficiency in the payment of Percentage Rental, then such
deficiency shall become immediately due and payable with interest at the rate
specified in Section 14.7 from the date when said payment should have been made.
In addition, if Tenant understates Net Sales by more than two percent (2%) and
if Landlord is entitled to any additional Percentage Rental as a result of said
understatement, or if such audit shows that Tenant has failed to maintain the
books of account and records required by this Section so that Landlord is unable
to verify the accuracy of Tenant's statement then Tenant shall pay to Landlord
all reasonable costs and expenses (including all reasonable auditor and attorney
fees) which may be incurred by Landlord in conducting such audit and collecting
such underpayment, if any. If Tenant understates Net Sales by more than six
percent (6%), then, in addition to Landlord's aforesaid rights, Landlord may
terminate this Lease. Any information gained from such statements or inspection
shall be confidential and shall not be disclosed other than to carry out the
purposes hereof; provided, however, Landlord shall be permitted to divulge the
contents of any such statements in connection with any contemplated sales,
transfers, assignments, encumbrances or financing arrangements of Landlord's
interest in the Premises or in connection with any administrative or judicial
proceedings in which Landlord is involved where Landlord may be required to
divulge such information.
4.5 ADDITIONAL RENT. Tenant shall pay, as Additional Rent, all sums of money
required to be paid pursuant to the terms of this Lease, including, but not
limited to those sums referenced in Articles 4, 7, and 11, herein collectively
referred to as "Additional Rent". If such amounts or charges are not paid at
the time provided in this Lease, they shall nevertheless be collectible as
Additional Rent with the next installment of Minimum Annual Rental thereafter
falling due, but nothing herein contained shall be deemed to suspend or delay
the payment of any amount of money or charge at the time the same becomes due
and payable hereunder or to limit any other remedy of Landlord. All amounts of
Minimum Annual Rental and Additional Rent payable in a given month shall be
deemed to comprise a single rental obligation of Tenant to Landlord.
4.6 FAILURE TO PAY ITEMS REQUIRED UNDER ARTICLE 4. If Tenant fails to pay,
when the same is due and payable, the Minimum Annual Rental or any Additional
Rent, such unpaid amounts shall bear interest at the rate specified in Section
14.7 from the date due to the date of payment and computed on the basis of
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monthly compounding with actual days elapsed compared to a 360-day year. In
addition to such interest, Tenant acknowledges that the late payment by Tenant
of any monthly rental will cause Landlord to incur certain costs and expenses
not contemplated under this Lease, the exact amount of which costs being
extremely difficult or impracticable to fix. Such costs and expenses will
include, without limitation, administrative and collection costs, and processing
and accounting expenses. Therefore, if any such installment is not received by
Landlord from Tenant when due, Tenant shall immediately pay to Landlord a late
charge of five percent (5%) of the past due amount. Landlord and Tenant agree
that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for its loss caused by Tenant's
nonpayment. Should Tenant pay said late charge but fail to pay
contemporaneously therewith all unpaid amounts of Minimum Annual Rental and
Additional Rent Landlord's acceptance of this late charge shall not constitute a
waiver of Tenant's default with respect to such nonpayment by Tenant nor prevent
Landlord from exercising all other rights and remedies available to Landlord
under this Lease or under Law.
4.7 SECURITY DEPOSIT. On or before the Effective Date, Tenant shall deposit
with Landlord the sum specified in Article 1 as "Security Deposit". Landlord
shall deposit the Security Deposit in a segregated interest bearing account in
either a Federally insured commercial bank or a savings and loan institution,
and the interest thereon shall remain in the account and be deemed a part of the
Security Deposit for all purposes hereof. Said deposit shall be held by
Landlord as security for the faithful performance by Tenant of all of its
obligations under this Lease. The Security Deposit shall not be mortgaged,
assigned, transferred or encumbered by Tenant without the prior written consent
of Landlord and any such act on the part of Tenant shall be without force and
effect and shall not be binding upon Landlord. If any of the rents herein
reserved or any other sum payable by Tenant to Landlord shall be overdue and
unpaid as of the end of the cure period therefor as provided in Section 14.2
hereof, or should Landlord make payments on behalf of Tenant, or if Tenant
shall fail, beyond the applicable cure period therefor, to perform any of the
terms of this Lease, then Landlord may, at its option and without prejudice to
any other remedy which Landlord may have on account thereof, appropriate and
apply said entire Security Deposit or so much thereof as may be necessary to
compensate Landlord for Minimum Annual Rental or Additional Rent, loss or damage
sustained by Landlord as a result thereof, and Tenant shall forthwith upon
demand restore said Security Deposit to the original sum deposited. Provided
that as of the end of the thirty-sixth (36th) month following the Rent Start
Date, Tenant is not in default, and has not been in default uncured beyond the
notice period, then Landlord shall apply the Security Deposit being held
hereunder (including any interest which has accrued since the date of its
deposit) against the payment of Minimum Annual Rental due on the thirty-seventh
(37th) month following the Rent Start Date, and if the amount of the Security
Deposit including interest exceeds the amount due on the thirty-seventh (37th)
month, then the excess shall be applied against amounts due for the thirty-eight
(38th) month. If, as of the end of such thirty-sixth (36th) month, Tenant is
in, or has been in default, then Landlord shall retain the entire Security
Deposit until the expiration or earlier termination of the Lease Term at which
time the Security Deposit (plus any interest which has accrued thereon, or so
much of said total Security Deposit as has not been applied as otherwise
provided herein) shall be refunded in full to Tenant within forty-five (45)
days after the expiration or earlier termination of the Lease Term. In the
event of bankruptcy or other debtor-creditor proceedings against Tenant, the
Security Deposit shall be deemed to be applied first to the payment of rent and
other charges due Landlord for all periods prior to filing of such proceedings.
Landlord may deliver the funds deposited hereunder by Tenant to the purchaser or
assignee of Landlord's interest in the Premises in the event that such interest
is transferred and thereupon Landlord shall be discharged from any further
liability with respect to such Security Deposit, and this provision shall also
apply to any subsequent transfer of Landlord's interest in the Premises.
4.8 DEFINITION OF NET SALES. The term "Gross Sales" of Tenant, as used in this
Lease, is defined to be the actual gross sales price of all movie ticket sales
for movies shown at the Premises by Tenant, its subtenants, licensees and
concessionaires, whether for cash or on credit and whether made by store
personnel, outside ticket vendors, or by approved vending machines or by
electronic, telephonic, video, computer, or other technology-based system,
whether existing now or developed in the future, located at the Premises or
generating orders therefor. The term "Net Sales" of Tenant, as used in this
Lease, is defined to be Gross Sales, excluding the following:
(a) Cash refunds made to customers, or credit refunds, in the ordinary
course of business, to the extent the initial sale was previously reported as
Net Sales hereunder, and the amount of discounts granted to non-profit or other
groups, provided, however, that the full amount of the sales price has been
included in Net Sales;
(b) Sales taxes, so-called luxury taxes, consumers' excise taxes, gross
receipts taxes and other similar taxes now or hereafter imposed upon the sale of
merchandise or services, but only if collected separately from the selling price
of movie admission and collected from customers;
(c) Gift certificates, or like vouchers, until such time as the same shall
have been converted into a sale by redemption.
All sales originating at the Premises shall be considered as made and completed
therein, even though bookkeeping and payment of the account may be transferred
to another place for collection and even though
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actual filling of the sale or service order and actual delivery of the
merchandise may be made from a place other than the Premises.
ARTICLE 5
NET LEASE; TRUE LEASE
It is the intention of the parties hereto that the obligations of Tenant
hereunder shall be separate and independent covenants and agreements, and that
Minimum Annual Rental, Additional Rent and all other sums payable by Tenant
hereunder shall continue to be payable in all events, and that the obligations
of Tenant hereunder shall continue unaffected, unless the requirement to pay or
perform the same shall have been terminated pursuant to an express provision of
this Lease. This is a net Lease and Minimum Annual Rental, Additional Rent and
all other sums payable hereunder by Tenant shall be paid without notice or
demand, and without setoff, counterclaim, recoupment, abatement, suspension,
deferment, diminution, deduction, reduction or defense, except as otherwise
specifically set forth herein. Tenant shall pay all operating expenses related
to use, occupancy, management, maintenance, repair, operation or possession of
the Premises, and to the extent required hereunder, taxes and insurance costs.
This Lease shall not terminate and Tenant shall not have any right to terminate
this Lease, during the Lease Term (except as otherwise expressly provided
herein).
Tenant agrees that, except as otherwise expressly provided herein, it shall
not take any action to terminate, reject, rescind or avoid this Lease,
notwithstanding (i) the bankruptcy, insolvency, reorganization, composition,
readjustment, liquidation, dissolution, winding-up, or other proceeding
affecting Landlord, Tenant or any assignee or subtenant of Tenant, (ii) the
exercise of any remedy, including foreclosure, under the mortgage, or (iii) any
action with respect to this Lease (including the disaffirmance hereof) which may
be taken by Landlord under the Federal Bankruptcy Code or by any trustee,
receiver or liquidator of Landlord or by any court under the Federal Bankruptcy
Code or otherwise, or (iv) the condition of the Premises (except to the extent
Tenant's action as it relates to this clause (iv) is being taken as a result of
actions of Landlord). Tenant waives all rights which are not expressly stated
herein but which may now or hereafter otherwise be conferred by law to quit,
terminate or surrender this Lease or any of the Premises, to any setoff,
counterclaim, recoupment, abatement, suspension, deferment, diminution,
deduction, reduction or defense of or to Minimum Annual Rental, Additional Rent
or any other sums payable under this Lease, except as otherwise expressly
provided herein; and for any statutory lien or offset right against Landlord or
its property.
ARTICLE 6
POSSESSION AND USE
6.1 PERMITTED USES. Tenant shall use the Premises solely for the purposes and
under the trade name specified in Article 1. At Tenant's sole expense, Tenant
shall procure, maintain and hold available for Landlord's inspection any
governmental license or permit required for the proper and lawful conduct of
Tenant's business.
6.2 DUTIES AND PROHIBITED CONDUCT. Tenant shall not use, or permit any person
or persons to use, the Premises for the sale or display of pornography or
drug-oriented paraphernalia or to use the Premises or any part thereof as a
massage parlor, adult bookstore or second-hand store or to conduct an auction,
distress, fire, bankruptcy or going-out-of business sale. Notwithstanding the
foregoing, the display of various sexual or drug oriented matters in a film
being shown at the Premises, which is a film that is generally shown at major
retail theaters operated by major commercial theater operators and/or the sale
of posters or movie memorabilia related to such films will not be deemed in
violation of the foregoing; "major retail theaters" and "major commercial
theater operators" as used herein shall mean theaters and operators generally
operating in community shopping centers and showing primarily first run films
such as those operating as of the date of this Lease as AMC, Edwards Theaters,
and Pacific Theatres, and other theaters generally found in family oriented
shopping centers and specializing in foreign films and "art" films, such as
theaters currently operating in San Diego County as Landmark Theaters. Tenant
shall not use the Premises, occupy, or permit any of the Premises to be used or
occupied, nor do or permit anything to be done in or on any of the Premises, in
a manner which would (i) make void or voidable any insurance which Tenant is
required hereunder to maintain then in force with respect to any of the
Premises, (ii) affect in any manner the ability of Tenant to obtain any
insurance which Tenant is required to furnish hereunder, (iii) cause any injury
or damage to any Fixtures or improvements to the Tenant Parcel unless pursuant
to Improvements permitted under Article 10 hereof or as required to effectively
maintain the Tenant Parcel as required in Section 8.2 hereof, (iv) constitute a
public or private nuisance or waste, or (v) violate any of the laws of the
United States of America, or the laws, ordinances, regulations and requirements
of the State, County and City where the Shopping Center is situated, or of other
lawful authorities. Tenant shall keep the Premises, and every part thereof, in a
clean and wholesome condition, free from any objectionable noises, odors or
nuisances, and shall comply with all health and police regulations in all
respects.
6.3 TENANT'S OPERATION IN THE PREMISES. Tenant covenants to perform the
Tenant's Work in accordance with the provisions of this Lease, and on or before
the Rent Start Date to open with the entire Building fully fixturized, stocked
and staffed for full operation of the Permitted Use. Thereafter, in the event
Tenant fails to continuously operate the Permitted Use from all or substantially
all of the Building for a period of twelve (12) consecutive months, then, in
addition to any other legal remedy available to Landlord, Landlord
Page 8
may, at any time following the end of such twelve (12) month period terminate
this Lease upon written notice to Tenant. Any Personal Property or Fixtures
belonging to Tenant and left on the Premises thirty (30) days following the
termination date specified in Landlord's notice, shall be deemed abandoned.
In such case, Landlord may dispose of said Personal Property in any manner
provided by the laws of California and is hereby relieved of all liability
for doing so.
6.4 NEW LOCATIONS FOR TENANT. Tenant agrees that it will not, during the first
five (5) years after Tenant opens for business, directly or indirectly, lease,
operate or own any similar type of business (not so operated and owned on the
Effective Date of this Lease) within a radius of three (3) miles from the
location of the Premises. Without limiting Landlord's remedies in the event
Tenant should violate this covenant, Landlord may, at its option and for so long
as Tenant is operating said other business, include the net sales of such other
business in the Net Sales made from the Premises for the purpose of computing
the Percentage Rental due hereunder. Tenant will provide Landlord with a
statement of Tenant's Net Sales, in accordance with the provisions of Section
4.4, for each such prohibited business location operated by Tenant in violation
of the foregoing radius restriction. After the aforementioned period, Tenant may
operate another business with the aforementioned radius provided: (a) Tenant
gives Landlord written notice of its intention to operate such business and the
location and anticipated opening date of such business and (b) within thirty
(30) days of the date of said written notice, Landlord and Tenant shall enter
into a written amendment to this Lease adjusting the Minimum Annual Rental
payable under Section 4.1. Said Minimum Annual Rental shall be adjusted as
follows: from the statements of Net Sales as submitted by Tenant under Section
4.4, Landlord shall compute an amount which represents the highest amount of
annual Percentage Rental paid or payable by Tenant under Section 4.3, during any
consecutive twelve (12) month period occurring within the sixty (60) months
immediately preceding said amendment, and this amount, if any, shall be added to
the amount specified in Article 1 as Minimum Annual Rental, and this resulting
sum shall thereafter be the Minimum Annual Rental payable hereunder. The
effective date for payment of the adjusted Minimum Annual Rental shall be the
first day of the calendar month following the opening of Tenant's other
business.
6.5 NEW LOCATIONS FOR LANDLORD. Landlord agrees that it will not, during the
first three (3) years after Tenant opens for business (but only so long as
Tenant remains open for business), directly or indirectly, lease, operate or own
any similar type of business (not so operated and owned on the Effective Date of
this Lease) within a radius of three (3) miles from the location of the
Premises.
6.6 USE OF NAME OF SHOPPING CENTER. Tenant shall use the name of the Shopping
Center in which the Premises are located in all Tenant's advertising in
connection with Tenant's business at the Premises and for no other purpose,
except with Landlord's consent. Tenant shall not have or acquire any property
right or interest in the name of the Shopping Center. Landlord reserves the
right to change the name, title, or address of the Shopping Center or the
address of the Premises at any time, and Tenant waives all claims for damages
caused by any such change.
6.7 HAZARDOUS MATERIALS.
(a) DEFINITIONS. As used herein, "Hazardous Materials Laws" means any and
all federal, state or local laws, ordinances, rules, decrees, orders,
regulations or court decisions relating to hazardous substances, hazardous
materials, hazardous waste, toxic substances, environmental conditions on, under
or about the Premises, or soil and ground water conditions, including, but not
limited to, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), as amended, 42 U.S.C. Section 9601, et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901, et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the California Hazardous Waste Control Act, Cal. Health and Safety Code
Section 25100, et seq., the Carpenter-Presley-Tanner Hazardous Substances
Account Act, Cal. Health and Safety Code Section 25300, et seq., the Safe
Drinking Water and Toxic Enforcement Act, Cal. Health and Safety Code Section
25249.5, et seq., the Porter-Cologne Water Quality Control Act, Cal. Water Code
Section 13000, et. seq., any amendments to and any regulations promulgated
pursuant to the foregoing, and any similar federal, state or local laws,
ordinances, rules, decrees, orders or regulations. As used herein, "Hazardous
Materials" means any chemical, compound, substance, pollutant, containment or
other material that: (a) is defined as a hazardous substance, hazardous
material, hazardous waste or toxic substance under any Hazardous Materials Law;
or (b) is controlled or governed by any Hazardous Materials Law or gives rise to
any reporting, notice or publication requirements thereunder.
(b) USE. Tenant shall not allow any Hazardous Material to be used,
generated, manufactured, released, stored or disposed of on, under or about, or
transported from, the Premises or the Shopping Center, unless such use is: (a)
specifically disclosed to and approved by Landlord in writing prior to such use;
(b) conducted in compliance with the provisions of this Section; and (c)
conducted in compliance with the requirements and recommendations of Landlord's
and Tenant's insurers based upon prudent industry practices regarding management
of Hazardous Materials. Landlord may approve such use subject to reasonable
conditions to protect the Premises and Landlord's interests. Notwithstanding
the foregoing, Landlord hereby consents to Tenant's use, storage or disposal of
products containing small quantities of Hazardous Materials, which products are
of a type customarily found in offices and households (such as aerosol cans
containing insecticides, toner for copies, paints, paint remover, and the like),
provided that Tenant shall handle, use, store and dispose of such Hazardous
Materials in a safe and lawful manner and shall not allow such Hazardous
Materials to contaminate the Premises. If Landlord's consent is required for an
assignment of the Lease or a sublease of the Premises, Landlord shall have the
right to refuse such consent
Page 9
if, in Landlord's reasonable judgment, the possibility of a release of
Hazardous Materials is materially increased as a result of the assignment or
sublease or if Landlord does not receive reasonable assurances that the new
tenant or subtenant has the experience and the financial ability to remedy a
violation of Hazardous Materials and fulfill its obligations under this
Section 6.7.
(c) COMPLIANCE WITH LAWS. Tenant shall strictly comply with, and shall
maintain the Premises in compliance with, all Hazardous Materials Laws. Tenant
shall obtain and maintain in full force and effect all permits, licenses and
other governmental approvals required for Tenant's operations on the Premises
under any Hazardous Materials Laws and shall comply with all terms and
conditions thereof. At Landlord's request, Tenant shall deliver copies of, or
allow Landlord to inspect, all such permits, licenses and approvals. Tenant
shall, at Tenant's expense, perform any monitoring, investigation, clean-up,
removal, detoxification, preparation of closure or other required plans and any
other remedial work (collectively, "Remedial Work") required as a result of any
release or discharge of Hazardous Materials affecting the Premises or the
Shopping Center or any violation of Hazardous Materials Laws by Tenant or any
assignee or sublessee of Tenant or their respective agents, contractors,
employees, licensees or invitees. Landlord shall have the right to intervene in
any governmental action or proceeding involving any Remedial Work, and to
approve performance of the work, or, at Landlord's option, after reasonable
notice to Tenant, to remedy any violation by Tenant and require reimbursement
from Tenant for costs incurred by Landlord in connection with such remedy, in
order to protect Landlord's interests.
(d) NOTICE; REPORTING. Tenant shall notify Landlord, in writing, within
five (5) days after any of the following: (i) Tenant has knowledge, or has
reasonable cause to believe that any Hazardous Material has been released,
discharged or is located on, under or about the Premises, whether or not the
Hazardous Material is in quantities that would otherwise be reportable to a
public agency; (ii) Tenant receives any order of a governmental agency requiring
any Remedial Work pursuant to any Hazardous Materials Laws; (iii) Tenant
receives any warning, notice of inspection, notice of violation or alleged
violation, or Tenant receives notice or knowledge of any proceeding,
investigation or enforcement action, pursuant to any Hazardous Materials Laws;
or (iv) Tenant receives notice or knowledge of any claims made or threatened by
any third party against Tenant or the Premises relating to any loss or injury
resulting from Hazardous Materials. Tenant shall deliver to Landlord copies of
all test results, reports, spill prevention plans, and business or management
plans required to be filed with any governmental agency pursuant to any
Hazardous Materials Laws; however, Landlord shall have no obligation to review
the same nor shall Landlord have any liability as to the adequacy of any actions
taken by Tenant.
(e) TERMINATION/EXPIRATION. Upon termination or expiration of this Lease,
Tenant shall, at its sole expense, remove any equipment, improvements or storage
facilities utilized in connection with any Hazardous Materials and shall clean
up, detoxify, repair and otherwise restore the Premises to a condition free of
Hazardous Materials, provided, however, that Tenant's obligations as aforesaid
shall specifically exclude the obligation to remove equipment, improvements or
facilities or restore the Premises as a result of conditions which existed or
arose prior to Tenant's entry onto the Premises, or which initially arose on the
balance of the Shopping Center.
(f) INDEMNITY. Tenant shall indemnify, protect, defend and hold Landlord
(and its partners and their respective officers, directors, employees and
agents) harmless from and against any and all claims, costs, expenses, suits,
judgments, actions, investigations, proceedings and liabilities arising out of
or in connection with any breach of any provisions of this Section or directly
or indirectly arising out of the use, generation, storage, release, disposal or
transportation of Hazardous Materials by Tenant, or any sublessee or assignee of
Tenant, or their respective agents, contractors, employees, licensees, or
invitees, on, under or about the Premises during the Lease Term, including, but
not limited to, all foreseeable and unforeseeable consequential damages
(excluding lost profits) and the cost of any Remedial Work. Neither the consent
by Landlord to the use, generation, storage, release, disposal or transportation
of Hazardous Materials nor the strict compliance with all Hazardous Materials
Laws shall excuse Tenant from Tenant's indemnification obligations pursuant to
this Section. The foregoing indemnity shall be in addition to and not a
limitation of the indemnification provisions of Section 12.1 of the Lease.
Tenant's obligations pursuant to this Section shall survive the termination or
expiration of the Lease.
(g) LANDLORD'S REPRESENTATIONS AS TO HAZARDOUS MATERIALS. Landlord
represents and warrants to the best of Landlord's actual knowledge without
independent investigation that there are no Hazardous Materials on or about the
Shopping Center, and there are no Hazardous Materials which may impact the
Shopping Center, and Landlord agrees to indemnify and hold Tenant harmless for
costs of any Remedial Work required as a result of (i) any discharge or release
of Hazardous Materials or any violation of Hazardous Materials Laws prior to
commencement of the Lease affecting the Premises, or (ii) any discharge or
release of Hazardous Materials or any violation of Hazardous Materials Laws by
Landlord or its agents, contractors, or employees affecting the Premises or the
Shopping Center. In the event Landlord causes a Phase I Environmental Audit to
be performed, Landlord shall provide Tenant with a copy of the resulting
report.
ARTICLE 7
TAXES AND TITLE OF PREMISES
Page 10
7.1 TITLE OF PREMISES. Tenant acknowledges that as of the Effective Date the
Premises are subject to the following: (a) covenants, conditions, restrictions,
easements, mortgages or deeds of trust, any ground lease of record, any
rights-of-ways of record, and any other matters or documents of record,
including without limitation that certain Declaration of Restrictions and Grant
of Easements being recorded simultaneously herewith ("Declaration") (hereinafter
referred to collectively as "CC&R's"): (b) zoning laws of the City, County and
State where the Shopping Center is located; and (c) general and special taxes
not delinquent. Except as permitted by this Lease, from and after the Effective
Date, Tenant and all persons in possession of the Premises, shall not encumber
the Premises, whether involuntarily or otherwise. As to its leasehold estate,
Tenant and all persons in possession thereof will conform to and will not
violate the terms of the aforementioned CC&R's or said matters of record. Tenant
acknowledges and agrees that Landlord, as an Owner pursuant to the Declaration,
has delegated its responsibilities as Owner of the Tenant Parcel to Tenant for
the Term of the Lease commencing as of the Commencement Date hereof,
specifically excluding, however, the rights of Declarant thereunder which are
not similarly shared by other Owners such as approval rights or reserved rights.
Tenant acknowledges that any first mortgagee or first deed of trust trustee or
beneficiary has the right to subordinate at any time its interest in this Lease
and the leasehold estate to that of Tenant, without Tenant's consent. Tenant
acknowledges that this Lease is subordinate to the CC&R's and any amendments or
modifications thereof. Notwithstanding the foregoing, if the CC&R's are not of
record as of the Effective Date, then this Lease shall automatically become
subordinate to the CC&R's upon recordation of said CC&R's and Tenant further
agrees to execute and return to Landlord, within ten (10) days after written
demand therefor by Landlord, an agreement in recordable form (substantially in
the form of Exhibit E) subordinating this Lease to said CC&R's, provided,
however, that Tenant's obligation to subordinate to ground leases, mortgages,
deeds of trust, and other security instruments, and to execute Exhibit E in
connection therewith, shall be governed by the provisions of Section 21.1
hereof.
7.2 PROPERTY TAXES. Tenant agrees to pay, or cause to be paid before
delinquency (i) all taxes, assessments, license fees, and public charges levied,
assessed, or imposed, or which may become payable during the Term upon the
Premises (including both the Building Improvements and the Tenant Parcel and any
and all improvements thereon), and upon any fixtures, furniture, appliances, and
personal property installed or located on the Premises; and (ii) transfer,
transaction, sales, rental, gross receipts, license or similar taxes or charges
measured by rent received by Landlord with respect to the Premises. Landlord
shall, after receipt of any tax bill or other notice of tax due on Premises,
furnish Tenant with a copy of such bill or notice. Tenant shall pay all of such
taxes when due and, on demand, shall furnish to Landlord receipts evidencing
such payment. Taxes for first and last years shall be prorated between
Landlord and Tenant.
Landlord shall furnish Tenant with a legal description of the Tenant
Parcel, and shall have the Tenant Parcel segregated as a separate tax lot, and
Tenant shall pay all real estate taxes directly to the taxing authority. In
the event Landlord, after using its best efforts to have the Tenant Parcel
segregated as a separate tax lot is unable to do so and provides Tenant with
evidence reasonably satisfactory to Tenant of its efforts to create the Tenant
Parcel as a separate tax lot, Tenant shall have the right to have the Tenant
Parcel segregated as a separate tax lot.
In the event both Landlord and Tenant are unable to have the Tenant Parcel
segregated as a separate tax lot or until real estate taxes are so segregated,
the taxes allocable to the Premises shall be ascertained from the records of the
Tax Assessor by adding (i) the product of multiplying the applicable tax rate by
the assessed value of the Building Improvements and any inventory, trade
fixtures, machinery, equipment or other personal property included in the
assessed value, plus (ii) the product of multiplying (A) the applicable tax rate
by (B) the assessed value of all land assessed under the applicable assessment
by (c) a fraction, the numerator of which shall be the square footage of the
Tenant Parcel and the denominator of which shall be the square footage of all
land assessed under the applicable assessment. In the event taxes are to be
allocated as provided in this paragraph, Landlord shall submit a statement of
Tenant's share of such taxes with appropriate supporting information to Tenant
at least sixty (60) days before the date when such taxes can last be paid within
any fine, penalty, interest or cost being added for non-payment, and Tenant
shall pay such amount to Landlord prior to such date. Landlord shall in such
event cause the taxes on the Premises to be paid before any fine, penalty,
interest or cost for nonpayment may be added and shall promptly furnish written
evidence of payment to Tenant.
Page 11
ARTICLE 8
COMMON AREA
8.1 DEFINITION OF COMMON AREA. The term "Common Area" shall include all
areas within the Shopping Center outside the exterior boundaries of the
buildings situated thereon, including, but not limited to, streets,
driveways, parking areas, truckways, delivery passages, loading doors,
sidewalks, ramps, open and closed courts and malls, landscaped and planted
areas, exterior stairways, bus stops, retaining and decorative walls and
planters, and other areas provided by Landlord and/or other owners of
portions of the Shopping Center for the general use, convenience and benefit
of Landlord, other persons entitled to occupy Floor Area in the Shopping
Center and/or their customers, patrons, employees and invitees. The Common
Area shall also include any off-site areas which must be maintained by the
Shopping Center owners pursuant to governmental conditions of approval of
subdivision and/or development of the Shopping Centers. Landlord reserves
the right to make changes at any time and from time to time in the size,
shape, location, number and extent of the Common Area including the Common
Area of the Premises, or any of them, provided, however, that Landlord shall
make no changes to the Common Area of the Premises without Tenant's prior
written approval, such approval not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, Landlord and Tenant hereby acknowledge and
agree that Tenant's rights and obligations to maintain the Common Area of the
Premises as described herein are granted to and accepted by Tenant in
Tenant's capacity as Designated Parcel Operator under the Declaration, and
agree that pursuant to the terms of the Declaration, Operator thereunder
shall have the right to perform Tenant's obligations hereunder if Tenant
fails to perform such obligations following written notice from Operator, and
that Operator shall have the right to terminate Tenant's designation as
Designated Parcel Operator, all as more particularly described in the
Declaration. In the event of any such termination, Operator shall maintain
Tenant's Parcel, and Tenant, as designated Owner of the Tenant Parcel, shall
pay its Allocable Share of Common Area Maintenance Costs to Operator, all as
more particularly described in the Declaration.
8.2 COMMON AREA MAINTENANCE OF TENANT'S PARCEL. Tenant shall cause at
Tenant's expense the Common Area of Tenant's Parcel to be kept in good and
clean condition and repair, in accordance with good standards and practices
typical of comparable shopping centers in the general area of the Shopping
Center. Tenant shall perform repairs, replacements and improvements so as
to maintain substantially the type and quality of improvements installed by
Landlord as part of the original improvements. Maintenance shall include,
but not be limited to, the following: providing water, electricity and other
common utilities; sweeping; janitorial services; trash and refuse removal;
replacing of asphalt, paving, bumpers, curbs, striping and other parking lot
repairs; repairs and replacement of pylon and monument signs and directional
signs on Tenant's Parcel, lighting, perimeter walls, sidewalks, storm
drainage, planters, landscaping, and the irrigation system; slope
maintenance; any fire protection systems, providing security guards if Tenant
deems necessary, and any other items of repair, replacement and/or
maintenance that may be needed from time to time to properly operate, manage
and maintain the Common Area of Tenant's Parcel.
8.3 COMMON AREA MAINTENANCE OF REMAINDER OF SHOPPING CENTER. Landlord
shall maintain the remaining parcels of the Shopping Center in a condition
consistent with Tenant's obligations hereunder, or in the event that Landlord
does not maintain all of the areas in the Shopping Center because other
tenant(s) or owner(s) of the Shopping Center maintains their respective
Common Area, then, for the length of time such condition may exist,
Landlord's responsibility shall be to maintain and repair only those portions
of the Common Area not maintained by such other owner(s) or tenant(s).
Tenant acknowledges and agrees that the remaining parcels of the Shopping
Center may be unimproved land until such time as said parcels are developed
for use for specific tenants or owners; provided, however, that Landlord
shall grade and/or landscape said remaining parcels until such time as they
are developed for use by specific tenants or owners, such grading and/or
landscaping to be done in a manner which does not adversely affect Tenant's
operation of the Premises. Landlord shall be responsible to pay all operating
expenses related to use, occupancy, management, maintenance, repair,
operation, or possession of the balance of the Shopping Center, including
taxes and insurance costs.
8.4 CONTROL OF COMMON AREA OF TENANT'S PARCEL. Tenant shall have the right
at any time and from time to time to exclude and restrain any person from use
or occupancy on the Tenant Parcel, excepting, however, bona fide customers,
patrons and service suppliers of other owners or tenants in the Shopping
Center who make use of said areas in accordance with the provisions of the
Declaration. The rights of Tenant with respect to the Common Area of the
Tenant Parcel shall at all times be subject to the rights of Landlord, the
other tenants of Landlord and the other owners of the Shopping Center to use
the same in common with Tenant as provided in the Declaration. It shall be
the duty of Tenant to keep all of the Common Area of the Tenant Parcel free
and clear of any obstructions created or permitted by Tenant or resulting
from Tenant's operation and to permit the use of any of the Common Area only
for normal parking and ingress and egress by the customers, patrons and
service suppliers of Tenant or other occupants of the Shopping Center as
provided in the Declaration, provided, however, that Tenant shall have the
right to conduct special events in the parking lot adjacent to the Building
consistent with its operation of the Building as a retail operation
exhibiting commercial motion pictures subject to the following conditions:
(a) any such event shall be conducted within the areas cross-hatched on
Exhibit A hereto, (b) no one event shall use more than 1,000 square feet of
the Common Area of Tenant's Parcel, (c) Tenant shall conduct no more than
four (4) such events per calendar year, (d) no one event shall exceed two (2)
weeks in duration, (e) such events shall be
Page 12
held at Tenant's sole cost and expense, and shall be conducted in a manner so
as to not unreasonably disturb the operation of the balance of the Shopping
Center.
8.5 RULES AND REGULATIONS. Tenant shall abide by the rules and regulations
governing the Shopping Center which may be promulgated from time to time
pursuant to the provisions of the Declaration, provided, however, that Tenant
shall have the right to approve such rules and regulations, such approval not
to be unreasonably withheld. Such rules and regulations shall be
nondiscriminatory, and may specify, without limitation, when and where
Tenant, and other tenants/owners of the Shopping Center and their employees
may park their vehicles in the Common Area of the Shopping Center, provided,
however, that parking for all tenants and employees of the Shopping Center
shall not be located solely on the portion of the Premises which constitutes
the Common Area of Tenant's Parcel. Landlord agrees that there shall be no
charge for parking within the Shopping Center.
8.6 [Intentionally Deleted.]
8.7 SITE PLAN/REMODEL. Landlord may expand, reduce, remove, remodel, or
refurbish ("remodel") portions of the Shopping Center, provided, however,
that Landlord shall make no changes to the Common Area of the Premises
without Tenant's prior written approval, such approval not to be unreasonably
withheld or delayed. Tenant acknowledges that the remodeling may include
changes and additions to the pipes, conduits and ducts, or other structural
and nonstructural installations in the Premises where desirable to serve the
Common Areas and other premises in the Shopping Center or to facilitate the
expansion or alteration of the Shopping Center (including without limitation,
the construction and erection of columns and support facilities). The
remodeling will be done in accordance with design specifications prepared by
the Project Architect and reviewed and approved by Landlord. Copies of such
specifications will be made available to Tenant, and Tenant shall have the
right to review and approve any alterations which are being made to the
Premises, such approval not to be unreasonably withheld or delayed. Tenant
agrees that Tenant will not, through any act or omission, in any way impede,
delay or prevent the completion of such remodeling in a timely manner.
Landlord agrees that the initial construction and any subsequent remodel of
the Shopping Center shall provide parking for the Shopping Center as required
by law. As part of the design specifications or otherwise, in order to
rejuvenate the Shopping Center, a new exterior tenant sign criteria may be
developed. Within sixty (60) days after Tenant's receipt of written notice
of said new sign criteria, Tenant shall, at Tenant's expense, remove all
existing exterior signs and replace the same with new signs in accordance
with the new sign criteria. Notwithstanding the foregoing, Tenant shall have
the right to approve any modification to the Shopping Center which alters the
Building Area limit lines, the Maximum Building Area, or the maximum building
height above the heights permitted pursuant to the Declaration, access to
Tenant's Parcel or Building, or the number of parking spaces located on
Tenant's Parcel.
ARTICLE 9
MECHANICS' LIENS
9.1 MECHANICS' LIENS. Tenant agrees that it will pay, or cause to be paid,
all costs for work done by it, or caused to be done by it, on the Premises,
and Tenant will keep the Premises free and clear of all mechanics' liens and
other such liens on account of work done for Tenant or persons claiming under
Tenant. Tenant agrees to and shall indemnify, defend and hold Landlord
harmless from any and all liability, loss, damage, costs, attorney fees and
all other expenses on account of claims of lien of laborers or materialmen or
others for work performed or materials or supplies furnished for Tenant or
persons claiming under Tenant.
9.2 CONTEST OF LIEN. If Tenant shall desire to contest any claim of such
mechanics' lien, it shall furnish Landlord adequate security for the value or
in the amount of the claim, plus estimated costs and interest, or a bond of a
responsible corporate surety in such amount, conditioned on the discharge of
the lien. If a final judgment establishing the validity or existence of a
lien for any amount is entered, Tenant shall immediately pay and satisfy the
same.
9.3 RIGHT TO CURE. If Tenant shall be in default in paying any charge for
which a mechanics' lien claim and suit to foreclose the lien have been filed,
and shall not have given Landlord security to protect the property and
Landlord from liability for such claim of lien, Landlord may (but shall not
be so required to) pay said claim and any costs, and the amount so paid,
together with reasonable attorney fees incurred in connection therewith,
shall be immediately due and owing from Tenant to Landlord, and Tenant shall
pay the same to Landlord with interest at the rate specified in Section 14.7
from the dates of Landlord's payments.
9.4 NOTICE OF LIEN. Should any claim of lien be filed against the Premises
or any action against the Premises or any action affecting the title to such
property be commenced, the party receiving notice of such lien or action
shall forthwith give the other party written notice thereof.
9.5 NOTICE OF NONRESPONSIBILITY. Landlord or its representatives shall have
the right to go upon and inspect the Premises at all reasonable times and
shall have the right to post and keep posted thereon notices of
nonresponsibility or such other notices which Landlord may deem to be proper
for the protection of Landlord's interest in the Premises. Tenant shall,
before the commencement of any work which might result
Page 13
in any such lien, give to Landlord written notice of its intention to do so
in sufficient time to enable posting of such notices.
ARTICLE 10
TENANT'S RIGHT TO MAKE IMPROVEMENTS;
PERSONAL PROPERTY; AND FIXTURES
10.1 IMPROVEMENTS. At Tenant's own expense, after giving Landlord notice in
writing of its intentions to do so and without limiting Tenant's right to
remove and/or replace Personal Property in accordance with Article 10,
Section 10.3, Tenant may, from time to time after completion of all work in
accordance with Exhibit C, make such permanent and nonstructural alterations,
replacements, additions, changes, and/or improvements (collectively referred
to in this Lease as "Improvements") to Tenant's Work previously completed in
accordance with Exhibit C or to prior Improvements as Tenant may find
necessary or convenient for its purposes, provided that the value of the
Premises is not thereby diminished; provided, however, no Improvements shall
be made to any storefront, mechanical, electrical or plumbing systems, the
exterior walls or roof of the Building without obtaining the prior written
approval of Landlord. Tenant shall have the right to erect a mezzanine in
the Building at its own expense, subject to the provisions of Section 10.2
hereof, and provided that there shall be no effect on the parking
requirements for the Shopping Center as a result thereof. Notwithstanding the
foregoing, in no event shall Tenant make or cause to be made any penetration
into or through the roof or floor of the Building without obtaining the
prior written approval of Landlord. Tenant agrees to reimburse Landlord
for all costs and expenses (including, without limitation, any architect
and/or engineer fees) incurred by Landlord in approving or disapproving
Tenant's plans for Improvements. Tenant shall be liable for and shall
indemnify and defend Landlord and other tenants at the Shopping Center from
any claim, demand, lien, loss, damage or expense, including reasonable
attorney fees and costs, arising from any Improvements permitted under this
Article 10. Within thirty (30) days after completing its Improvements,
Tenant shall certify to Landlord in writing Tenant's actual cost of
constructing its Improvements.
10.2 CONSTRUCTION REQUIREMENTS. All Improvements to be made to the Premises
which require the approval of Landlord shall be made under the supervision of
a competent architect or licensed structural engineer and made in accordance
with plans and specifications prepared in conformity with the structural,
mechanical, electrical, design and quality standards, requirements and/or
criteria specified in Exhibit C and approved in writing by Landlord before
commencement of the work. All work with respect to any Improvements must be
done in a good and workmanlike manner and diligently prosecuted to completion
to the end that the Premises shall at all times be a complete unit except
during the period of work. Upon completion of such work, Tenant shall have
recorded in the office of the County Recorder where the Shopping Center is
located a Notice of Completion, as required or permitted by law, and Tenant
shall deliver to Landlord, within ten (10) days after completion of said
work, a copy of the building permit with respect thereto. Upon the
expiration or earlier termination of this Lease, such Improvements shall not
be removed by Tenant but shall become a part of the Premises. Any such
Improvements shall be performed and done strictly in accordance with the laws
and ordinances relating thereto. In performing the work of any such
Improvements, Tenant shall have the work performed in such a manner as not to
obstruct access to the premises of any other tenant in the Shopping Center.
10.3 PERSONAL PROPERTY. All of Tenant's trade fixtures, furniture,
furnishings, signs, merchandise, and other personal property not permanently
affixed to the Premises (collectively referred to as "Personal Property" in
this Lease) must be new or like-new when installed in, or attached to, the
Premises by Tenant. Subject to the provisions of Section 10.5, any such
Personal Property shall remain the property of Tenant, and Tenant shall have
the right to remove such property at the expiration or earlier termination of
this Lease. Tenant shall, at its expense, immediately repair any damage
occasioned to the Premises by reason of the removal of any such Personal
Property.
10.4 FIXTURES. Tenant's Improvements (as described in Section 10.1) and
Tenant Required Improvements which are a part of Landlord's Work (as
described in Exhibit C) are collectively referred to in this Lease as
"Fixtures" and shall become the property of Landlord upon expiration or
earlier termination of this Lease.
10.5 LANDLORD'S SECURITY INTEREST. Tenant hereby grants Landlord a security
interest in Tenant's Fixtures and Personal Property located on the Premises
to secure Tenant's performance of any and all of Tenant's obligations under
this Lease. To perfect said security interest, Tenant agrees to execute and
deliver to Landlord such financing statements required by the applicable
Uniform Commercial Code as Landlord may request. Landlord's rights and
remedies with respect to this Section 10.5 shall be as set forth in the
applicable Uniform Commercial Code. Notwithstanding anything to the contrary
contained herein, upon Tenant's written request therefor, on a form prepared
by Landlord, Landlord shall subordinate its rights in such Personal Property
of Tenant to the rights of any trade fixture or equipment seller, lender or
lessor which is providing financing for Tenant's Personal Property in the
Premises ("Lender") but only so long as Tenant is indebted to such Lender.
Page 14
10.6 PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes
(including sales and use taxes), assessments, license fees and public charges
levied, assessed or imposed upon its business operation as well as upon its
merchandise, Fixtures and Personal Property. In the event any such items of
property are assessed with property of Landlord, then, and in such event,
such assessment shall be divided between Landlord and Tenant to the extent
that Tenant shall pay only its equitable portion of such assessment.
10.7 SIGNS.
(a) BUILDING SIGN. Prior to opening for business in the Premises
Tenant shall design, fabricate and install, at Tenant's expense, on the front
of the Building Improvements a storefront sign consistent with the sign
criteria developed by Landlord for the Shopping Center ("Sign Criteria") and
subject to all governmental approvals; Tenant shall have the right to approve
the Sign Criteria, such approval not to be unreasonably withheld or delayed.
(b) PYLON SIGN. Subject to governmental approvals, Landlord shall
construct a pylon sign at an entrance to the Shopping Center designated by
Landlord ("Pylon Sign") and Tenant shall install its trade name on both sides
of the first and highest position of such pylon sign. Other tenants of the
Shopping Center shall be entitled to have a position on the Pylon Sign and,
if available, on other pylon signs of the Shopping Center. Tenant agrees
that Tenant, at Tenant's sole expense, shall design and install Tenant's
sign in the sign panel designated by Landlord ("Tenant's Sign") in accordance
with the provisions of all governmental laws, rules and regulations and the
Tenant-approved Sign Criteria, and that such sign shall be subject to
Landlord's approval. Tenant shall maintain, repair and as necessary, replace
Tenant's Sign. If for any reason for any period of time Tenant does not
display Tenant's trade name on Tenant's Sign, Tenant shall cover that portion
of the sign with white plexiglass or such other substance as shall be
reasonably satisfactory to Landlord. If at any time for any reason Tenant
does not display its trade name on Tenant's Sign for sixty (60) days or more,
Landlord may, upon written notice to Tenant, re-lease such sign to such party
and upon such terms and conditions as Landlord shall choose in Landlord's
sole discretion. Tenant shall pay its pro rata share of the cost of design
and construction of the Pylon Sign which share shall be based on the square
footage of Tenant's Sign divided by the square footage of all sign panel
space on the Pylon Sign. Tenant shall maintain, repair and, if necessary,
replace the Pylon Sign, provided, however, that Tenant shall be entitled to
reimbursement from other tenants/owners whose names are on sign panels of the
Pylon Sign in an amount equal to the square footage of such owner/tenant's
sign panel(s) divided by the square footage of all sign panels which are
occupied on the sign at the time such expenses are incurred. All such other
tenant/owners shall be responsible to maintain, repair and replace their
individual tenant signs.
(c) MONUMENT SIGN. In addition, Tenant shall be entitled, at Tenant's
expense, to design, fabricate and install a monument sign for displaying
movie titles. Said monument sign shall be subject in all respects to
Landlord's approval, all governmental approvals, and Sign Criteria. In the
event Tenant does not use the Monument Sign for a period of ninety (90)
consecutive days, Landlord shall have the right, upon thirty (30) days notice
to Tenant to allow other tenants in the Shopping Center to use said Monument
Sign for temporary periods until Tenant delivers written notice to Landlord
of its intent to again use the Monument Sign.
ARTICLE 11
REPAIRS; MAINTENANCE
11.1 TENANT'S OBLIGATIONS. Tenant agrees at all times from and after
delivery of the Building Improvements, at its own cost and expense, to
repair, maintain in good and tenantable condition and replace, as necessary,
the Building Improvements and every part thereof, including, without
limitation, the following: the roof, exterior walls, structural parts of the
Building Improvements (including the structural floor), all meters, pipes,
conduits, equipment, components and facilities within the Tenant Parcel
(except as the appropriate utility company has assumed these duties)
including without limitation, maintenance, repair, and replacement of the
HVAC system, all Fixtures and other equipment installed in the Premises; all
exterior and interior glass installed in the Premises; all signs, lock and
closing devices; all window sashes, casements and frames; doors and door
frames; floor coverings; and all such items of repair, maintenance,
alteration, improvement or reconstruction as may be required at any time or
from time to time by a governmental agency having jurisdiction thereof. All
replacements made by Tenant in accordance with this Section 11.1 shall be of
like size, kind and quality to the items replaced and shall be subject to
Landlord's approval; Tenant shall paint and otherwise refurbish the exterior
of the Building Improvements no less than once every seven (7) years of the
Lease Term. Tenant shall make all improvements necessary to comply with the
Declaration and with any laws, ordinances, rules or regulations of any public
authority, the Insurance Service Office or any similar body (except any such
laws, ordinances, rules or regulations which were required to be performed
prior to the date of the Notice of Substantial Completion which items shall
be performed by Landlord in accordance with its obligations under Exhibit C
hereto). Upon surrender of the Premises, Tenant shall deliver the Premises,
including the Building Improvements, to Landlord in good order, condition
and state of repair, subject to ordinary wear and tear and loss by fire or
other casualty if Tenant is not otherwise required to restore or repair such
loss pursuant to the terms hereof.
Page 15
11.2 [Intentionally Deleted.]
11.3 TENANT'S FAILURE TO MAINTAIN; LANDLORD RIGHT TO ENTER. Tenant agrees to
permit Landlord, or its authorized representatives, to enter the Premises at
all times during usual business hours to inspect the same, and if Tenant
refuses or neglects to repair, replace, or maintain the Building
Improvements, or any part thereof, as required hereinabove, in a manner
reasonably satisfactory to Landlord, Landlord shall have the right, upon
giving Tenant reasonable written notice of its election to do so, to make
such repairs or perform such maintenance on behalf of and for the account of
Tenant. Nothing herein contained shall imply any duty on the part of
Landlord to do any such work which, under any provision of this Lease, Tenant
may be required to do, nor shall Landlord's performance of any repairs on
behalf of Tenant constitute a waiver of Tenant's default in failing to do the
same. If Landlord makes or causes any such repairs to be made or performed,
as provided herein, Tenant shall pay the cost thereof to Landlord, plus an
administrative fee of fifteen percent (15%) as Additional Rent, promptly
upon receipt of an invoice therefor.
11.4 [Intentionally Deleted.]
ARTICLE 12
INDEMNITY AND INSURANCE
12.1 INDEMNITY BY TENANT. Landlord shall not be liable for, and Tenant shall
indemnify, hold harmless and defend Landlord from any claim, demand,
liability, judgment, award, fine, mechanics' lien or other lien, loss,
damage, expense, charge or cost of any kind or character (including actual
attorney fees and court costs) arising directly or indirectly from (a) any
labor dispute involving Tenant or its contractors and agents or (b) the
construction, repair, alteration, maintenance, improvement, use, occupancy or
enjoyment of the Premises or any other portion of the Shopping Center by
Tenant, Tenant's assignees and/or subtenants and their respective
contractors, agents, licensees or invitees (hereinafter referred to as
"Claims"), including without limitation, Claims caused by the concurrent
negligent act or omission, whether active or passive, of Landlord or its
agents; provided, however, Tenant shall have no obligation to defend or
indemnify Landlord from Claims caused by the sole negligence, or willful or
criminal act of Landlord or its agents. Notwithstanding anything to the
contrary contained herein, in the event of Claim asserting Landlord's
concurrent negligence, Landlord may elect to defend itself against such
Claim, in which event each party shall pay any amounts awarded against it as
determined by judicial proceeding and each shall pay its own attorney's fees.
In the event Landlord does not elect to tender its own defense, Tenant shall
defend and indemnify Landlord as described herein, provided, however, that
Landlord shall reimburse Tenant to the extent that damages are awarded to a
third party as a result of Landlord's negligence, and in such event, in the
same proportion which the amount of the award related to Landlord's
negligence bears to the total amount awarded to such third party; Landlord
shall also reimburse Tenant for reasonable attorneys fees and costs incurred
by Tenant in connection with any such Claim, such reimbursement to be in the
same proportion which Landlord is reimbursing Tenant related to Landlord's
negligence as aforesaid.
12.2 LANDLORD'S INSURANCE OBLIGATION. At all times from and after the
Effective Date that Landlord is responsible to maintain portions of the
Common Area of the Shopping Center pursuant to Section 8.2 hereof, Landlord
shall maintain in effect a policy or policies of public liability insurance
providing protection bodily injury , death, and property damage arising from
Landlord's ownership and/or operation such portion of the Shopping Center
with coverage limits at least equal to those Tenant is required to maintain
in accordance with Section 12.3(a).
12.3 TENANT'S INSURANCE OBLIGATION. Tenant further covenants and agrees that
from and after the earlier of substantial completion of the Premises or
Tenant's entry onto the Premises with Landlord's consent, Tenant will carry
and maintain, at its sole cost and expense, the following types of insurance,
in the amounts specified and in the form hereinafter provided for:
(a) PUBLIC LIABILITY. Contractual and comprehensive general liability
insurance for bodily injury, death and property damage with coverage limits
of not less than One Million Dollars ($1,000,000) combined each occurrence
and in the aggregate insuring against any and all liability of the insured
with respect to said Premises or arising out of the maintenance, use or
occupancy thereof. All such bodily injury liability insurance and property
damage liability insurance shall specifically insure the performance by
Tenant of that part of the indemnity agreement contained in Section 12.1
relating to liability for injury to or death of persons and damage to
property.
(b) WORKER'S COMPENSATION. Statutory amount of workers' compensation
insurance required by the State in which the Shopping Center is located for
the benefit of Tenant's employees.
(c) INTERRUPTION INSURANCE. Interruption insurance, against loss or
damage resulting from the risks under Articles 18 Reconstruction, and 19
Condemnation in an amount equal to the aggregate of one (1) year's
requirements of (i) Minimum Annual Rental, (ii) the amounts payable by Tenant
for Additional Rent, and (iii) insurance premiums necessary to comply with
this Section 12.3.
Page 16
(d) EQUIPMENT. Machinery insurance on all air conditioning equipment
and systems exclusively serving the Premises. If said equipment and the
damage it may cause are not covered by Tenant's "All Risk" insurance (as
specified in subparagraph (e), below), then the insurance specified in this
subparagraph (d) shall be in an amount not less than Five Hundred Thousand
Dollars ($500,000). If Tenant requires boilers or other pressure vessels to
serve the Premises, they shall also be insured in the amount required by this
subparagraph (d).
(d) ALL RISK. Insurance against loss or damage covering (1) the
Building Improvements, (2) all other improvements to Tenant's Parcel, (3)
"Fixtures" as defined in Article 10, Section 10.4), including the items
specified as "Tenant's Work" in Exhibit C, and (4) "Personal Property" (as
defined in Article 10, Section 10.3) from time to time, in, on or upon the
Premises, under an All Risk policy (which shall include windstorm, flood, and
earthquake coverage if the Premises is located in an area in which such
hazards are customarily insured against by prudent commercial property
owners), which may contain such exclusions as are standard in the industry,
in amounts to prevent Landlord or Tenant from becoming a co-insurer under the
applicable policies, and in any event in amounts not less than the actual
replacement cost of all such items (excluding footings and foundations and
parts of the Improvements which are not insurable). Notwithstanding anything
herein to the contrary, if the cost of earthquake coverage is greater for any
insurance period than the cost customarily paid by prudent commercial
property owners, Tenant may elect to discontinue (or not to carry) earthquake
coverage for such period provided, however, that prior to discontinuing (or
failing to initially contract for) earthquake insurance Tenant shall notify
Landlord in writing of the amount Tenant can demonstrate is customarily paid
as aforesaid ("Customary Cost"), and shall provide three (3) bids Tenant has
obtained for such insurance. Within thirty (30) days following receipt of
any such notice from Tenant, Landlord shall have the right, but not the
obligation, to obtain earthquake coverage as required hereunder in which
event Tenant shall pay the Customary Cost to Landlord within thirty (30) days
after receipt of invoice therefor, and Landlord shall pay the excess if any.
At the end of any insurance period for which Tenant is not carrying
earthquake insurance or in which Landlord is paying the excess cost, Tenant
shall again be obligated to carry earthquake insurance or to provide notice
and bids as aforesaid for the next succeeding insurance period. All policy
proceeds shall be used for the repair or replacement of the property damaged
or destroyed.
All policies of insurance provided for herein shall be issued by insurance
companies with a general policyholder's rating of not less than A and a
financial rating of not less than Class X as rated in the most current
available "Best's" Insurance Reports, qualified to do business in the State
where the Shopping Center is located. All such policies shall be issued in
the name of the Landlord, Tenant, and Landlord's mortgagees or beneficiaries,
which policies shall be for the mutual and joint benefit and protection of
Landlord, Tenant and said mortgagees or beneficiaries. Executed copies of
such policies of insurance or certificates thereof shall be delivered to
Landlord prior to the earlier of delivery of the Premises, or Tenant's entry
onto the Premises with Landlord's consent, and thereafter copies of renewal
policies or certificates thereof shall be delivered to Landlord within thirty
(30) days prior to the expiration of the term of each such policy. As often
as any such policy shall expire or terminate, renewal or additional policies
shall be procured and maintained by Tenant in like manner and to like extent.
All policies of insurance delivered to Landlord must contain a provision
that the company writing said policy will give to Landlord twenty (20) days'
notice in writing in advance of any cancellation, lapse, reduction or other
adverse change respecting such insurance. All public liability, property
damage and other casualty policies shall be written as primary policies, not
contributing with or secondary to coverage which Landlord may carry.
Tenant's obligations to carry the insurance provided for above may be
satisfied by inclusion of the Premises within the coverage of a so-called
blanket policy or policies of insurance carried and maintained by Tenant;
provided, however, that Landlord and Landlord's mortgagees or beneficiaries
shall be named as additional insureds thereunder as their interests may
appear and that the coverage afforded Landlord will not be reduced or
diminished by reason of the use of such blanket policies of insurance, and
provided further that the requirements set forth herein are otherwise
satisfied. Tenant agrees to permit Landlord at all reasonable times to
inspect any policies of insurance of Tenant which Tenant has not delivered to
Landlord.
12.4 MUTUAL WAIVERS OF RIGHTS. Landlord (for itself and its insurer, and to
the extent and on condition that Tenant carries and maintains the insurance
at all times required under Section 12.3) hereby waives any rights, including
rights or subrogation, and Tenant (for itself and its insurer, and to the
extent and on the condition that Landlord carries and maintains the insurance
at all times required under Section 12.2) hereby waives any rights, including
rights of subrogation, each may have against the other, and Tenant (for
itself and its insurer) hereby waives any rights, including rights of
subrogation, it may have against any of the parties to the CC&R's referred to
in Article 7 and against other tenants in the Shopping Center (provided such
other tenants have waived such rights against Tenant) for compensation of any
loss or damage occasioned to Landlord or Tenant, as the case may be, with
regard to their respective property, the Premises, its contents or portions
of the Shopping Center, arising from any risk generally covered by All Risk
insurance Tenant shall carry and maintain under Section 12.2 and 12.3 hereof.
Each party shall cause each insurance policy obtained by it to provide that
the insurer waives all right of recovery by way of subrogation against the
other party in connection with any damage covered by such policy. The
foregoing waivers shall be operative only so long as available in the State
where the Shopping Center is located and so long as no policy is invalidated
thereby.
12.5 [Intentionally Deleted.]
Page 17
ARTICLE 13
ASSIGNMENT OR SUBLEASE
13.1 PROHIBITION. Tenant shall not assign, convey, mortgage, pledge,
encumber or otherwise transfer this Lease or any interest therein, sublet the
Premises or any part thereof, or permit the use or occupancy of the Premises
or any part thereof by anyone other than Tenant ("transfer"), without
receiving Landlord's prior written consent, which consent shall not be
unreasonably withheld or delayed. A transfer by operation of law, merger or
consolidation, or a change in the controlling partnership interest in Tenant
or in the controlling ownership of the voting stock of Tenant or any direct
or indirect parent of Tenant shall be deemed an assignment for purposes of
this Article 13, provided, however, that notwithstanding the foregoing Tenant
shall have the right, without the prior written consent of Landlord, to enter
into a transfer with a corporation which: (i) is a wholly owned subsidiary
of Tenant; or (ii) is a corporation of which Tenant owns in excess of fifty
percent (50%) of the outstanding capital stock; or (iii) merges or
consolidates with Tenant, where Tenant is the surviving entity. Any transfer
pursuant to (i), (ii) or (iii) ("Approved Transfer")above shall be subject to
the following conditions: (a) Tenant shall remain fully liable during the
unexpired Lease Term and any Option Terms; (b) any such transfer shall be
subject to all of the terms, covenants and conditions of this Lease and any
such transferee shall expressly assume for the benefit of Landlord the
obligations of Tenant under this Lease by a document reasonably satisfactory
to Landlord; (c) the resulting entity pursuant to (iii) above shall have a
net worth equal to or greater than Tenant's net worth at the date of Tenant's
request for consent; (d) Tenant shall give Landlord notice of such transfer
at least twenty (20) days prior to its effective date; and (e) Tenant shall
reimburse Landlord for Landlord's reasonable documentation fees incurred in
conjunction with the processing and preparation of documentation for any such
transfer.
Tenant shall, in writing, request consent to any transfer other than an
Approved Transfer, at least ninety (90) days prior to the anticipated
effective date of the transfer, and shall provide to Landlord information
regarding the identity of the proposed transferee and its net worth and
previous business experience including recent copies of current financial
statements, and within sixty (60) days following Landlord's receipt of such
written request and related information, Landlord shall, in writing, (i)
approve the proposed transfer, (ii) reject the proposed transfer or (iii)
exercise its option to cancel as described in Section 13.2 hereof. It shall
be reasonable for Landlord to refuse consent to a proposed transfer if (1) in
Landlord's reasonable business judgment, the present net worth of the
transferee is less than the greater of (i) the net worth of Tenant at the
Effective Date or (ii) the net worth of Tenant at the date of Tenant's
request for consent, or (2) if in Landlord's reasonable business judgment,
the Percentage Rental under Section 4.3 hereof that Landlord reasonably
anticipates receiving from the transferee is less than that which Landlord
has received from Tenant, or (3) in Landlord's reasonable business judgment,
the transferee lacks sufficient business reputation or experience to operate
a successful business of the type and quality permitted under the Lease, or
(4) the transferee's contemplated use of the Premises following the transfer
conflicts with the Permitted Use, or (5) the proposed transfer would breach
any covenant of Landlord respecting any other lease, financing agreement, or
other agreement relating to the Shopping Center. Any purported transfer,
encumbrance, pledge, mortgage, assignment or subletting (other than an
Approved Transfer) without Landlord's written consent shall be void and of no
force or effect. In the event of an assignment expressly approved by
Landlord in writing as provided hereinabove, Tenant shall be not be liable
for obligations which arise related to occupancy or enjoyment of the
Premises following the effective date of the assignment. Except as provided
herein with respect to an assignment specifically approved by Landlord, in
the event of any assignment, subletting, transfer or occupancy by someone
other than Tenant, whether or not expressly or implicitly by Landlord, Tenant
shall, nevertheless, at all times, remain fully responsible and jointly and
severally liable for the payment of the rent and for compliance with all
other obligations imposed upon Tenant under the terms, provisions and
covenants of this Lease. Any assignment or sublease shall contain a provision
whereby the assignee or subtenant agrees to comply with and be bound by all
of the terms, covenants, conditions, provisions and agreements of this Lease,
and Tenant shall deliver to Landlord, promptly after execution, an executed
copy of each assignment or sublease and an agreement of compliance by each
assignee or subtenant in form and substance acceptable to Landlord. Any
sublease shall also contain a provision that in the event of default by
Tenant hereunder and a termination of this Lease by Landlord, such subtenant
shall, at Landlord's option, attorn to Landlord as if Landlord were the
landlord under the sublease. Notwithstanding anything herein to the
contrary, Landlord specifically agrees that Tenant shall have the right to
assign this Lease to a major theater operator (which shall mean an operator
which has 500 or more screens in operation), subject to Landlord's prior
written consent as provided hereinabove, provided, however, that Tenant shall
remain liable hereunder, unless Landlord otherwise specifically agrees in
writing at the time of Tenant's request.
13.2 OPTION TO CANCEL. Upon receipt of Tenant's written request for
Landlord's consent to subletting, assignment, transfer or occupancy by
someone other than Tenant, Landlord shall have the option to cancel this
Lease as of the date the requested subletting, assignment, transfer or
occupancy by someone other than Tenant is to be effective. Landlord shall
exercise its option to cancel this Lease by written notice to Tenant within
sixty (60)days after Landlord receives Tenant's request for Landlord's
consent. In the event Landlord elects to cancel the Lease pursuant hereto
during the initial Lease Term Landlord shall pay to Tenant as of the
effective date of the transfer, the unamortized cost of Tenant's Work
amortized on a straight line basis over the initial Lease Term
Page 18
13.3 RIGHT TO COLLECT RENTS DIRECTLY. Upon the occurrence of an "event of
default" as set forth in Section 14 hereof, if all or any part of the
Premises is then assigned, sublet, transferred or occupied by someone other
than Tenant, then, in addition to any other remedies provided in this Lease
or provided by law, Landlord, at its option, may collect directly from the
assignee, subtenant, transferee or occupant all rent becoming due to Tenant
by reason of the assignment, sublease, transfer or occupancy. Any collection
directly by Landlord from the assignee or subtenant shall not be construed to
constitute a novation or a release of Tenant from the further performance of
its obligations under this Lease.
13.4 EXCESS RENT. If Tenant assigns this Lease or sublets all or a portion
of the Premises for an amount in excess of the Minimum Annual Rental (or the
pro rata share of Minimum Annual Rental in the case of a sublease of a
portion of the Premises), then Tenant shall pay to Landlord, as rent, fifty
percent (50%) of such excess received by Tenant.
ARTICLE 14
DEFAULTS BY TENANT; REMEDIES
14.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute a default by Tenant and a breach of this Lease:
(a) Failing or refusing to pay any amount of Minimum Annual Rental or
Additional Rent when due in accordance with the provisions of this Lease;
(b) [Intentionally deleted.]
(c) Failing or refusing to perform fully and promptly any covenant or
condition of this Lease, other than those specified in subparagraph (a)
above, the breach of which Tenant is capable of curing after reasonable
notice from Landlord; or
(d) Entering into a transfer of Tenant's interest in the Lease or the
Premises contrary to the provisions of Article 13; or understating Gross
Sales by more than six percent (6%), as set forth in Article 4, Section 4.4;
and committing any other breach of the Lease which is not capable of cure.
14.2 NOTICES. Following the occurrence of any of the defaults specified in
subparagraphs (a), (b) and (c) of Section 14.1, Landlord shall give Tenant,
and any subtenant, a written notice specifying the nature of the default and
the provisions of this Lease breached and demanding that Tenant, and any
subtenant, either fully cure each such default within the time period
specified in the correspondingly lettered subparagraphs below or quit the
Premises and surrender the same to Landlord:
(a) For nonpayment of Minimum Annual Rental or Additional Rent, five
(5) days;
(b) For a curable default, a reasonable period not to exceed ten (10)
days, provided, however, that if such default cannot be cured within said
time period, Tenant shall be deemed to have cured such default if Tenant so
notifies Landlord in writing, commences cure of the default within said time
period, and thereafter diligently and in good faith continues with and
actually completes said cure; and
(c) With regard to those noncurable defaults specified in subparagraph
(d) of Section 14.1, Landlord shall give Tenant, and any subtenant, a written
notice specifying the nature of the default and the provisions of this Lease
breached and Landlord shall have the right to demand in said notice that
Tenant quit the Premises within five (5) days.
To the extent permitted by applicable State law, the time periods provided in
this Section 14.2 for cure of Tenant's defaults under this Lease or for
surrender of the Premises shall be in lieu of, and not in addition to, any
similar time periods described by applicable State law as a condition
precedent to the commencement of legal action against Tenant for possession
of the Premises.
14.3 LANDLORD'S RIGHTS AND REMEDIES. Should Tenant fail to cure within the
time periods specified in Section 14.2 any default specified in subparagraph
(a), (b) or (c) of Section 14.1, or fail to quit the Premises in accordance
with subparagraph (c) of Section 14.2 with respect to any default specified
in subparagraph (d) of Section 14.1, Landlord may exercise any of the
following rights without further notice or demand of any kind to Tenant or
any other person, except as required by applicable State law:
(a) The right of Landlord to terminate this Lease and Tenant's right to
possession of the Premises and to reenter the Premises, take possession
thereof and remove all persons therefrom, following which Tenant shall have
no further claim thereon or hereunder;
(b) The right of Landlord, without terminating this Lease and Tenant's
right to possession of the Premises, to reenter the Premises and occupy the
whole or any part thereof for and on account of Tenant
Page 19
and to collect any unpaid rentals and other charges, which have become
payable, or which may thereafter become payable; or
(c) The right of Landlord, even though it may have reentered the
Premises, in accordance with subparagraph (b) of this Section 14.3, to elect
thereafter to terminate this Lease and Tenant's right to possession of the
Premises.
Should Landlord have reentered the Premises under the provisions of
subparagraph (b) of this Section 14.3, Landlord shall not be deemed to have
terminated this Lease, the liability of Tenant to pay rental or other charges
thereafter accruing, or Tenant's liability for damages under any of the
provisions hereof, by any such reentry or by any action, in unlawful detainer
or otherwise, to obtain possession of the Premises, unless Landlord shall
have notified Tenant in writing that it has so elected to terminate this
Lease and Tenant's right to possession. Tenant further covenants that the
service by Landlord of any notice pursuant to the unlawful detainer statutes
of the State where the Shopping Center is located and the surrender of
possession pursuant to such notice shall not (unless Landlord elects to the
contrary at the time of, or at any time subsequent to, the serving of such
notice and such election is evidenced by a written notice to Tenant) be
deemed to be a termination of this Lease. In the event of any reentry or
taking possession of the Premises as aforesaid, Landlord shall have the
right, but not the obligation, to remove therefrom all or any part of the
Fixtures or Personal Property located therein and to place the same in
storage at a public warehouse at the expense and risk of Tenant. The rights
and remedies given to Landlord in this Section 14.3 shall be additional and
supplemental to all other rights or remedies which Landlord may have under
laws in force when the default occurs.
14.4 LANDLORD'S DAMAGES. Should Landlord terminate this Lease and Tenant's
right to possession of the Premises, pursuant to the provisions of
subparagraph (a) or (c) of Section 14.3 or the provisions of Article 17,
Section 17.1, Landlord may recover from Tenant as damages, all of the
following:
(a) The worth at the time of award of any unpaid rental that had been
earned at the time of such termination;
(b) The worth at the time of award of the amount by which the unpaid
rental that would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid
rental for the balance of the Lease Term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided;
(d) 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, any costs or expense
incurred by Landlord in (i) retaking possession of the Premises, including
reasonable attorney fees therefor, (ii) maintaining or preserving the
Premises after such default, (iii) preparing the Premises for reletting to a
new tenant, including repairs or alterations to the Premises for such
reletting, (iv) leasing commissions, and (v) any other costs necessary or
appropriate to relet the Premises; and
(e) At Landlord's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the laws of
the State where the Shopping Center is located.
As used in subparagraphs (a) and (b) of the Section 14.4, the "worth at the
time of award" is computed by allowing interest at the maximum rate allowed
by the usury or similar law, if any, of the State in which the Shopping
Center is located. As used in subparagraph (c) of this Section 14.4, "the
worth at the time of award" is computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%).
All rental, other than Minimum Annual Rental shall, for the purposes of
calculating any amount due under the provisions of subparagraph (c) of this
Section 14.4, be computed on the basis of the average monthly amount thereof
accruing during the immediately preceding sixty (60) month period, except
that, if it becomes necessary to compute such rental before such a sixty (60)
month period has occurred, then such rental shall be computed on the basis of
the average monthly amount hereof accruing during such shorter period.
14.5 FIXTURES AND PERSONAL PROPERTY. Without limitation to Landlord's rights
under Article 10, in the event of Tenant's default, all of Tenant's
merchandise, Fixtures and Personal Property shall remain on the Premises and,
continuing during the length of said default, Landlord shall have the right
to take the exclusive possession of same and to use the same free of rent or
charge until all defaults have been cured or, at its option, to require
Tenant to remove same forthwith.
14.6 NO WAIVER. The waiver by Landlord of any breach of any term, covenant or
condition contained in this Lease shall not be deemed to be a waiver of such
term, covenant or condition of any subsequent breach thereof, or of any other
term, covenant or condition contained in this Lease. Landlord's subsequent
acceptance of partial rental or performance by Tenant shall not be deemed to
be an accord and satisfaction
Page 20
or a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease or of any right of Landlord to a forfeiture of the
Lease by reason of such breach, regardless of Landlord's knowledge of such
preceding breach at the time of Landlord's acceptance. No term, covenant or
condition of this Lease shall be deemed to have been waived by Landlord
unless such waiver be in writing and signed by Landlord.
Notwithstanding anything to the contrary contained in this Article 14, Tenant
waives (to the fullest extent permitted under law) any written notice (other
than such notice as this Article 14 specifically requires) which any statute
or law now or hereafter in force prescribes be given Tenant.
14.7 INTEREST. Any amounts due from Tenant under the provisions of this
Lease which are not paid when due shall bear interest at the rate of two
percent (2%) over the prime rate charged from time to time by Wells Fargo
Bank (San Diego office), but not to exceed the maximum rate which Landlord is
permitted by law to charge.
ARTICLE 15
DEFAULTS BY LANDLORD; REMEDIES
15.1 DEFAULTS BY LANDLORD. If Landlord shall neglect or fail to perform or
observe any of the terms, covenants, or conditions contained in this Lease on
its part to be performed or observed within thirty (30) days after written
notice of default or, when more than thirty (30) days shall be required
because of the nature of the default, if Landlord shall fail to proceed
diligently to cure such default after written notice thereof, then Landlord
shall be liable to Tenant for any and all damages sustained by Tenant as a
result of Landlord's breach; provided, however, it is expressly understood
and agreed that (a) any money judgment resulting from any default or other
claim arising under this Lease shall be satisfied only out of the current
rents, issues, profits and other income Landlord receives from its operation
of the Shopping Center, net of all current operating expenses if any paid by
Landlord, and debt service associated with said operation ("Net Income" for
purposes of this Article 15 only), (b) no other real, personal or mixed
property of Landlord, wherever located, shall be subject to levy on any such
judgment obtained against Landlord, and (c) if such Net Income is
insufficient to satisfy such judgment, Tenant will not institute any further
action, suit, claim or demand, in law or in equity, against Landlord for or
on the account of such deficiency, and (d) such neglect or failure shall not
constitute consent by Landlord for Tenant to perform or observe such terms,
covenants or conditions at Landlord's expense. Tenant hereby waives, to the
extent permitted under law, any right to satisfy said money judgment against
Landlord except from Net Income.
15.2 MORTGAGEE NOTICE AND RIGHT TO CURE. If the Premises or any part thereof
are at any time subject to any mortgage or deed of trust and this Lease or
the rentals due from Tenant hereunder are assigned to the mortgagee or trust
deed holder ("Mortgagee"), Tenant agrees to give each Mortgagee, by
registered mail, a copy of any notice of default served upon Landlord,
provided that Tenant has been previously notified in writing of the address
of such Mortgagee. Tenant further agrees that if Landlord fails to cure such
default within the time provided for in this Lease, then the Mortgagee shall
have an additional thirty (30) days within which to cure such default, or if
such default cannot reasonably be cured within that time, then such
additional time as may be necessary if, within said 30-day period, any
Mortgagee has commenced and is diligently pursuing the remedies necessary to
cure the default (including but not limited to commencement of foreclosure
proceedings if necessary to affect such cure), in which event this Lease
shall not be terminated while such remedies are being so diligently pursued.
If and when the Mortgagee has made performance on behalf of Landlord, such
default shall be deemed cured.
ARTICLE 16
ABANDONMENT
[Intentionally Deleted.]
ARTICLE 17
BANKRUPTCY; INVOLUNTARY TRANSFERS
17.1 RIGHT OF TERMINATION. Should any of the following events occur,
Landlord may terminate this Lease and any interest of Tenant therein,
effective with the commencement of the event:
(a) Proceedings are instituted whereby all, or substantially all, of
Tenant's assets are placed in the hands of a receiver, trustee or assignee
for the benefit of Tenant's creditors, and such proceedings continue for at
least thirty (30) days;
(b) Any creditor of Tenant institutes judicial or administrative
process to execute on, attach or otherwise seize any of Tenant's merchandise,
Fixtures or Personal Property, located on the Premises and
Page 21
Tenant fails to discharge, set aside, exonerate by posting a bond, or
otherwise obtain a release of such property within thirty (60) days;
(c) A petition is filed for an order of relief under the Federal
Bankruptcy Code or for an order or decree of insolvency or reorganization or
rearrangement under any state or federal law, and is not dismissed within
thirty (60) days;
(d) Tenant makes a bulk sale of all, or substantially all, of Tenant's
merchandise, Fixtures or Personal Property located on the Premises, except in
accordance with Article 10, Section 10.1, or except in a permitted Occupancy
Transaction under Article 13, and fails to replace the same with similar
items of equal or greater value and utility within three (3) days; or
(e) [Intentionally deleted.]
(f) [Intentionally deleted.]
Landlord may require Tenant to deliver periodic financial statements and
other information reasonably required by Landlord in order to verify Tenant's
current net worth. If a court of competent jurisdiction determines that any
of the foregoing events is not a default under this Lease, and a trustee is
appointed to take possession (or if Tenant remains a debtor in possession),
and such trustee or Tenant transfers Tenant's interest hereunder, then
Landlord shall receive, as Additional Rent, the difference between the rent
(or other consideration) paid in connection with such transfer and the rent
payable by Tenant hereunder. Any assignee pursuant to the provisions of any
bankruptcy law shall be deemed without further act to have assumed all of the
obligations of the Tenant hereunder arising on or after the date of such
assignment. Any such assignee shall upon demand execute and deliver to
Landlord an instrument confirming such assumption. This is a lease of real
property in a shopping center within the meaning of Section 365(b)(3) of the
Bankruptcy Code, 11 U.S.C. Section 101 ET. SEQ.
17.2 REQUEST FOR INFORMATION. Within ten (10) days after Landlord's request
therefor, Tenant or Guarantor of this Lease shall provide Landlord and
Landlord's mortgagee or proposed mortgagee, as Landlord shall specify, such
financial, legal and business information concerning any of the events
described in Section 17.1 as Landlord may request, provided, however, that
Tenant shall not be required to provide such information more than two (2)
times in any one calendar year.
ARTICLE 18
RECONSTRUCTION
18.1 DAMAGE, DESTRUCTION.
(a) Tenant shall give Landlord immediate notice of any casualty loss.
Tenant shall adjust, collect and compromise any and all claims, with the
consent of Landlord and Landlord's mortgagee or trust deed holder ("Lender"),
such consent not to be unreasonably withheld or delayed, and Landlord and
Lender shall have the right to join with Tenant therein. All proceeds of any
insurance shall be payable to a Trustee which shall be as federally insured
bank or other financial institution, selected by Landlord and Tenant and
reasonably satisfactory to Lender (the "Trustee"). If the Premises shall be
covered by a mortgage, Lender, if it so desires, shall be the Trustee. Each
insurer is hereby authorized and directed to make payment under said policies
directly to such Trustee instead of to Landlord and Tenant jointly; and
Tenant hereby appoints such Trustee as Tenant's attorney-in-fact to endorse
any draft therefor for the purposes set forth in this Lease after approval by
Tenant of such Trustee, if Trustee is other than Lender.
(b) In the event of any casualty (whether or not insured against)
resulting in damage to the Premises or any part thereof, the Term shall
nevertheless continue and there shall be no abatement or reduction of Minimum
Annual Rental, Additional Rent or any other sums payable by Tenant hereunder.
The entire proceeds paid as a result of any property casualty payable under
insurance required under Article 12, less any actual and reasonable expenses
incurred by Landlord or Tenant in collecting such proceeds ("Net Proceeds")
of such insurance payment shall be retained by the above-mentioned Trustee
and, promptly after such casualty and receipt of the Net Proceeds by the
Trustee, Tenant shall commence and diligently continue to perform the
restoration to the Premises. Upon payment to Trustee of such Net Proceeds,
the Trustee shall, to the extent available, make the Net Proceeds available
to Tenant for restoration, in accordance with the provisions of Section 18.2.
Tenant shall to the extent of available insurance proceeds promptly complete
restoration of the Premises as nearly as possible to their value, condition
and character immediately prior to such damage ("Restoration")(including
Tenant's making any desired Alterations allowed hereunder) and the Net
Proceeds of such loss shall thereupon be payable to Tenant, subject to the
provisions of Section 18.2 hereof.
18.2 RESTORATION. The Net Proceeds shall be disbursed by the Trustee in
accordance with the following conditions:
Page 22
(a) At the time of any disbursement, no event of default shall exist
(regardless of whether Tenant shall have received notice and an opportunity
to cure) and no construction, mechanics' or materialmen's liens shall have
been filed and remain undischarged and unbonded.
(b) If the cost of Restoration exceeds $100,000, then prior to
commencement of the Restoration, the architects, contracts, contractors,
plans and specifications for Restoration shall have been approved by Landlord
and Lender, which approval shall not be unreasonably withheld or delayed.
(c) Each request for disbursement shall be accompanied by a certificate
of Tenant, signed by the President, Treasurer or any Vice President of
Tenant, describing the work for which payment is requested, stating the cost
incurred in connection therewith and stating that Tenant has not previously
received payment for such work and the certificate to be delivered by Tenant
upon completion of the work shall, in addition, state that the work has been
completed and complies with the applicable requirements of this Lease.
(d) Disbursements shall be made from time to time in an amount not
exceeding the cost of the work completed since the last disbursement upon
receipt of (1) satisfactory evidence, including architects' certificates of
the stage of completion, of the estimated cost of completion and of
performance of the work to date in a good and workmanlike manner in
accordance with the contracts, plans and specifications, (2) waivers of
liens, (3) a satisfactory bring down of title insurance, and (4) other
evidence of cost and payment so that Landlord can verify that the amounts
disbursed from time to time are represented by work that is completed in
place and free and clear of mechanics', construction and materialmen's lien
claims.
(e) The Trustee may retain ten percent of the Net Proceeds until the
Restoration is fully completed in the reasonable judgment of the Lender.
(f) The Net Proceeds shall be kept in a separate interest-bearing
federally insured account by the Trustee or by Lender.
Any sum held by Trustee which remains upon completion of Restoration and
payment in full of all amounts due with respect thereto, shall be paid to
Landlord.
18.3 LAST YEAR OF TERM. If, during the last year of the Lease Term (or any
extension thereof), the Premises are damaged to the extent of twenty-five
percent (25%) or more of their replacement value, either Landlord or Tenant
may terminate this Lease by giving at least thirty (30) days prior written
notice to the other within thirty (30) days after the date of the damage.
However, if Tenant, within ten (10) days after receipt of any such notice
from Landlord, gives written notice to Landlord agreeing to exercise an
option to extend which would otherwise have been available to Tenant at the
end of the last year , extending the Lease Term for a period of five years
from the end of such last year in accordance with the terms of said Option,
then the Lease shall not terminate, and Tenant shall restore the Premises as
provided herein. If the Lease is terminated pursuant to this Section 18.3,
all Net Proceeds shall be paid to Landlord.
ARTICLE 19
CONDEMNATION
19.1 CONDEMNATION. If more than twenty-five percent (25%) of either the
Building Improvements or Tenant's Parcel is taken or sold under such threat,
or the amount of parking available in the Shopping Center following any such
taking is insufficient to meet the governmental parking requirements for
Tenant's operation in the Premises as it exists as of the effective date of
such condemnation, then in any such case, either Landlord or Tenant may
terminate this Lease as of the date that the condemning authority takes
possession by delivery of written notice of such election within twenty (20)
days after such party has been notified of the taking or, in the absence
thereof, within twenty (20) days after the condemning authority shall have
taken possession.
19.2 CONTINUATION OF LEASE AFTER CONDEMNATION. If this Lease is not
terminated by Landlord or Tenant, it shall remain in full force and effect as
to the portion of the Premises remaining; provided, however, that the Minimum
Annual Rental shall be reduced in proportion to the reduction of the Floor
Area of the Premises. Rental due hereunder shall not otherwise be abated or
reduced. In the event the Lease remains in full force and effect as to the
portion remaining, Tenant shall, at Tenant's expense, restore the Premises
to a complete unit of like quality and character, except as to size, as
existed prior to the date on which the condemning authority took possession,
provided, however, that Tenant's obligation to restore the Premises is
limited to the extent of condemnation proceeds made available to Tenant as
provided hereinbelow.
19.3 RESTORATION AND ALLOCATION OF CONDEMNATION AWARD. Subject to the
provisions of this Article 19, Tenant hereby irrevocably assigns to Lender or
to Landlord, in that order, any award or payment in respect to any
Condemnation of the Premises, except that nothing in this Lease shall be
deemed to require (i) the assignment to Landlord or Lender of any award or
payment on account of Tenant's leasehold interest hereunder, Tenant's trade
fixtures, or other tangible personal property, moving expenses and similar
claims, if available, to the extent Tenant shall have right to make a
separate claim therefor against the condemnor or (ii) any act or circumstance
that impairs Tenant's right to any such award or payment.
Page 23
In the event the Lease is terminated pursuant to Section 19.1 hereof,
the entire award in the condemnation proceeding shall be paid to Lender, or
if there is no Lender, to Landlord or, if the amount of such award is greater
than the amount owing to Lender, the excess shall be paid to Landlord .
In the event the Lease is not terminated, the amount of the
condemnation award shall be retained by Landlord, and Landlord and Lender
shall, to the extent received, make that portion of the award (after
deducting therefrom all expenses incurred in the collection thereof) ("Net
Award") equal to the cost of Restoration, available to Tenant for
Restoration, in accordance with the provisions of Section 18.2 hereinabove
(using "Net Award" in lieu of "Net Proceeds" for purposes hereof), and
promptly after such Condemnation, Tenant shall commence and diligently
continue to perform the Restoration of the Premises. Upon completion of the
Restoration the amount of the Net Award which remains shall be the property
of Lender or Landlord in that order.
ARTICLE 20
SALE OR MORTGAGE BY LANDLORD
20.1 SALE OR MORTGAGE. From and after the Effective Date, Landlord may at
any time, without the consent of Tenant, sell, purchase, exchange, transfer,
assign, lease or convey Landlord's interest in whole or in part, in the
Lease, the Premises, the realty underlying the Premises and/or any portion of
or interest in the realty or improvements in the Shopping Center
(collectively referred to in Article 20 and 21 as "Sale").
20.2 RELEASE ON SALE. From and after a Sale, Landlord shall be released from
all liability toward Tenant and Tenant's successors and assigns arising from
this Lease because of any act, occurrence or omission of Landlord occurring
after such Sale, provided Landlord's purchaser or assignee expressly assumes
Landlord's duties and covenants under this Lease.
20.3 ESTOPPEL CERTIFICATE. Tenant shall at any time during the Term of this
Lease, within five (5) days of written notice from Landlord, execute and
deliver to Landlord a statement in writing, substantially in the form
attached hereto as Exhibit D, certifying that this Lease is unmodified and
in full force and effect or, if modified, stating the nature of such
modification. Tenant's statement shall include other details requested by
Landlord, such as the date to which rent and other charges are paid, Tenant's
knowledge concerning any outstanding defaults with respect to Landlord's
obligations under this Lease and the nature of such defaults if there are
claims. Any such statement may be relied upon conclusively by any
prospective purchaser or encumbrancer of the Premises. Tenant's failure to
deliver such statements within such time shall be conclusive upon Tenant that
this Lease is in full force and effect, except to the extent any modification
has been represented by Landlord, and that there are no uncured defaults in
the Landlord's performance, and that not more than one month's rent has been
paid in advance.
ARTICLE 21
SUBORDINATION; ATTORNMENT
21.1 SUBORDINATION. This lease is junior and subordinate to all ground
leases, mortgages, deeds of trust, and other security instruments now or
hereafter affecting the property of which the Premises are a part and to all
advances made on the security thereof, and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any mortgagee, first
trustee or ground lessor elects to have this Lease prior to the lien of its
mortgage, deed of trust or ground lease, and gives written notice thereof to
Tenant, this Lease shall be deemed prior thereto. Within ten (10) days after
the receipt of a written request from Landlord, from any first mortgagee or
first deed of trust trustee or beneficiary of Landlord, or from any lessor of
Landlord, Tenant will, in writing, subordinate its rights under this Lease to
the lien or security interest of the first mortgage, the first deed of trust
(including all future advances made thereunder, subsequent to the Effective
Date of this Lease), or the interest of any lease in which Landlord is the
lessee, as such may burden the Premises or any building hereafter placed upon
the land of which the Premises are a part. Notwithstanding the foregoing or
any other provision of this Lease, Tenant's obligation to subordinate its
rights hereunder shall be conditioned upon Tenant's receipt from any party
seeking such superior position of a non-disturbance agreement to the effect
that so long as Tenant pays the rentals due under this Lease and otherwise
complies with the terms hereof, Tenant's occupancy hereunder shall not be
disturbed. Tenant shall agree to attorn directly to any such party.
21.2 ATTORNMENT. In the event any proceedings are brought for foreclosure,
or in the event of the exercise of the power of sale under any mortgage or
deed of trust made by Landlord covering the Premises or the expiration or
earlier termination of any ground lease or master lease in which Landlord is
the lessee, Tenant shall attorn to the purchaser upon any such foreclosure or
sale or the lessor of any such lease and recognize such purchaser or lessor
as Landlord under this Lease.
21.3 SUBORDINATION OF LEASE TO CERTAIN AGREEMENTS WITH THIRD PARTIES. Upon
the request of Landlord, Tenant will subordinate its rights hereunder to any
Declaration of Restrictions and Grant of Easements or any other operation and
reciprocal easement agreement for access and parking between
Page 24
Landlord and the Owner(s) of any property located within or adjacent to the
Shopping Center whenever, in the reasonable discretion of Landlord, it is
determined that any such agreement would be beneficial to the use and
operation of the Shopping Center.
21.4 EXECUTION OF DOCUMENTS. Tenant, upon request of any party in interest,
shall execute promptly such instruments and certificates to carry out the
intent of this Article 21 as shall be requested by Landlord.
ARTICLE 22
QUIET ENJOYMENT
22.1 LANDLORD'S COVENANT. If Tenant is not in breach under the covenants
made in this Lease, Landlord covenants that Tenant shall have peaceful and
quiet enjoyment of the Premises without hindrance on the part of Landlord.
Landlord will defend Tenant in the peaceful and quiet enjoyment of the
Premises against claims of all persons claiming through or under the Landlord.
ARTICLE 23
HOLDING OVER
23.1 EFFECT OF HOLDING OVER. If Tenant remains in possession of the Premises
after the expiration of the term of this Lease without executing a new Lease,
or after Landlord has declared a forfeiture by reason of a default by Tenant,
then such holding over shall be construed as a tenancy from month to month,
subject to all the conditions, provisions and obligations of this Lease
insofar as they are applicable to a month-to-month tenancy. The Minimum
Annual Rental payable during any period of holding over should be equal to
one hundred fifty percent (150%) of the Minimum Annual Rental payable during
the period immediately preceding Tenant's holding over.
ARTICLE 24
LIMITATION OF LIABILITY
24.1 AGREEMENT BY TENANT.
(a) In consideration of the execution of this Lease by Landlord, Tenant
agrees that if Landlord assigns its interest hereunder to a partnership, then
in the event of any actual or alleged failure, breach, or default hereunder
by said partnership:
(i) The sole and exclusive remedy shall be against the
partnership and its partnership assets;
(ii) No partner of Landlord should be sued or named as a party in
any suit or action (except as may be necessary to secure jurisdiction of the
partnership);
(iii) No service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the
partnership);
(iv) No partner of Landlord shall be required to answer or
otherwise plead to any service of process;
(v) No judgment will be taken against any partner of Landlord;
(vi) Any judgment taken against any partner of Landlord may be
vacated and set aside at any time without hearing;
(vii) The covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.
(b) Tenant agrees that each of the foregoing covenants and agreements
shall be applicable to any covenant or agreement either expressly contained
in this Lease or imposed by statute or at common law.
Page 25
ARTICLE 25
NOTICES
25.1 NOTICES. Whenever in this Lease it shall be required or permitted that
notice or demand be given or served by either party to this Lease to or on
the other, such notice or demand shall be in writing, mailed by certified
mail, or personally delivered, or forwarded by overnight courier for next
business day delivery, to the other party at the addresses specified in
Article 1. Notices personally delivered shall be deemed given on the date of
delivery. Mailed notices shall be sent by United States Postal Service,
certified mail, return receipt requested, postage prepaid and shall be deemed
to have been given on the date of the receipted signature, or on the date the
receipt is returned to the noticing party as undeliverable. Notices sent by
overnight courier, next business day delivery, shall be deemed delivered on
the next business day, as evidenced by a receipt of delivery provided by the
courier service. Either party may, by written notice delivered pursuant to
this provision, at any time designate a different address to which notices
shall be sent.
ARTICLE 26
GENERAL PROVISIONS
26.1 GOVERNING LAW. The laws of the state in which the Shopping Center is
located shall govern the validity, performance and enforcement of this Lease.
26.2 INVALIDITY. If any provision of this Lease is determined to be void by
any court of competent jurisdiction, such determination shall not affect any
other provision of this Lease and such other provisions shall remain in full
force and effect. If any provisions of this Lease are capable of two
constructions, one which would render the provision void and one which would
render the provision valid, the provision shall be interpreted in the manner
which would render it valid.
26.3 PAYMENTS. Except as may otherwise be expressly stated, each payment
required to be made by Tenant shall be in addition to and not in substitution
for other payments to be made by Tenant.
26.4 TIME OF ESSENCE. Time is of the essence of each and every provision of
this Lease.
26.5 FORCE MAJEURE. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God; inability to obtain labor, materials
or reasonable substitutes therefor, governmental restrictions, regulations,
or controls including delays caused by governmental authorities or inability
to obtain required governmental approvals, judicial orders, enemy or hostile
governmental action, civil commotion, fire or other casualty, adverse weather
conditions, and other causes beyond the reasonable control of the party
obligated to perform, shall excuse the performance by such party for a period
equal to that resulting from such prevention, delay or stoppage, except those
obligations of Tenant to pay Minimum Annual Rental and Additional Rent
pursuant to the terms of this Lease ( provided, however, that the
commencement of the obligation to pay Minimum Annual Rental and Additional
Rent shall be subject to the provisions of this paragraph as more
particularly described in Sections 3.1 and 4.1 hereof).
26.6 BROKERS. Tenant warrants that it has had no dealings with any real
estate broker or agent in connection with the negotiation and/or execution of
the Lease except Business Real Estate Brokerage Co. In the event any broker
other than the brokers acknowledged in writing by Landlord make claim for
monies owed, Tenant shall hold Landlord harmless therefrom. Any such claims
or demands or requests should be made subject to the indemnity provision of
Section 12.1.
26.7 ATTORNEY'S FEES. If either party commences any legal action or
proceeding to enforce, interpret or construe this Lease, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees
and court costs, as determined by the court. "Legal action or proceeding"
includes a declaratory relief action and any bankruptcy or insolvency
proceedings. If Landlord is involuntarily made a party defendant to any
litigation relating to this Lease or the Premises by reason of any act or
omission of Tenant, then Tenant shall hold Landlord harmless from any loss,
cost or expense, including reasonable attorney's fees and expenses as a part
of the judgment resulting therefrom.
26.8 ENTIRE AGREEMENT. This Lease and its exhibits contain all of the
agreements and conditions made between the parties with respect to the hiring
of the Premises and may not be modified orally or in any other manner other
than by a written instrument signed by all the parties to this Lease.
26.9 LIABILITY OF SUCCESSORS. The covenants and conditions herein contained
shall, subject to the provisions as to assignment, apply to and bind the
heirs, successors, executors, administrators and assigns of all of the
parties hereto and all of the parties hereto shall be jointly and severally
liable for the covenants contained herein.
ARTICLE 27
CONDITIONS TO LEASE
Page 26
27.1 CONDITIONS TO LEASE. Notwithstanding anything herein to the contrary,
this Lease is contingent upon Landlord obtaining financing for construction
of the Shopping Center, all approvals required by governmental authorities,
and all other approvals necessary to implement the provisions of this Lease.
If Landlord does not obtain such financing and all such approvals, this Lease
shall be terminated upon notice from Landlord to Tenant. Further, Landlord
and Tenant acknowledge that as of the date of this Lease, Landlord is in
escrow to buy, but does not own hold fee title to the Shopping Center, and
that both Landlord and Tenant's performance hereunder shall be conditioned
upon Landlord's obtaining title. Landlord and Tenant agree that neither
party shall be obligated to perform its obligations hereunder until such time
as Landlord obtains title to the Shopping Center, and in the event it is
determined that Landlord will be unable to obtain title to the Shopping
Center, then either party shall have the right to terminate this Lease upon
written notice to the other. In the event of a termination of the Lease as
provided hereinabove, the Lease shall be deemed null and void, and Landlord
and Tenant shall have no further rights or obligations to each other
hereunder except that Landlord shall return any deposits previously delivered
from Tenant to Landlord pursuant hereto. In the event of any such
termination, Landlord and Tenant shall each pay the costs incurred by it, or
its employees, contractors, consultants or other agents. Landlord shall
satisfy the foregoing contingencies within one (1) year following the
execution of this Lease. In the event that such conditions have not been
satisfied by such date, Landlord, at its option, may elect to extend the
period for satisfying such contingencies for an additional forty-five (45)
days, subject to Landlord agreeing to reimburse Tenant for all costs incurred
by or for Tenant in connection with implementing this Lease during such
45-day period, including, without limitation, the preparation of plans,
specifications, tests and other such items. In the event Landlord elects not
to pay such expenses, Tenant may agree to extend the contingency period or to
terminate the Lease, as Tenant so elects and in its sole discretion.
ARTICLE 28
MEMORANDUM OF LEASE
This Lease Agreement shall not be recorded, but a Memorandum of this
Lease Agreement, in a form acceptable to both Landlord and Tenant shall be
executed and acknowledged by the parties and recorded in the county in which
the Premises are located, at Tenant's expense.
IN WITNESS WHEREOF, the Landlord and Tenant have duly executed this Lease as
of the day and year first above written.
TENANT: LANDLORD:
CINEMA STAR LUXURY THEATERS, INC. LANDGRANT CORPORATION
a California corporation a California corporation
By: /s/ Frank Moreno By: /s/ Sam Marasco
----------------------------------- -------------------------------
Signature Title: President
Frank Moreno ----------------------------
-----------------------------------
Name By: Chris Smith
-------------------------------
President & COO Title: Executive Vice President
----------------------------------- ---------------------------
Title
By: /s/ Norman Dowling
-----------------------------------
Signature
Norman Dowling
-----------------------------------
Name
Vice President & CFO
-----------------------------------
Title
Page 27
EXHIBIT A
SITE PLAN OF THE SHOPPING CENTER
Exhibit A-2
EXHIBIT B
DESCRIPTION OF THE PREMISES
[To Be Provided]
Exhibit B-1
EXHIBIT C
CONSTRUCTION OF IMPROVEMENTS
THESE CONSTRUCTION OF IMPROVEMENTS provisions are made a part of the
Lease (the "Lease") between Landlord and Tenant to which these CONSTRUCTION
OF IMPROVEMENTS provisions are attached as EXHIBIT C. Except as specifically
provided in this EXHIBIT C, defined terms shall have the meanings assigned
them in the Lease.
1. LANDLORD'S WORK. As a condition to Tenant's obligations under the
Lease, Landlord shall be responsible for the full completion, at Landlord's
sole cost and expense (subject to paragraph 10 hereof), of all of the
following (collectively, "Landlord's Work"):
a. GRADING. Landlord shall, at Landlord's sole cost and expense,
cause the land in the Tenant Parcel to be cut, filled and graded (the
"Grading Work") in accordance with final plans which have been approved by
Tenant in writing, such approval not to be unreasonably withheld (the
"Grading Plans"). The Grading Plans shall not be materially changed by
Landlord or Tenant without the prior consent of the other, which consent
shall not be unreasonably withheld or delayed. Tenant shall be provided with
a copy of the prepared foundation soils test results. Landlord agrees to
obtain all necessary permits for the Grading Work and to cause its contractor
to promptly commence and diligently pursue the Grading Work in accordance
with the Grading Plans. Subject to the provisions of paragraph 8 hereof,
Landlord covenants and agrees (i) to use reasonable efforts and due diligence
to complete the Grading Work, as herein contemplated, in accordance with the
Grading Plans; and (ii) to obtain approval for all curb cuts indicated on the
Grading Plans. Landlord agrees to keep Tenant advised on a regular basis as
to Landlord's progress in completing the Grading Work.
b. SITE WORK. Landlord, at its sole cost and expense, shall
cause a contractor licensed in the State of California to complete (i) the
construction and installation of the parking areas and all paving (including
heavy-duty paving) and curbing for parking areas (including sidewalk curbs
and sidewalks in front of the Building), vehicular access and service roads,
driveways, walkways, landscaping and parking lot lighting within the Tenant
Parcel prior to Tenant's opening for business; and (ii) the construction and
installation to the Building, of utility lines sufficient for Tenant's
initial Permitted Use for telephone, permanent electricity, sanitary sewer,
domestic water, fire protection water (if required by the City of Oceanside),
with a fire sprinkler detector check, vault and post indicator valve, and the
completion of the storm water drainage system, all prior to the delivery of
the Building to Tenant; and (iii) the construction and installation of a
pylon sign and, at Landlord's election, other site identification signage
prior to Tenant's opening for business, subject to Tenant's paying for its
sign panel thereon, and for its pro rata share of the cost of the pylon sign
as more particularly described in Section 10.7 of the Lease (it being agreed
that Tenant shall be responsible to construct at Tenant's election and
expense, a Monument Sign, more specifically described in Section 10.7 of the
Lease, and that said Monument Sign is not a part of Site Work)(the work
described in (i), (ii) and (iii) collectively referred to as the "Site
Work"). Landlord's plans and specifications for the Site Work shall be
prepared at Landlord's direction and sole expense, and shall be subject to
the prior written approval of Tenant not to be unreasonably withheld or
delayed. The Landlord's plans and specifications shall contain the intended
location of utility lines to be installed for the Building. No change shall
be made to any such locations unless mutually approved by both parties hereto.
c. PAD SURVEY. Landlord shall complete the Grading Work for the
land in substantial conformance with the Grading Plans, and shall promptly
thereafter cause a certified survey to be made of the footprint area of the
Building (the "Pad Survey"). The Pad Survey shall be promptly provided to
Tenant and shall include the certification by Landlord's surveyor as to the
line and grade, and a certification by Landlord's soils engineer as to soil
compaction. Tenant shall have the right to verify the accuracy of the
certifications.
d. BUILDING CONSTRUCTION. Promptly following completion of the
Grading and delivery of the certified Pad Survey and upon receipt of all
required permits and approvals therefor, Landlord shall commence and pursue
with due diligence to completion the construction of the Tenant Building; the
expense of such construction to be paid as provided in paragraph 10 hereof.
Tenant's Building shall be constructed in a good and workmanlike manner in
compliance with all applicable laws, and in accordance with plans and
specifications prepared by Landlord and Tenant in accordance with this
Paragraph 1(d). The Tenant Building will consist of a "Building Shell" and
"Tenant-Required Improvements," each as hereinafter defined. In the
construction of the Tenant Building Landlord shall endeavor to achieve a
reasonable balance among cost, schedule and quality.
i. Landlord shall, at its expense as part of Landlord's
Construction Contribution, prepare or cause the preparation of the plans,
specifications and working drawings for the "Building Shell" described in
SCHEDULE 1 attached hereto. The Building Shell shall be based on the
Tenant's Concept Plan (consisting of a building footprint) and Tenant's
Design Information defined in paragraph 1(d)(iii) hereof. Tenant shall have
the right to approve Landlord's plans, specifications and working drawings
Exhibit C-2
in accordance with paragraph 1(i) hereof. Landlord shall separately provide
building elevations to Tenant which Tenant shall review and approve in
accordance with the Construction Schedule attached hereto as SCHEDULE 2
("Construction Schedule").
ii. Tenant shall, at its sole expense without reimbursement,
prepare or cause the preparation of the plans, specifications and working
drawings for the "Tenant-Required Improvements" which are listed in Schedule
3 hereto. Tenant shall cause the plans, specifications and working drawings
of the Tenant-Required Improvements to be delivered to Landlord on or before
the date set forth for such delivery in the Construction Schedule attached
hereto. Landlord will have the right to approve and price the plans,
specifications and working drawings, which approval shall not be unreasonably
withheld or delayed.
iii. In connection with the preparation of the Building Shell,
Tenant shall deliver the following information (collectively, "Tenant Design
Information") to Landlord's architect in sufficient time for Landlord's
architect to incorporate them into Landlord's plans and deliver the working
drawings for the Building Shell within the time frame shown on the
Construction Schedule:
SCHEMATIC INFO
- Programming information for box office and exterior
queuing design.
- Required clear ceiling heights in theaters.
- Tenant approval of exterior design of Tenant Building.
DD INFO
- CADD floor plans.
- HVAC equipment specifications and locations.
- Floor slab block out areas and preferred slab expansion
joint locations.
- Structural support requirements and locations for any
TI improvements to be supported or braced from the
Building Shell structure.
- Anticipated electric service requirements.
CD INFO
- Sewer connection requirements.
- Specifications for illuminated exterior signage.
- Trash compactor specs- compactor pad and electrical
conduit stubbed to compactor location; compactor and
installation is by Tenant.
- Anticipated water, sprinkler and gas service
requirements.
- Tenant approval of DD package.
e. PERMITS. Landlord at its sole expense shall obtain or cause
to be obtained all building permits, licenses and other governmental
approvals required for the construction of the Site Work. Landlord, at its
sole expense as part of the Landlord Construction Contribution, shall obtain
or cause to be obtained all building permits, licenses and other governmental
approvals required for the construction of the Building Shell. Tenant, at
the cost of Landlord as part of the Landlord Construction Contribution,
shall obtain or cause to be obtained all building permits required to permit
the construction of the Tenant-Required Improvements. Landlord shall be
responsible for obtaining final sign-off from building inspectors on the
construction of the Building Shell and the Tenant-Required Improvements. The
parties contemplate that, following such sign-off, Tenant shall cause the
installation of FF&E (defined in paragraph 2(a) hereof). Following the
completion of such installation, Landlord and Tenant shall assist and
cooperate with each other in obtaining a preliminary and final certificate of
occupancy for the Premises.
f. INSPECTIONS. During the course of construction of the
Landlord's Work, Tenant may, in cooperation with Landlord's contractor, enter
the Premises and the Tenant Parcel for purposes of inspecting the Landlord's
Work; Tenant may bring its consultants and representatives for purposes of
such inspection(s), so long as such parties cooperate with Landlord's
contractor and do not interfere with or delay completion of Landlord's Work.
Exhibit C-3
g. SUBSTANTIAL COMPLETION OF LANDLORD'S WORK. Landlord's Work as
to the Site Work and the Building Improvements shall be deemed substantially
complete when it has been completed or performed per the terms and conditions
of this Lease, subject only to a "punch-list" of minor and immaterial items
which are capable of completion within thirty (30) days thereafter and which
do not interfere with Tenant's ability to reasonably complete Tenant's Work
within 90 days thereafter, and Landlord and Landlord's architect have so
notified Tenant in writing (such notice shall be referred to as the "Notice
of Substantial Completion"). In the event both Landlord and Tenant are
working in the Premises at the same time, each agrees to cause its contractor
to reasonably cooperate with the other contractor.
h. FINAL COMPLETION. Landlord shall cause final completion of
the Tenant Building in a lien-free condition to occur within thirty (30) days
after the date of the Notice of Substantial Completion.
i. SHELL BUILDING PLANS AND SPECIFICATIONS. Landlord and Tenant
shall cooperate with each other so as to allow Landlord to have plans,
specifications and working drawings prepared for the Building Shell pursuant
to Section 1(d), above, as soon as reasonably practicable. Tenant shall have
thirty (30) days following receipt of such plans and specifications in which
to approve or disapprove the same in writing. Tenant must identify with
reasonable specificity any grounds for disapproval, and Landlord shall
re-submit revised plans and specifications to Tenant, attempting to address
in good faith Tenant's grounds for disapproval, within ten (10) business days
after receipt of Tenant's written disapproval. Tenant shall have then ten
(10) business days after receipt of the revised plans and specifications to
approve or disapprove the same in writing, and again must identify any
grounds for disapproval with reasonable specificity. In the event there are
remaining grounds for disapproval Landlord and Tenant shall promptly meet and
diligently and in good faith work toward resolving the dispute. Landlord
shall solicit and receive bids from no fewer than three (3) subcontractors
for each subtrade (including any one subcontractor in each subtrade which
Tenant has identified prior to the plans being bid) and shall deliver such
bids to Tenant for informational purposes only. Landlord shall provide
Tenant with a copy of each bid package concurrent with Landlord's
distribution of bid packages to subcontractors. Landlord will select the
lowest responsible and qualified bidder. Tenant shall have no right to
approve the bidder selected by Landlord. Once all subcontracts have been let
for the Building Shell, Landlord shall provide Tenant with the total of all
subcontract prices for the Building Shell. Once all subcontracts for the
Tenant Required Improvements have been let, Landlord shall provide Tenant
with the total of all subcontract prices for the Tenant Required Improvements
and the total Construction Cost (as such term is defined in paragraph 10
hereof). Once the subcontracts have been let, all change orders which
materially affect the subcontract price or the plans and specifications will
be subject to the prior written approval of Tenant which will not be
unreasonably withheld. Tenant will provide its written approval or its
disapproval (which will identify with specificity any grounds for
disapproval) within three (3) days from Tenant's architect's receipt of such
change order and, if such change order results in an increase in cost over
Landlord's Contribution, shall pay the amount of such change order within
fifteen (15) days after receipt of an invoice therefor. Landlord's
contractor shall be HBD Construction ("HBD"), which shall receive an overhead
and profit fee of five percent (5%) and general conditions commensurate with
the project. All subcontractors shall be bondable, be experienced in the
trade for which they are being considered and be independent companies
unrelated to either Landlord or the general contractor. In the event that
Tenant expresses its concern as to any subcontractor in writing with reasons
therefor, Landlord will reasonably consider such request and, if reasonably
appropriate, will disqualify said potential subcontractor from bidding.
j. TENANT'S COMPLIANCE WITH CONSTRUCTION SCHEDULE. Except as
specifically provided in this EXHIBIT C, Tenant shall perform all acts which
Tenant is required to perform pursuant to this EXHIBIT C and the Lease or on
the Construction Schedule, on or before the date specified for the completion
of such act in the Construction Schedule, provided, however, that Tenant's
obligation hereunder shall be subject to the provisions of paragraph 8
hereof, and to delays caused by delay or failure to act by Landlord.
k. COMMENCEMENT AND COMPLETION OF LANDLORD'S WORK. Landlord
agrees to commence and complete construction of Landlord's Work within the
time periods more particularly described in Section 3.2 of the Lease.
2. TENANT'S WORK. Upon Landlord's delivery of the Notice of
Substantial Completion, Tenant shall be responsible for the full completion
of all of the following (collectively, "Tenant's Work").
a. TENANT'S FF&E. Tenant shall pay for and install its
storefront sign, a monument sign (at Tenant's election and as more fully
described in Section 10.7(c) of the Lease), furniture, trade fixtures and
trade equipment ("FF&E") for the Building.
b. PLANS AND SPECIFICATIONS. Tenant shall, at its sole cost,
prepare all plans, specifications and working drawings for Tenant's FF&E.
c. PERMITS. Tenant shall obtain or cause to be obtained all
building permits, licenses or other governmental approvals which may be
required to permit the construction and installation of Tenant's FF&E.
Landlord shall assist and cooperate with Tenant in obtaining such permits,
licenses or approvals.
Exhibit C-4
d. OPENING NOTICE TO LANDLORD. So that Landlord will be able to
coordinate timely completion of Landlord's Work within the Tenant Parcel,
Tenant shall give Landlord at least ten (10) business days prior notice of
Tenant's intended date of opening for business.
3. INTENTIONALLY OMITTED.
4. PERFORMANCE OF LANDLORD AND TENANT WORK. Both Landlord and Tenant
shall each use their respective best efforts to cause the Landlord Work and
Tenant Work to be performed in a good, workmanlike, and expeditious manner,
and in compliance with all laws, rules, regulations, ordinances, permits,
approvals, and licenses of governmental authorities having jurisdiction over
the Shopping Center. Landlord and Tenant will each use their best efforts to
take or cause to be taken all necessary and appropriate measures to minimize
any disruption or inconvenience caused by or affecting the performance of
each other's work hereunder and shall cooperate with the other to the extent
construction activities overlap.
5. INDEMNITY. Each party shall defend, indemnify, and hold the other
harmless from any and all claims, demands, debts, liabilities, actions, costs
or expenses, including without limitation attorneys' fees arising from each
other's (including each other's agents', independent contractors', and
employees') performance of their respective work under this EXHIBIT C, but
not including those caused by the negligence of the other.
6. INSURANCE. All contractors and subcontractors performing
Landlord's Work or Tenant's Work shall carry workers' compensation insurance
covering all of their respective employees, as well as commercial general
liability insurance, including replacement coverage, property damage,
liability assumed by contract, and comprehensive business automobile
liability insurance. The general contractors shall also carry builders' all
risk insurance. All such liability insurance shall provide single limit
coverage of at least $2,000,000 for the general contractors and $1,000,000
for each subcontractor, per occurrence (except for workers' compensation,
which shall have limits as provided by law). All insurance for contractors
and subcontractors for Tenant's Work shall name Landlord as additional
insured, and all insurance for contractors and subcontractors for Landlord's
Work shall name Tenant as additional insured. Landlord and Tenant shall each
provide the other with certificates of insurance evidencing such coverage
prior to the commencement of any work hereunder. All insurance shall contain
provisions prohibiting cancellation or reduction in coverage prior to the
giving of at least 30 days prior written notice by the canceling insurer to
the party named as additional insured.
7. CONSTRUCTION EASEMENT. Landlord hereby grants to Tenant a
construction easement over the Tenant Parcel to be utilized for ingress and
egress of vehicles transporting construction materials, equipment, and
persons employed in connection with the performance of the Tenant's Work
required hereunder and for temporary storage of materials and vehicles being
utilized in connection with the performance of such work.
8. FORCE MAJEURE. The date for completion of the obligations of both
Landlord and Tenant hereunder shall be extended (but not excused) by the
period of time taken by delays described in Section 26.5 of the Lease.
9. MEASUREMENT UPON COMPLETION. Landlord and Tenant intend to use the
same architect for purposes of Landlord's Work and Tenant's Work hereunder
("architect of record"). Upon completion of Landlord's Work, the architect
of record shall measure and determine the Floor Area of the Building. In
the event Landlord and Tenant do not use the same architect, Tenant shall
have the Floor Area of the Premises measured and determined by Tenant's
architect, and Landlord shall have the right to dispute such calculation. In
the event Landlord and Tenant are unable to agree on the calculation of the
Floor Area, the two architects shall appoint a third architect, and the
three (3) architects shall meet and agree upon the appropriate Floor Area
calculation.
10. LANDLORD CONSTRUCTION CONTRIBUTION. Landlord shall contribute up
to Ninety Dollars ($90.00 ) per square foot of the agreed upon square footage
of the Building ("Landlord's Construction Contribution") toward the
construction cost of the Building Shell and the Tenant-Required Improvements.
Construction cost shall mean any and all costs associated with the
construction of the Building Shell and Tenant-Required Improvements
("Construction Costs") including without limitation the cost of exterior
lighting of the building, trash enclosures, the costs of architects and
engineers, consultants, and any other costs related to plan preparation
(except as otherwise specifically provided herein), the costs of equipment,
material and labor; contractor's overhead and profit fee, and the general
conditions fees, field overhead and fees; testing and inspection costs; sales
and use taxes (but not real property taxes); bonds; building permits, plan
check fees or other governmental fees; utility tap fees and/or utility
deposits.
Landlord shall have no obligation hereunder or under the construction
contract to pay Construction Costs over the amount of the Landlord's
Construction Contribution; any and all additional costs and expenses
relating thereto shall be the sole obligation of the Tenant. Upon
determination of bid amounts for the completion of the Building Shell and
Tenant-Required Improvements, Landlord shall provide to Tenant a statement of
the total amount of the those bids and the total amount of the Construction
Costs; if the Construction Costs exceed the Landlord's Construction
Contribution, Tenant shall pay the amount of any such excess prior to
Landlord's commencement of construction of the Tenant-Required Improvements,
provided, however, that if the Construction Costs exceed $100 per square foot
Tenant shall have the right within five
Exhibit C-5
(5) days following receipt of Landlord's statement to notify Landlord (a) of
specific items Tenant requires, at Tenant's cost, to be re-bid, (b) that
Tenant shall, at Tenant's sole expense revise the working drawings, or (c)
that Tenant shall pay the excess amount as shown on Landlord's statement. If
Tenant elects either (a) or (b) hereinabove, Landlord and Tenant shall
diligently and in good faith work toward agreeing on the total Construction
Cost within the next thirty (30) days following Tenant's election.
Exhibit C-6
SCHEDULE 1 TO EXHIBIT C
BUILDING SHELL DESCRIPTION
The Building Shell will include ancillary improvements to the Parcel
consisting of walkways, pedestrian entrances and exits from the Building,
ramps and loading areas (if any). The Building Shell will have irregular
dimensions and will have a total Floor Area of approximately 50,000 square
feet.
Building Shell scope shall include and be limited to the following:
1. Exterior finish, flashings, etc., as required to provide a water
resistant enclosure. Exterior skin will be painted 7/8" cement
plaster over insulated exterior walls.
2. Exterior doors and storefront (excluding box office windows).
3. The roof and wall structural frames will be fire-proofed as required.
4. Roof complete with drains, roof hatch and curbed openings for TI
mechanical units. The roof shall be designed to accommodate the
weight and location of the TI mechanical units as provided by the
Tenant. Curbs are to be installed as part of the Building Shell.
5. Tenant signage and any TI components which will be suspended,
supported and/or braced by the Building Shell frame. All support
requirements for Tenant Required Improvements will be provided by the
Tenant.
6. Main First Floor Electrical Room with meter and main switch gear.
Size of service will be provided by the Tenant.
7. Exterior building and soffit lighting.
8. Below slab sewer lines stubbed to blocked out floor areas. Size of
service will be provided by the Tenant. Fixture venting and the exact
location of plumbing fixtures, floor sinks, etc., will be the
responsibility of the Tenant.
9. Water and sprinkler service will be stubbed into the building. Size
of services will be provided by the Tenant. Interior piping is the
responsibility of the Tenant.
10. Interior floor finish will be concrete with portions of the slab
omitted to accommodate TI fixturization. Slab block out areas will be
provided by the Tenant.
11. Interior walls will be limited to the Electrical Room enclosure.
12. Pneumatic tube will be documented by others but installed as part of
the Building Shell.
13. Fire proofing for structure.
14. Step-down transformer.
Exhibit C-7
SCHEDULE 2 TO EXHIBIT C
CONSTRUCTION SCHEDULE
[TO BE PROVIDED]
Exhibit C-8
SCHEDULE 3 TO EXHIBIT C
TENANT-REQUIRED IMPROVEMENTS
1. Structure for stadium seating, with fireproofing (seats to be provided by
Tenant as a part of Tenant's Work).
2. Interior walls and finishes (draperies to be provided by Tenant as a part
of Tenant's Work).
3. Ceiling.
4. Floor finishes, slab block out areas.
5. Restroom fixtures, plumbing lines except roof drains
6. All building mechanical and electrical items, interior (Tenant to provide
sound system, projection equipment, and screens as a part of Tenant's Work)
7. Finish carpentry.
8. Concession areas (Tenant to provide all concession and box office equipment
as a part of Tenant's Work)
Tenant shall be responsible to provide and install as Tenant's Work, at
Tenant's sole cost and expense, all furniture, fixtures and equipment,
including without limitation, those items specified in the parenthetical
phrases hereinabove)
Exhibit C-9
EXHIBIT D
TENANT'S CERTIFICATE
STATEMENT OF TENANT REGARDING LEASE
Date: , 19
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Re: Address
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For Premises in:
Gentlemen:
It is our understanding that you have committed to place a mortgage loan
upon the subject premises and, as a condition precedent thereof, have
required this certification by the undersigned.
The undersigned, as Tenant under that certain Lease dated
__________________, 19_____, made and entered into between
___________________________________________________________, as Landlord and
the undersigned, as Tenant, hereby ratifies said Lease and certifies that the
undersigned has entered into occupancy of the premises described in said
Lease on __________________, 19_____, the undersigned opened for business on
__________________, 19 , the Commencement Date of the Lease Term is
__________________, 19______ and the Minimum Annual Rental in the monthly
amount of $__________________ was payable from __________________, 19______
(the "Rent Start Date"); that said Lease is in full force and effect and has
not been assigned, modified, supplemented or amended in any way (except by
agreement(s) dated __________________, 19______); that the same represents
the entire agreement between the parties as to this leasing; that the term of
said Lease expires on __________________, 19______, subject to Tenant's
rights to extend the term for ____ additional periods of five (5) years each
as provided in the Lease; that all conditions under said Lease to be
performed by Landlord have been satisfied, including, but without limitation,
all co-tenancy requirements thereunder, all required contributions by
Landlord to Tenant on account of Tenant's improvements have been received,
and to the best of Tenant's actual knowledge, there are on this date no
existing defenses or offsets which the undersigned has against the
enforcement of said Lease by Landlord; that no rental has been paid more than
one (1) month in advance and no security (other than a security deposit in
the amount of $__________________) has been deposited with Landlord; and that
the Minimum Annual Rental for __________________, 19______, has been paid.
Very truly yours,
TENANT
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Exhibit D-1
EXHIBIT E
WHEN RECORDED RETURN TO:
- ----------------------------------------
c/o LandGrant
12625 High Bluff Drive, Suite 212
San Diego, CA 92130
Attn:
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SUBORDINATION AGREEMENT
_____________________________, Tenant named in that certain Lease dated
___________________, 19__, wherein Tenant leases from
_______________________________________, as Landlord, certain premises which
are part of a shopping center known as ___________________________, the
location of said shopping center being more particularly described in Exhibit
"A" attached hereto and made a part hereof, hereby subordinates said Lease
and its interest in said premises to that certain
_____________________________________________________ dated _______________,
19__, entered into by and between________________________,
____________________, and recorded on ____________________, 19__, under File
No. ______Page No._____ in the Official Public Records of the County of
_______________, State of ____________.
Dated this ___________day of ______________, 19___.
TENANT:
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By:
--------------------------------
Title:
--------------------------------
By:
--------------------------------
Title:
--------------------------------
[NOTARIAL ACKNOWLEDGMENT]
Exhibit E-1
EXHIBIT F
CONFIRMATION OF TERM OF LEASE
This Confirmation of Term of Lease is made ________________________, 19
___, between LANDGRANT CORPORATION, a California corporation, ("Landlord"),
and Cinema Star Luxury Theaters, Inc., a California corporation,, ("Tenant"),
who agree as follows:
1. Landlord and Tenant entered into a lease dated
________________________, 19 ___, in which Landlord leased to Tenant and
Tenant leased from Landlord the premises described in Paragraph 1.2 of the
Lease (the "Premises"). The Floor Area of the Building Improvements is
agreed to be: _______________________ square feet. The Minimum Annual Rental
for the Lease Term and the Option Terms shall therefore be as follows:
2. Pursuant to Paragraph 1.3 of the Lease, Landlord and Tenant agree
to confirm the Commencement Date and Expiration Date of the Term, and the
Rent Start Date, as follows:
a. __________________________ 19 ___, is the Commencement Date of
the Term of the Lease;
b. __________________________ 19 ___, is the Expiration Date of
the Term of Lease;
c. __________________________ 19 ___, is the Rent Start Date
under the Lease;
TENANT: LANDLORD:
CINEMA STAR LUXURY THEATERS, INC., LANDGRANT CORPORATION,
a California corporation a California corporation
By: By:
----------------------------------- ----------------------------------
Signature Title:
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-----------------------------------
Name By:
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----------------------------------- Title:
Title -------------------------------
By:
- -------------------------------------
Signature
- -------------------------------------
Name
- -------------------------------------
Title
Exhibit F-1