FORM OF LEASE -- THE CO & AMC
Published on November 13, 1997
LEASE
BETWEEN
ENTERTAINMENT PROPERTIES TRUST,
a Maryland real estate investment trust
("LANDLORD")
AND
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
("TENANT")
For the Lease
of
Grand 24, Dallas, TX Leawood Town Center 20, Kansas City, MO
Promenade 16, Los Angeles, CA South Barrington 30, Chicago, IL
Ontario Mills 30, Los Angeles, CA Mission Valley 20, San Diego, CA
West Olive 16, St. Louis, MO Lennox 24, Columbus, OH
Studio 30, Houston, TX First Colony 24, Houston, TX
Huebner Oaks 24, San Antonio, TX Oakview 24, Omaha, NE
November ___, 1997
Michael G. O'Flaherty E.T. Bullard
Stinson, Mag & Fizzell, P.C. Lathrop & Gage L.C.
1201 Walnut Suite 2500
Suite 2800 2345 Grand Boulevard
Kansas City, Missouri 64105 Kansas City, Missouri 64108
Telephone: (816) 691-3180 Telephone: (816) 292-2000
Telecopy: (816) 691-3495 Telecopy: (816) 292-2001
Counsel to Landlord Counsel to Tenant
TABLE OF CONTENTS
LEASE BETWEEN ENTERTAINMENT PROPERTIES TRUST
AS LANDLORD AND AMERICAN MULTI-CINEMA, INC.,
AS TENANT, COVERING PREMISES IN
_______________________________
Article Page
- -------- -----
1. Attachments to Lease; Rent and Expense Rider and Exhibits.. . . . . . .1
2. Definitions and Rules of Construction.. . . . . . . . . . . . . . . . .2
3. Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6. Covenant of Title; Authority and Quiet Possession; Transfer
of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7. Use of Premises.. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Subletting and Assigning. . . . . . . . . . . . . . . . . . . . . . . 14
9. Continued Possession of Tenant. . . . . . . . . . . . . . . . . . . . 21
10. Fixtures.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11. Utilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12. Governmental and Ground Lease Compliance.. . . . . . . . . . . . . . 22
13. Maintenance and Repairs. . . . . . . . . . . . . . . . . . . . . . . 27
14. Damage Clause. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15. Insurance, Indemnity, Waiver of Subrogation and Fire
Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. Indemnification Generally. . . . . . . . . . . . . . . . . . . . . . 39
i
17. Tenant to Pay Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 41
18. Alterations and Tenant's Liens.. . . . . . . . . . . . . . . . . . . 41
19. Tenant's Signs.. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
20. Condemnation and Economic Obsolescence.. . . . . . . . . . . . . . . 44
21. Other Tenancies; REA. . . . . . . . . . . . . . . . . . . . . . . . 48
22. Common Facilities. . . . . . . . . . . . . . . . . . . . . . . . . 49
23. Options to Extend; Right of First Offer to Lease by Tenant.. . . . . 49
24. Common Area Charge.. . . . . . . . . . . . . . . . . . . . . . . . . 52
25. Other Theatres and Restrictions. . . . . . . . . . . . . . . . . . . 52
26. No Merchants Association.. . . . . . . . . . . . . . . . . . . . . . 53
27. Tenant's Covenant to Operate.. . . . . . . . . . . . . . . . . . . . 54
28. Estoppel Certificate; Attornment and Priority of Lease;
Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
29. Right of First Refusal to Purchase by Tenant.. . . . . . . . . . . . 56
30. Default Clause and Self-Help.. . . . . . . . . . . . . . . . . . . . 63
31. Access to Premises.. . . . . . . . . . . . . . . . . . . . . . . . . 68
32. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
33. Remedies Cumulative; Legal Expenses; Time of the Essence . . . . . . 69
34. Lease Not to be Recorded.. . . . . . . . . . . . . . . . . . . . . . 70
35. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
36. Waiver of Performance and Disputes.. . . . . . . . . . . . . . . . . 71
37. Modification of Lease. . . . . . . . . . . . . . . . . . . . . . . . 73
ii
38. Captions and Lease Preparation.. . . . . . . . . . . . . . . . . . . 73
39. Lease Binding on Successors and Assigns, Etc.. . . . . . . . . . . . 73
40. Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
41. Landlord's Status as a REIT. . . . . . . . . . . . . . . . . . . . 74
42. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
43. Certain Landlord Rights On Termination.. . . . . . . . . . . . . . . 74
44. Estoppel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
45. Joint Preparation. . . . . . . . . . . . . . . . . . . . . . . . . . 75
46. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
47. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
48. Limitation on Landlord's Liability . . . . . . . . . . . . . . . . . 76
49. Waiver of Trial by Jury. . . . . . . . . . . . . . . . . . . . . . . 77
iii
AMC BUILD
(REIT PROGRAM)
LEASE
THIS LEASE, dated as of November ___, 1997, is made by and between
ENTERTAINMENT PROPERTIES TRUST, a Maryland real estate investment trust, with
an office at 1221 Baltimore Avenue, Kansas City, Missouri, 64105,
("LANDLORD"), and AMERICAN MULTI-CINEMA, INC., a Missouri corporation, with
an office at 106 West 14th Street, Suite 1700, Kansas City, Missouri 64105
("TENANT").
1. ATTACHMENTS TO LEASE; RENT AND EXPENSE RIDER AND EXHIBITS.
Attached to this Lease and hereby made a part hereof are the
following:
RENT AND EXPENSE RIDER - a statement of the Annual Fixed Rent,
Percentage Rent and common area and real estate tax charges, if any, which
are to be paid by Tenant hereunder together with provisions pertaining to the
payment thereof.
EXHIBIT A - a legal description of the tract of land
constituting the land portion of the Entire Premises, if applicable, or if
not, the land constituting the land portion of Tenant's Facility.
EXHIBIT B - a site plan (the "Site Plan") of Leased Premises and
the Entire Premises (if applicable) showing (i) the location of Tenant's
Facility, outlined in red and specifying the dimensions thereof, and (ii) the
Entire Premises (if applicable) of which the Leased Premises are a part,
outlined in black, and (iii) the location of any other buildings and
improvements constructed or to be to be constructed, if known, within the
Entire Premises by any person or entity, including Tenant's Pylon.
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improvements constructed on the Leased Premises.
2. DEFINITIONS AND RULES OF CONSTRUCTION.
(A) DEFINITIONS. The following terms for purposes of this
Lease shall have the meanings hereinafter specified:
"AFFILIATE" shall mean as applied to a person or entity, any
other person or entity directly or indirectly controlling, controlled by, or
under common control with, that person or entity.
"ANNUAL FIXED RENT" shall mean the annual fixed rent payable
hereunder, which shall be the following:
(1) From the Commencement Date through and including the end
of the first Lease Year, an amount, per annum, equal to the product
obtained by multiplying $__________________ (the Purchase Price with
respect to such property set forth in the Agreement of Sale and
Purchase entered into among Landlord, Tenant and AMC Realty, Inc.
dated November __, 1997) by ten and one half (10.5) percent.
(2) During the second Lease Year and each following Lease
Year until the end of the initial fixed term and during all Option
Periods, if Tenant shall so extend the term of this Lease, the
Annual Fixed Rates shall be increased each Lease Year by an amount
equal to the Annual Fixed Rent Escalation.
"ANNUAL FIXED RENT ESCALATION" shall be 2% of the previous Lease
Year's Annual Fixed Rent.
"ANNUAL PERCENTAGE RENT" is defined in the Rent and Expense
Rider.
2
"BUSINESS DAYS" is defined as any day other than a Saturday, a
Sunday or a day on which banking institutions in the City of New York are
authorized by law to close.
"COMMENCEMENT DATE" is defined in the Article captioned "Term."
"COMMON FACILITIES" shall include, if applicable, all parking
areas, streets, driveways, curb cuts, access facilities, aisles, sidewalks,
malls, landscaped areas, sanitary and storm sewer lines, water, gas,
electric, telephone and other utility lines, systems, conduits and facilities
and other common and service areas within the Entire Premises, whether or not
shown on the Site Plan, and regardless of by whom owned.
"CODE" means the Internal Revenue Code of 1986, as the same may
be amended or supplemented, and the rules and regulations promulgated
thereunder.
"CROSS-DEFAULT TERMINATION DATE" means the earlier to occur of
(i) the date the senior long-term debt obligations of Tenant's Parent or the
corporate credit rating of Tenant's Parent is rated investment grade by
either Standard & Poor's Corporation or Moody's Investors Services, Inc.,
(ii) Tenant's Rent under this Lease and any other lease between Landlord and
Tenant represents less than 50% of the Landlord's rental income for any
fiscal quarter or (iii) the expiration of the fixed term hereof.
"DEFAULT RATE" shall mean the lesser of (i) the Prime Rate plus
4% or (ii) the highest rate of interest that may lawfully be charged to the
party then required to pay interest under this Lease at the Default Rate.
"ENTIRE PREMISES" shall mean, if applicable, the larger tract of
land described on EXHIBIT A and shown outlined in black on the Site Plan
where Tenant's Facility is located, together with any buildings, Common
Facilities and other improvements thereon, as the Entire
3
Premises is constituted from time to time. In no event shall the Entire
Premises be deemed to include any land which Landlord does not own either fee
title or a leasehold interest.
"ENVIRONMENTAL REPORT" is defined in the Article captioned
"Governmental and Ground Lease Compliance."
"EXPIRATION DATE" is defined in the Article caption "Term."
"FINAL PLANS" shall mean the final plans, drawings and
specifications for Tenant's Facility as built.
"FLOOR AREA" shall mean, with respect to each building or
structure on the Entire Premises (if applicable) or Tenant's Facility, the
number of square feet of floor area at each level or story lying within the
exterior faces of exterior walls thereof (except party walls as to which the
center line, not the exterior faces, shall be used), whether or not leased or
occupied; PROVIDED, HOWEVER, none of the following shall be included in the
computation of the Floor Area of Tenant's Facility: (i) any canopies (or the
area under such canopies) extending from the walls of Tenant's Facility, (ii)
any sidewalks, ramps, stairways or other walkways located outside the
exterior walls of Tenant's Facility regardless of whether any are contiguous
or adjacent to Tenant's Facility, (iii) any mezzanines used primarily for
projection and office purposes, (iv) any area designed as a weather barrier,
and (v) any corridors, vertical transportation and other areas which would
not be necessary if Tenant's Facility were at grade level.
"FORCE MAJEURE" is defined in the Article captioned "Force
Majeure."
"GOVERNMENTAL AUTHORITIES" shall mean all federal, state,
county, municipal and local departments, commissions, boards, bureaus,
agencies and offices thereof, having or
4
claiming jurisdiction over all or any part of the Entire Premises (if
applicable) or Tenant's Facility or the use thereof.
"GROSS RECEIPTS" is defined in the Rent and Expense Rider.
"GROUND LEASE" shall mean, in the event Landlord does not own
fee title to the Leased Premises, the ground lease or similar conveyance
instrument by which Landlord holds a leasehold or similar estate therein and
to which this Lease is subject.
"HAZARDOUS SUBSTANCES" is defined in the Article captioned
"Governmental Compliance."
"LAWS" shall mean all present and future requirements,
administrative and judicial orders, laws, statutes, ordinances, rules and
regulations of any Governmental Authority.
"LEASE YEAR" is defined in the Rent and Expense Rider.
"LEASED PREMISES" shall mean Tenant's Facility, the land
described in Exhibit A (including, if applicable, the lessee's interest in
any ground lease) and all improvements, fixtures, appurtenances, rights,
easements and privileges thereunto belonging or in any way appertaining, and
all other rights, easements and privileges granted to Tenant in this Lease,
excluding, however, Tenant's Property as defined below.
"METROPOLITAN AREA" shall mean the ___________________
metropolitan area.
"MORTGAGE" shall mean any mortgage or deed of trust or other
instrument in the nature thereof evidencing a security interest in the Leased
Premises or any part thereof.
"NUMBER OF FIXED TERM YEARS" shall mean years. [Insert 13-15]
"OPTION PERIODS" shall mean four (4) successive separate periods
of five (5) years each.
"PERCENTAGE RATE" shall mean 6%.
5
"PRIME RATE" shall mean the per annum interest rate from time to
time publicly announced by Citibank, N.A., New York, New York as its base
rate. If Citibank, N.A. should cease to publicly announce its base rate, the
Prime Rate hereunder shall be the prime, base or reference rate of the
largest bank (based on assets) in the United States which announces such rate.
"REA" is defined in the Article captioned "Other Tenancies; REA".
"RELATED LEASES" shall mean the Leases with respect to the
properties listed on the cover sheet of this Lease and Gulf Pointe 30
(Houston, TX), Mesquite 30 (Dallas, TX), Cantera 30 (Chicago, IL), Hampton
Town Center 24 (Norfolk, VA) and Livonia 20 (Detroit, MI).
"RENT" shall mean Annual Fixed Rent, Annual Percentage Rent and
other charges payable by Tenant under this Lease.
"REQUIRED INSURANCE" shall mean the insurance policies which
Tenant is required to maintain pursuant to Sections (A), (B) and (C) of
Article 15.
"RIGHT TO PURCHASE PERIOD" shall for purposes of Article 29
hereof mean the period of 5 years from and including the date hereof.
"SHOPPING CENTER", if applicable, shall mean the shopping center
operated at the Entire Premises, which is called the __________ Shopping
Center and is located at _____________ .
"TAXES" is defined in the Rent and Expense Rider.
"TENANT'S FACILITY" shall mean the building previously erected
and/or owned by Tenant or Tenant's Affiliate which presently contains
approximately ___________ square feet of Floor Area, __________ auditoriums and
______ seats.
6
"TENANT'S OPERATING COVENANT" is defined in the Article
captioned "Tenant's Covenant to Operate."
"TENANT'S OPERATING PERIOD" shall mean the period beginning on
the Commencement Date and ending on the 10th anniversary of such date.
"TENANT'S PARENT" shall mean AMC Entertainment Inc., a Delaware
corporation.
"TENANT'S PROPERTY" is defined in the Article captioned
"Fixtures."
"TENANT'S PYLON" is defined in the Article captioned "Tenant's
Signs."
"TENANT'S SIGNS" is defined in the Article captioned "Tenant's
Signs."
"TERM OF THIS LEASE" or "TERM HEREOF" shall mean the initial
fixed term as provided in the Article captioned "Term" and any renewal or
extension thereof.
"TRANSFER" shall for purposes of Article 19 hereof mean any
sale, transfer, conveyance or other disposal (which may include a lease back)
of the Leased Premises or any part thereof.
(B) RULES OF CONSTRUCTION. The following rules of
construction shall be applicable for all purposes of this Lease, unless the
context otherwise requires:
(1) The terms "hereby," "hereof," "hereto," "herein,"
"hereunder" and any similar terms shall refer to this Lease, and the
term "hereafter" shall mean after, and the term "heretofore" shall
mean before, the date of this Lease.
(2) Words of the masculine, feminine or neuter gender shall
mean and include the correlative words of the other genders and
words importing the singular number shall mean and include the
plural number and vice versa.
7
(3) The terms "include," "including" and similar terms shall
be construed as if followed by the phrase "without being limited
to."
3. PREMISES.
Landlord hereby demises and leases or sublease, as applicable,
unto Tenant, and Tenant hereby leases or sublease, as applicable, from
Landlord, for the consideration and upon the terms and conditions herein set
forth, the Leased Premises.
4. TERM.
The initial fixed term of this Lease shall commence November __,
1997 (the "COMMENCEMENT DATE"), and shall expire as of midnight on the last
day of the last year of the Number of Fixed Term Years from the first day of
the first month immediately following the Commencement Date; PROVIDED,
HOWEVER, if the Term of this Lease is scheduled to expire on a date
("Expiration Date") other than January 31, or September 30, then Tenant may,
by notice to Landlord given not later than 6 months prior to the Expiration
Date, elect to have the Expiration Date postponed until the next succeeding
January 31 or September 30, whichever first occurs. If Tenant so elects,
then the last Lease Year shall be longer than 12 months, and shall end on the
January 31 or September 30 (as the case may be) next following the previously
scheduled Expiration Date.
5. RENT.
(A) FIXED AND PERCENTAGE. Tenant shall pay Landlord, without
abatement, adjustment or setoff, except as set forth herein, the Annual Fixed
Rent in the manner set forth herein and in the Rent and Expense Rider
commencing on the Commencement Date, subject to the provisions of paragraph
(B) below and, if applicable, Annual Percentage Rent, in the manner set forth
herein and in the Rent and Expense Rider.
8
(B) GROUND RENTS, IF ANY. Tenant also covenants and agrees
during the term of this Lease to pay any rent obligations of Landlord under
any Ground Lease. Tenant shall not receive a credit against its Annual Fixed
Rent or any other amounts due hereunder for such Ground Lease rental payments.
(C) PROHIBITION OF USE. If at any time during the term of this
Lease, (i) any Law shall prohibit the use of Tenant's Facility for the
purposes permitted in Section 7(A)(i) or (iii) of this Lease (the
"PROHIBITION"), and (ii) such Prohibition shall require Tenant to discontinue
its business operation in the Leased Premises or as a result of such
Prohibition Tenant reasonably determines that it is economically unfeasible
to continue to operate its business, and Tenant does in fact discontinue its
business operation in the Leased Premises, then for the period beginning with
the Tenant's discontinuance of its business operations in the Leased Premises
and ending on the earlier of the date the Tenant commences its business
operations in the Leased Premises or 30 days following the date the
Prohibition shall have been lifted, Rent payable by Tenant under this Lease
shall be fully abated and Landlord shall, promptly after such occurrence or
imposition, refund any unearned Rent paid by Tenant. Immediately upon the
earlier to occur of (a) Tenant becoming aware of any proposed Prohibition, or
(b) Tenant's receipt of any notice from any Governmental Authorities of any
Prohibition, Tenant shall promptly notify Landlord of such fact, and Landlord
shall have the right to proceed, in its or Tenant's name, and at Landlord's
sole cost and expense, to take such action as Landlord shall determine to be
necessary or desirable to contest or challenge the Prohibition. Landlord
shall within 30 days of receipt of notice from Tenant of the Prohibition
notify Tenant in writing if Landlord elects to contest or challenge such
Prohibition. If (x) Landlord shall elect not to
9
contest or challenge the Prohibition, (y) a final, nonappealable judgment is
entered upholding the Prohibition, or (z) Landlord shall fail in the judgment
of Tenant, reasonably exercised, to diligently proceed with the contest or
challenge of such Prohibition, and such failure to proceed continues for 10
days after written notice to Landlord of such failure, then either Tenant or
Landlord may at any time thereafter while such Prohibition continues
terminate this Lease by giving the other party written notice of such
termination. If a Prohibition should occur or be imposed, nothing in this
paragraph (C) shall be deemed to impair Tenant's obligations under paragraph
(B) of the Article captioned "Governmental Compliance" at any time during
which Tenant is not prohibited from using Tenant's Facility for the purposes
permitted in Section 7(A)(i) and (iii) of this Lease by the Prohibition.
6. COVENANT OF TITLE; AUTHORITY AND QUIET POSSESSION; TRANSFER
OF TITLE.
(A) LANDLORD'S COVENANT. Landlord represents and warrants to
Tenant that: (i) Landlord has full right and lawful authority to enter into
and perform Landlord's obligations under this Lease for the term hereof, and
Landlord has not and will not suffer, incur or enter into any contracts,
leases, tenancies, agreements, restrictions, violations, encumbrances or
defects in title of any nature whatsoever which would materially adversely
affect the right, title and interest in the Leased Premises which was
assigned or transferred to Landlord or would materially adversely restrict or
prevent the use or enjoyment by Tenant of the Leased Premises; (ii) this
Lease shall not be subject or subordinate to any Mortgage except for such
subordination as may be accomplished in accordance with the provisions of the
Article captioned "Estoppel Certificate; Attornment; and Priority of Lease;
Subordination" and (iii) if Tenant shall discharge the obligations
10
herein set forth to be performed by Tenant, Tenant shall have and enjoy,
during the term hereof, the quiet and undisturbed possession of the Leased
Premises together with the right to use the Common Facilities, if any, as in
this Lease contemplated, free from interference by Landlord or any party
claiming under Landlord.
(B) LEASEHOLD TITLE POLICY. Contemporaneously with the
execution of this Lease, if requested by Tenant, Landlord shall furnish
Tenant, at Tenant's sole cost and expense, a binding commitment for the
issuance of a leasehold owner's title insurance policy on the ALTA standard
form B-1970 (amended 10/17/70) policy form if available, and if not
available, on the current policy form available in the state in which the
Leased Premises is located, in an amount reasonably determined by Tenant and
containing such endorsements available in such state as Tenant shall
reasonably designate, written by Stewart Title Guaranty Company, committing
to insure as of the date of recording of a memorandum of this Lease that the
condition and state of the title to the leasehold estate created hereunder is
in accordance with clauses (i) and (ii) of paragraph (A) of this Article.
The acceptance of such commitment or resulting title policy by Tenant shall
in no way be construed as a waiver of, or in any way be deemed to impair,
Landlord's representations and warranties set forth in paragraph (A) of this
Article. By executing this Lease, Tenant shall be deemed to have approved
and accepted the status of title as reflected in such title commitment.
(C) CHANGE OF OWNERSHIP. Subject to Tenant's rights under the
Article captioned "Right of First Refusal to Purchase by Tenant", Landlord
shall promptly notify Tenant in writing of any change in the ownership of the
Leased Premises, giving the name and address of the new owner and
instructions regarding the payment of rent. In the event of any change in or
transfer of title of Landlord in and to the Leased Premises or any part
11
thereof, whether voluntary or involuntary, or by act of Landlord or by
operation of any Laws, Tenant shall have the right to pay Annual Fixed Rent
or other charges thereafter accruing to the party to which Tenant was making
payments prior to such change in title until (i) Tenant shall have been
notified of such change in title and given satisfactory proof thereof (it
being hereby agreed that a letter signed by both the prior owner and the new
owner of the Leased Premises notifying Tenant of such transfer and the
address for rent payment and notice purposes hereunder shall be deemed
satisfactory proof of such change in title), and (ii) such new owner shall
execute and deliver an agreement, in recordable form, whereby such new owner
assumes and agrees with Tenant to discharge all obligations of Landlord under
this Lease.
7. USE OF PREMISES.
(A) DURING INITIAL TEN YEARS. During the period commencing
with the Lease Commencement Date and ending on the day before the 10th
anniversary of the Lease Commencement Date, Tenant's Facility shall not be
used except (i) primarily as a theatre and auditorium for presentation of
motion pictures, telecasts and other audio-visual presentations, and for
meetings and other public presentations and entertainment; (ii) for the
incidental operation therein of games and other amusement devices (electronic
or otherwise); (iii) for the incidental retail sale therein of food,
beverages and refreshments; (iv) for the incidental sale or rental (or both)
of video cassettes and discs; (v) for the incidental sale of records, compact
discs, books, magazines, toys and novelties related to the movie industry;
(vi) for the incidental sale of other goods, wares, merchandise and services;
and (vii) such other incidental lawful retail, service or entertainment
purpose(s) which are not specifically prohibited under this Lease.
Notwithstanding anything to the
12
contrary herein, Tenant shall not have the right to use the Leased Premises,
or any part thereof, for any use or purpose which is not permitted by, or
which results in a violation of, any agreement, covenant or restriction to
which the Leased Premises is subject as of the date of this Lease, or any
Ground Lease or REA applicable to the Leased Premises.
(B) AFTER INITIAL TEN YEARS. Following the 10th anniversary of
the Lease Commencement Date, Tenant's Facility, if used at all, may be used
for any lawful purpose(s), provided that Tenant must obtain Landlord's prior
approval if such use would have the effect of causing all or a portion of the
amount received or accrued by Landlord pursuant to this Lease to be treated
as other than "rents from real property" within the meaning of Section 856(d)
of the Code. Notwithstanding anything to the contrary herein, Tenant shall
not have the right to use the Leased Premises, or any part thereof, for any
use or purpose which is not permitted by, or which results in a violation of,
any agreement, covenant or restriction to which the Leased Premises is
subject as of the date of this Lease, or any Ground Lease or REA applicable
to the Leased Premises.
(C) LANDLORD ASSISTANCE. Landlord agrees to execute, without
cost to Landlord, such customary applications, consents and other instruments
as shall be required by Governmental Authorities to permit the operation of
Tenant's Facility as permitted by this Lease, so long as such applications,
consents or other instruments do not impose or subject Landlord to any
liability or claim, and Tenant hereby covenants and agrees to indemnify and
hold harmless Landlord from and against any and all claims, costs, demands,
losses or liabilities (including attorneys' fees) which Landlord may suffer
or incur by reason of Landlord's execution of any such applications, consents
or other instruments as Tenant may request. If at any time any claims,
costs, demands, losses or liabilities
13
are asserted against Landlord by reason of Landlord's execution of any such
applications, consents or other instruments as Tenant may request, Tenant
will, upon written notice from Landlord given in accordance with the
provisions hereof, defend any such claims, costs, demands, losses or
liabilities at Tenant's sole cost and expense by counsel reasonably
acceptable to Landlord and Tenant. The provisions of this paragraph shall
not be construed as limiting the representations and warranties of Landlord
set forth in paragraph (A) of the Article captioned "Covenant of Title;
Authority and Quiet Possession; Transfer of Title."
(D) CERTAIN LIMITATIONS. The obligations of Tenant under this
Article are subject to the provisions of paragraph (C) of the Article
captioned "Tenant's Covenant to Operate."
8. SUBLETTING AND ASSIGNING.
(A) AFTER OPERATING COVENANT. At any time after the 5th
anniversary of the Lease Commencement Date, Tenant shall have the right,
without Landlord's consent, to assign this Lease or sublet all or any part of
the Leased Premises once or more often; provided, however, that (i) each
sublease or assignment shall be made subject and subordinate to the
provisions of this Lease; (ii) the sublessee or assignee, by written
instrument, duly executed, acknowledged and delivered to Landlord, shall
assume all of Tenant's Obligations under this Lease; and (iii) no sublease or
assignment shall impose any obligations on Landlord or modify or limit any
power or right of Landlord under this Lease except as may be set forth in
paragraph (E) hereof.
(B) CONTINUATION OF LIABILITY. If Tenant assigns this Lease or
sublets all or any part of the Leased Premises, Tenant shall, subject to the
provisions of paragraph (C) of
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this Article, remain liable and responsible under this Lease and Tenant's
Parent, subject to such provisions, shall remain liable as guarantor of
Tenant's obligations; PROVIDED HOWEVER, in the case of an assignment, if this
Lease shall continue in effect after the last day of the initial fixed term
hereof or any renewal term during which such assignment occurs and if the
assignee shall have assumed in writing the performance of the covenants and
obligations of Tenant hereunder, Tenant (and Tenant's Parent) shall not be
liable or responsible to Landlord for any default or nonperformance by such
assignee as tenant hereunder arising or occurring after the last day of the
initial term hereof or of the renewal term during which such assignment
occurs.
(C) RELEASE OF LIABILITY. Tenant shall be released and
relieved from further liability under this Lease (and Tenant's Parent shall
be released and relieved from its guaranty of Tenant's obligations under this
Lease) if an assignment is made after the 5th anniversary of the Lease
Commencement Date and (i) the assignee, by written instrument, duly executed
and acknowledged and delivered to Landlord, assumes and covenants and agrees
with Landlord to perform all the terms, covenants and conditions of this
Lease which by the terms hereof are binding on Tenant from and after such
transfer and (ii) such assignee (or the guarantor of such assignee's
obligations under this Lease) has as of the end of the fiscal quarter
preceding the month during which any such assignment becomes effective or
subsequently attains a book net worth of not less than $100,000,000.00, as
demonstrated to Landlord's reasonable satisfaction (e.g. by audited financial
statements or the delivery of a 10-Q report, in the case of a public
company). If Tenant wishes to assign this Lease at any time during the term
of this Lease to an assignee which does not have, as of the end of the fiscal
quarter preceding the month during which such assignment becomes effective,
15
a book net worth of $100,000,000.00, as demonstrated to Landlord's reasonable
satisfaction (e.g., by audited financial statements or the delivery of a 10-Q
report, in the case of a public company), then Tenant shall have the right to
make such assignment, but in such event such assignee shall have no further
rights to extend or renew under Section 23 of this Lease, and this Lease
shall terminate as of the end of the then current term without further right
of Tenant to extend or renew; PROVIDED, HOWEVER, that the foregoing provision
shall be of no force and effect, and such assignee shall continue to have the
right to extend or renew this Lease pursuant to the provisions of Section 23,
upon an assignment to an assignee which does not have, as of the end of the
fiscal quarter preceding the month during which such assignment becomes
effective, a book net worth of $100,000,000.00, if Tenant or Tenant's Parent
agree, at the time such assignment is made, to remain liable hereunder, and
under the guaranty by Tenant's Parent, respectively, in a manner reasonably
satisfactory to Landlord.
(D) FOUR-WALL DEALS. Anything in this Lease to the contrary
notwithstanding, Tenant shall have the right, without Landlord's consent,
once or more often, to enter into so-called "four-wall" deals whereby
Tenant's Facility or any part thereof is permitted to be used by others on a
limited engagement basis for any use permitted to be made thereof by Tenant.
(E) OTHER ACTIONS REQUIRE CONSENT. Except as otherwise
provided in this Article and in paragraph (C) of the Article captioned
"Tenant's Covenant to Operate," Tenant shall not assign this Lease or sublet
the Leased Premises in whole or in part without the consent of Landlord,
which consent Landlord agrees not to unreasonably withhold or delay.
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(F) DEFAULT NOTICES AFTER ASSIGNMENT; NEW LEASE PROVISIONS. If
Tenant assigns this Lease and remains liable hereunder, then Landlord, when
giving notice to said assignee or any future assignee in respect of any
default, shall also serve a copy of such notice in the manner provided herein
upon the original tenant named in this Lease, American Multi-Cinema, Inc.
("the ORIGINAL TENANT"), and no notice of default shall be effective until a
copy thereof is served to the Original Tenant in the manner provided herein.
The Original Tenant, at its sole option, shall have the same period after
receipt of such notice to cure such default as is given to Tenant under this
Lease. If because of a default of an assignee after an assignment of this
Lease (i) this Lease shall terminate, or (ii) this Lease and the term hereof
ceases and expires, or (iii) an assignee's possession of the Leased Premises
shall be terminated without termination of this Lease (Landlord hereby
agreeing to terminate this Lease upon the Original Tenant and Landlord
executing a new lease if Original Tenant exercises its option to become the
tenant thereunder), then in any of such events Landlord shall promptly give
the Original Tenant notice thereof, and the Original Tenant shall have the
option, to be exercised by notice to Landlord given within 30 days after
receipt by the Original Tenant of Landlord's notice, to cure any default and
become Tenant under a new lease for the remainder of the term of this Lease
(including any renewal periods) upon all of the same terms and conditions as
then remain under this Lease as it may have been amended by agreement between
Landlord and Original Tenant. If any default of an assignee is incapable of
being cured by the Original Tenant, then notwithstanding the failure to cure
same, the Original Tenant shall have the foregoing option to enter into a new
lease. Such new lease shall commence on the date of termination of this
Lease. Notwithstanding the foregoing, if Landlord delivers to the
17
Original Tenant, together with Landlord's notice, a release as to all
liability under this Lease as theretofore amended, the Original Tenant shall
not have the foregoing option.
(G) SUBLETTING TO CONCESSIONAIRES. Tenant may, without
Landlord's prior approval, sublease portions of the Leased Premises to
concessionaires or licensees to: (i) operate games or other amusement
devices; (ii) sell food, beverages and refreshments; (iii) sell or rent video
cassettes and discs; (iv) sell records, compact discs, books, magazines, toys
and novelties related to the movie industry; and (v) sell other goods, wares,
merchandise and services customarily associated with or incidental to the
operation of each Property. Each sublease will be subject and subordinate to
the provisions of this Lease relating to the Leased Premises. The sublease
will not affect or reduce any of the obligations of Tenant, or Tenant's
Parent as guarantor of Tenant's obligations, under this Lease, nor will the
sublease impose any additional obligations on Landlord. Tenant will, within
10 days after the execution and delivery of any sublease, deliver a duplicate
original thereof to Landlord. Notwithstanding the foregoing, without
Landlord's prior written approval Tenant shall not enter into any sublease,
license agreement or other arrangement which would have the effect of causing
any portion of the amount received or accrued, directly or indirectly, by the
Landlord under this Lease to be treated as other than "rents from real
property" within the meaning of Paragraph 856(d) of the Code.
Notwithstanding anything to the contrary herein and subject to the provisions
and exclusions of Section 1(B)(4) to the Rent and Expense Rider, if Tenant
shall sublease any portion of the Leased Premises to any concessionaire(s) or
licensee(s) and either (A) such concessionaire(s) or licensee(s) are
Affiliates of Tenant, or (B) the Gross Receipts of such concessionaire(s) or
licensee(s) equal or exceed 10% of the Gross Receipts of Tenant in
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any Lease Year, then the total Gross Receipts of such concessionaire(s) or
licensee(s) shall be included in Tenant's Gross Receipts for the purpose of
determining the Annual Percentage Rent payable by Tenant for such Lease Year.
If Tenant shall enter into any subleases of any portion of the Leased
Premises with any concessionaire(s) or licensee(s), Tenant shall notify
Landlord if any of such concessionaire(s) or licensee(s) are Affiliates of
Tenant, and Tenant shall obtain from such concessionaire(s) or licensee(s),
and submit to Landlord, all information necessary to permit Landlord to
determine the Gross Receipts of such concessionaire(s) or licensee(s).
(H) ASSIGNMENT OF RIGHTS IN SUBLEASE. As security for
performance of its obligations under this Lease, Tenant hereby grants,
conveys and assigns to Landlord all right, title and interest of Tenant in
and to all subleases now in existence or hereinafter entered into for any or
all of the Leased Premises, and all extensions, modifications and renewals
thereof and all rents, issues and profits therefrom. Landlord hereby grants
to Tenant a license to collect and enjoy all rents and other sums of money
payable under any sublease of any of the Leased Premises; provided, however,
that Landlord shall have the absolute right at any time after the occurrence
and continuance of an event of default and Tenant's failure to timely cure or
commence to cure the same as herein provided, upon notice to Tenant and any
subtenants to revoke said license and to collect such rents and sums of money
and to retain the same. Tenant shall not (i) consent to, cause or allow any
material modification or alteration of any of the terms, conditions or
covenants of any of the subleases or the termination thereof, without the
prior written approval of Landlord which shall not be unreasonably withheld
or delayed nor (ii) accept any rents (other than customary security deposits)
more than 30 days in advance of the accrual thereof nor (iii)
19
permit anything to be done, the doing of which, nor omit or refrain from
doing anything, the omission of which, will or could be a breach of or
default in the terms of any of the subleases.
(I) REIT LIMITATIONS. Anything contained in this Lease to the
contrary notwithstanding, Tenant shall not: (i) sublet or assign or enter
into other arrangements such that the amounts to be paid by the sublessee or
assignee thereunder would be based, in whole or in part, on the income or
profits derived by the business activities of the sublessee or assignee; (ii)
sublet or assign the Leased Premises or this Lease to any tenant in which
Landlord owns, directly or indirectly (by applying constructive ownership
rules set forth in Paragraph 856(d)(5) of the Code), a 10% or greater
interest within the meaning of Section 856(d)(2)(B) of the Code; or (iii)
sublet or assign the Leased Premises or this Lease in any other manner or
otherwise derive any income without the prior written consent of Landlord
which subletting could cause any portion of the amounts received by Landlord
pursuant to this Lease or received indirectly by Landlord pursuant to any
sublease to fail to qualify as "rents from real property" within the meaning
of Paragraph 856(d) of the Code, or which could cause any other income
received by Landlord to fail to qualify as income described in Paragraph
856(c)(2) of the Code. The requirements of this subpart (I) shall likewise
apply to any further subleasing by any subtenant.
(J) LICENSES, ETC. For purposes of this Article, subleases
shall be deemed to include any licenses, concession arrangements, management
contracts or other arrangements relating to the possession or use of all or
any part of the Leased Premises.
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9. CONTINUED POSSESSION OF TENANT.
Any holding over after the last day of any extension of the term
hereof, or after the last day of the initial fixed term hereof if this Lease
is not extended, shall be construed to be a monthly tenancy, on the terms
herein set forth, terminable by either party on not less than one month's
notice.
10. FIXTURES.
(A) Any and all trade fixtures and equipment, signs,
appliances, furniture and other personal property of any nature installed in
Tenant's Facility on the Commencement Date or at any time thereafter by
Tenant, including lighting fixtures, concession stands and related equipment,
acoustical wall panels, projection and sound equipment, seats and satellite
dishes, if installed (all of the foregoing being collectively referred to in
this Lease as "TENANT'S PROPERTY"), shall not become a part of the realty
and may be removed from Tenant's Facility by Tenant at any time during the
term hereof or within 30 days after the termination of the term hereof.
Landlord hereby waives any and all liens, claims, demands or rights,
including rights of levy, execution, sale and distraint for unpaid rent, or
any other right, interest or lien which Landlord has or may hereafter acquire
in any of Tenant's Property.
(B) Tenant shall have the right to finance the acquisition and
installation of Tenant's Property (by granting a security interest therein or
entering into an equipment lease therefor), and in connection therewith,
Landlord agrees to execute and to cause the holder of any Mortgage to execute
and deliver a standard form of landlord's and mortgagee's waiver and all
other documents in standard form as reasonably required by such lessor of
21
or holder of a security interest in Tenant's Property to confirm such
entity's ownership of and/or security interest in said Tenant's Property.
11. UTILITIES.
(A) Tenant shall pay all charges for gas, electricity, water,
sewer service and other utilities used in Tenant's Facility and the Leased
Premises during the term hereof, all such utilities to be separately metered
and to be obtained by Tenant from the applicable utility company. Tenant
also shall be solely responsible for the payment of any connection, tap,
hookup or other fee(s) imposed by Governmental Authority or by any utility
company to extend and/or connect utility service to the Leased Premises.
(B) Tenant shall, at Tenant's expense, furnish, install and
maintain in good condition and repair, (i) to points in Tenant's Facility,
all storm and sanitary sewers, and all gas, water, telephone, electrical
facilities and other utilities of such size and type as may be required to
provide adequate service for the Leased Premises, and (ii) to Tenant's Pylon,
electrical facilities of such size and type as may be required to adequately
service Tenant's Pylon.
12. GOVERNMENTAL AND GROUND LEASE COMPLIANCE.
(A) TENANT RESPONSIBILITIES GENERALLY. Except as provided in
paragraph (C) of this Article, Tenant shall comply with all Laws which
affect the Leased Premises and Tenant's Facility located thereon and the use
and occupancy thereof. Tenant may, at its expense, contest the validity or
applicability of any governmental
22
requirements and postpone or delay compliance therewith (in whole or in part)
pending resolution of such contest. If Tenant receives written notice of any
violation of any governmental requirements applicable to the Leased Premises,
Tenant shall give prompt notice thereto to Landlord.
(B) PARTIES' ENVIRONMENTAL KNOWLEDGE. Landlord and Tenant each
warrants and represents to the other that to its actual knowledge and, except
as otherwise disclosed in the Environmental Report (hereinafter defined) (i)
no release, leak, discharge, spill, storage, disposal or emission of
"Hazardous Substances" (hereinafter defined) has occurred in, on or under the
Leased Premises, and that the Leased Premises, are free of Hazardous
Substances as of the date hereof, (ii) there are no underground storage tanks
under or adjacent to the Leased Premises, (iii) there has not been any notice
of intent to sue, notice of violation, citation, warning or similar
notification under any federal, state or local environmental law or
regulation regarding the Leased Premises or arising out of operations on the
Leased Premises, and (iv) it is not aware of any investigation or inquiry by
any Governmental Authority concerning the Entire Premises or the operations
thereon; PROVIDED, HOWEVER, Tenant hereby acknowledges and agrees that (i) it
has received a copy of an environmental assessment prepared by
_________________ respecting the Leased Premises (the "Environmental
Report"), Tenant is fully aware of the contents of the Environmental Report,
and Tenant accepts the Leased Premises subject to all matters and conditions
disclosed in the Environmental Report, (ii) Landlord has not undertaken any
investigation or inquiry with respect to environmental aspects of the Leased
Premises other than the Environmental Report, and the warranties and
representations of Landlord set forth in this section are based solely upon
the contents of the Environmental Report and any actual knowledge, and (iii)
the representations and warranties contained in this section are subject to
the matters and conditions disclosed in the Environmental Report,
23
and Landlord shall not be deemed to be in breach of the warranties and
representations contained in this section to the extent that the matter or
conditions which would otherwise be a breach of such warranties and
representations is disclosed in the Environmental Report.
(C) LANDLORD'S ENVIRONMENTAL RESPONSIBILITIES. During the term
of this Lease, Landlord shall not cause any Hazardous Substances to be used,
stored, generated or disposed of (collectively "USED") on, in or under the
Leased Premises by Landlord or its agents, employees, contractors or anyone
(other than Tenant) claiming by through or under Landlord, except for those
Hazardous Substances which may lawfully be Used in the ordinary course of
business in the operation of such properties or which may be reasonably
required in performing the obligations of Landlord under this Lease, and then
only to the extent no Laws in effect at such time are violated by Landlord.
(D) TENANT'S ENVIRONMENTAL RESPONSIBILITIES. During the terms
of this Lease, Tenant shall not cause or permit any Hazardous Substances to
be Used on, in or under the Leased Premises by Tenant, Tenant's agents,
employees, contractors or anyone claiming by, through or under Tenant, except
in the ordinary course of business in the operation of Tenant's business as
permitted by Section 7(A) this Lease, or as reasonably required in performing
the obligations of Tenant under this Lease, and then only to the extent no
Laws in effect at such time are violated by Tenant.
(E) ENVIRONMENTAL INDEMNITIES. Each party ("INDEMNIFYING
PARTY") shall indemnify and save the other party ("INDEMNIFIED PARTY")
harmless from any and all claims of third parties, and damages, costs and
losses owing to third parties or suffered by Indemnified Party, including
court costs, reasonable attorneys' fees
24
and consultants' fees, arising during or after the term and reasonably
incurred or suffered by the Indemnified Party as a result of any default or
breach of any representation, warranty or covenant made by Indemnifying Party
under paragraphs (A) through (D) of this Article. It is a condition of this
indemnification and save harmless that the Indemnifying Party shall receive
notice of any such claim against the Indemnified Party promptly after
Indemnified Party first has knowledge thereof, but no failure by the
Indemnified Party to promptly notify the Indemnifying Party of any such claim
shall adversely affect the Indemnified Party's right to indemnification
except (and only to the extent) that the Indemnifying Party can prove
prejudice as a result of the failure to receive prompt notice. This
indemnification and save harmless includes any and all costs reasonably
incurred by the Indemnified Party after notice to Indemnifying Party for any
cleanup, removal or restoration mandated by any public official acting
lawfully under Law if Indemnifying Party shall not timely perform such work.
(F) DEFINITION. As used herein, "HAZARDOUS SUBSTANCE" means
any substance that is toxic, radioactive, ignitable, flammable, explosive,
reactive or corrosive and that is, in the form, quantity, condition and
location then found upon or under the Leased Premises and/or the remainder of
the Entire Premises, as the case may be, regulated by any Governmental
Authority. "Hazardous Substance" includes any and all materials and
substances that are defined as "hazardous waste," "hazardous chemical,"
"pollutant," "contaminant" or "hazardous substance," in the form, quantity,
condition and location then found upon the Leased Premises and/or the
remainder of the Entire Premises, as the case may be, pursuant to Law.
"Hazardous Substance" includes asbestos, polychlorinated biphenyls and
petroleum.
25
(G) COMPLIANCE WITH GROUND LEASE. Tenant covenants and agrees
(i) that this Lease is subject to any Ground Lease pursuant to which Landlord
has leased to Tenant the Leased Premises and (ii) during the Term of this
Lease to pay and perform when due any and all obligations of Landlord under
and with respect to any such Ground Lease and (iii) Tenant shall comply with
and abide by all of the terms and provisions of the Ground Lease, whether
such terms and provisions are binding upon the holder of the tenant's
interest in the Ground Lease or the Leased Premises. Landlord agrees to
fully cooperate with Tenant in the exercise of any rights or remedies
pursuant to such Ground Lease the exercise of which Tenant believes is
necessary or prudent with respect to the Leased Premises. Tenant hereby
covenants and agrees to indemnify and hold harmless Landlord from and against
any and all claims, costs, demands, losses or liabilities (including
attorney's fees) which Landlord may suffer or incur by reason of any failure
by Tenant to pay and perform all of the terms of, or any violation of or
noncompliance with any of the covenants and agreements contained in, the
Ground Lease, regardless of whether such provisions are binding upon the
holder of the tenant's interest in the Ground Lease or the Leased Premises.
If at any time any claims, costs, demands, losses or liabilities are asserted
against Landlord by reason of any failure by Tenant to pay and perform all of
the terms of, or any violation of or noncompliance with any of the covenants
and agreements contained in, the Ground Lease, regardless of whether such
provisions are binding upon the holder of the tenant's interest in the Ground
Lease or the Leased Premises, Tenant will, upon written notice from Landlord
given in accordance with the provisions hereof, defend any such claims,
costs, demands, losses or liabilities at Tenant's sole cost and expense by
counsel reasonably acceptable to Landlord and Tenant.
26
(H) NO AMENDMENTS TO GROUND LEASE. During the term of this
Lease, Landlord shall not, without the prior written consent of Tenant,
modify, amend, terminate or surrender its interest in the Ground Lease, any
ECR or any other agreement relating to the Leased Premises or Entire Premises
to which Landlord has any right, title or interest (and for which Tenant has
any obligations hereunder). With respect to any such modification,
amendment, termination or surrender prohibited hereby which materially
adversely affects or impairs Tenant's operation of its business on the Leased
Premises or Entire Premises, or rights thereto, Tenant may withhold its
consent in its absolute discretion but otherwise Tenant's consent shall not
unreasonably be withheld or delayed.
(I) LANDLORD INDEMNIFICATION. Landlord hereby covenants and
agrees to indemnify and hold harmless Tenant from and against any and all
claims, costs, demands, losses or liabilities (including attorney's fees)
which Landlord may suffer or incur by reason of any violation by Landlord of
the provisions of Section 12(H) hereof.
(J) SURVIVAL. The provisions of this Article shall survive the
expiration or sooner termination of this Lease.
13. MAINTENANCE AND REPAIRS.
(A) WARRANTY. Landlord will, so long as no event of default
shall have occurred and be continuing, assign or otherwise make available to
the Tenant any and all rights the Landlord may have under any vendor's or
manufacturer's warranties or undertakings with respect to the Leased
Premises, but Landlord does not warrant or represent that any such warranties
or undertakings are or will be available to Tenant, and Landlord shall have
no further obligations or responsibilities respecting such warranties or
undertakings.
27
(B) MAINTENANCE AND REPAIR. Tenant shall pay all costs,
expenses, fees and charges incurred in connection with the use or occupancy
of the Leased Premises. Tenant shall at all times, at its own expense, and
subject to reasonable wear and tear, keep the Leased Premises in good
operating order, repair, condition and appearance. With respect to the
Leased Premises, the undertaking to maintain in good repair shall include,
without limitation, all interior and exterior repairs (including all
replacements of components, systems or parts which are a part of, or are
incorporated into, the Leased Premises, or any part thereof), whether
structural or nonstructural, foreseen or unforeseen, ordinary or
extraordinary and all common area maintenance including, without limitation,
removal of dirt, snow, ice, rubbish and other obstructions and maintenance of
sidewalks and landscaping.
(C) ANY GROUND LEASE RESPONSIBILITIES. Tenant also covenants
and agrees during the term of this Lease to perform all maintenance and
repair obligations of Landlord under any Ground Lease.
(D) ALTERATIONS. So long as no event of default shall have
occurred and be continuing, Tenant may, at its expense, make nonstructural
additions to and alterations to the Leased Premises and shall additionally
have the right to install communications equipment on the roof of Tenant's
Facility if such equipment is screened from customer view in a manner
reasonably acceptable to Landlord without the necessity of obtaining
Landlord's consent; provided, that upon (i) completion of such additions or
alterations, neither the fair market value of the Leased Premises shall be
materially lessened thereby nor the utility or condition of the Leased
Premises materially impaired, below the value, utility or condition thereof
immediately prior to such action, (ii) such additions or
28
alterations shall not result in a change of use of the Leased Premises, and
(iii) such work shall be completed in a good and workmanlike manner and in
compliance with all applicable legal requirements. Any and all such
additions and alterations shall be and remain part of the Leased Premises and
shall be subject to this Lease. Notwithstanding anything contained herein,
Tenant shall not perform any addition or alteration to the Leased Premises
which would have an estimated cost in excess of $500,000, nor any structural
alterations to the Leased Premises, without the Landlord's prior written
consent, which consent may be conditioned upon, among other things,
Landlord's approval of the plans and specifications for such additions and
alterations and Tenant's furnishing of such security as Landlord may
reasonably require to protect Landlord against any liens or claims affecting
the Leased Premises as a result of such addition or alteration, but otherwise
such consent shall not be unreasonably withheld or delayed.
(E) CERTAIN LIMITATIONS. Notwithstanding anything set forth in
paragraphs (A), (B) and (C) of this Article to the contrary, the obligations
of Tenant set forth therein shall be subject to the provisions set forth in
the Articles captioned "Damage Clause" and "Condemnation and Economic
Obsolescence."
14. DAMAGE CLAUSE.
(A) INSURED DAMAGE. If Tenant's Facility or the Common
Facilities shall be damaged or destroyed by fire, casualty or any cause
whatsoever, either in whole or in part, which is insurable under the Required
Insurance, and Tenant does not elect to terminate this Lease pursuant to the
provisions of paragraphs (C) or (E) hereof, Tenant shall with due diligence
remove any resulting debris and repair and/or rebuild the damaged or
destroyed structures and other improvements, including any improvements or
betterments
29
made by Landlord or Tenant, in accordance with the Final Plans (to the extent
then permitted by law and to the extent of available insurance proceeds).
Landlord shall make all insurance proceeds available as a result of such
fire, casualty or other destruction to Tenant for restoration. Tenant shall
obtain Landlord's consent (which shall not be unreasonably withheld or
delayed) to any material deviation from the Final Plans which Tenant is
required to make to obtain approval from Governmental Authorities having
jurisdiction for such restoration. Until the earlier of (i) the date 90 days
after the date Tenant's Facility and the Common Facilities are repaired,
rebuilt and put in good and tenantable order, or (ii) the date Tenant reopens
the portion(s) of Tenant's Facility so damaged or destroyed, the Annual Fixed
Rent and other charges hereby reserved, or a fair and just proportion thereof
according to the nature and extent of the damage sustained, shall be abated,
but only to the extent of any rental interruption insurance proceeds actually
received by Landlord.
(B) UNINSURED DAMAGE. If Tenant's Facility or the Common
Facilities shall be damaged or destroyed by a casualty not insurable under
the Required Insurance and Tenant does not elect to terminate this Lease
pursuant to the provisions of paragraphs (C) and (E) hereof, Landlord shall
with due diligence remove any resulting debris and repair and/or rebuild the
damaged or destroyed structures and other improvements, including any
improvements or betterments made by Landlord or Tenant, in accordance with
the Final Plans, to the extent permitted by law. Until the earlier of (i)
the date 90 days after the date Tenant's Facility and the Common Facilities
are repaired, rebuilt and put in good and tenantable order, or (ii) the date
Tenant reopens the portion(s) of Tenant's Facility so damaged or destroyed
the Annual Fixed Rent and other charges hereunder, or a just and
30
fair proportion thereof according to the nature and extent of the damage
sustained, shall be abated, but only to the extent of any rental interruption
insurance proceeds actually received by Landlord. Landlord shall have the
right, in lieu of repairing and restoring the Tenant's Facility or the Common
Facilities upon the occurrence of any casualty which is not insurable under
the Required Insurance, to terminate this Lease, effective as of the date of
such casualty, by written notice to Tenant given within 30 days after the
occurrence of such casualty; provided, however, such right of termination by
Landlord shall only be available to the extent as a result of such
uninsurable casualty all or a portion of Tenant's facility is rendered
unsuitable for use as a movie theatre and the cost of restoration would
exceed 50% of the amount it would cost to replace Tenant's Facility in its
entirety at the time such damage or destruction occurred. Upon any such
termination, all insurance proceeds (if any) payable with respect to the
casualty to the Leased Premises (other than insurance proceeds payable with
respect to Tenant's Property) shall belong to Landlord.
(C) RIGHT TO TERMINATE ON CERTAIN DAMAGE. If Tenant's Facility
is damaged or destroyed by fire, casualty or any cause whatsoever (other than
willful misconduct of Tenant) to such an extent that all or a portion thereof
is rendered unsuitable for use as a movie theatre and the cost of restoration
would exceed 50% of the amount it would cost to replace Tenant's Facility in
its entirety at the time such damage or destruction occurred, and if Tenant
has complied with its insurance obligations under this Lease (including
maintaining insurance against loss of rents by Landlord), Tenant may
terminate this Lease by notice to Landlord given within 30 days after such
damage or destruction. If Tenant elects to terminate this Lease as provided
herein, Tenant shall pay to Landlord, as a
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condition upon the effectiveness of such termination, within 60 days after
such notice, an amount equal to all insurance proceeds for such damage or
destruction (except any for Tenant's Property) together with an amount equal
to the difference, if any, between the amount of insurance proceeds turned
over to Landlord and the net book value of Tenant's Facility as accurately
reflected in Landlord's financial records as of the date of such damage or
destruction. Upon the giving of such notice by Tenant to terminate, and
Tenant's payment of all amounts provided for hereunder, this Lease shall
automatically terminate and the Annual Fixed Rental and other charges
hereunder shall be equitably adjusted as of the date of such destruction.
Notwithstanding anything to the contrary herein, if the provisions of any
Ground Lease or REA require the restoration of the Leased Premises following
the occurrence of any damage or destruction which is insurable under the
Required Insurance or under any insurance which is required under the
provisions of such Ground Lease or REA, then in such event Tenant shall not
have the right to terminate this Lease as provided in this Section 14, and in
such event Tenant shall proceed to restore the Leased Premises in accordance
with the requirements of such Ground Lease or REA.
(D) EFFECT OF LEASE TERMINATION. If Tenant elects to terminate
this Lease as set forth in paragraph (C) of this Article and such notice of
termination is not negated by Landlord as provided in this paragraph, then
this Lease shall terminate as of the date of such damage or destruction and
the Annual Fixed Rent and other charges hereunder shall be adjusted as of the
date of termination. If Tenant so elects to terminate this Lease as provided
in paragraph (C) of this Article, Landlord shall nevertheless have the option
of negating such notice of termination by giving notice to Tenant of such
negation, which
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notice, if given at all, shall be given within 60 days of Landlord's receipt
of Tenant's notice of termination. If Landlord elects to negate Tenant's
notice of termination, then (i) this Lease shall not terminate, and (ii)
Landlord shall, with due diligence, repair and restore Tenant's Facility in
its entirety at Landlord's sole cost and expense. If Landlord elects to
negate Tenant's notice of termination as provided herein, then all insurance
proceeds payable as a result of such damage or destruction (except for
proceeds payable with respect to Tenant's Property) shall belong to Landlord
and until the earlier of (i) the date 90 days after the date Tenant's
Facility and the Common Facilities are repaired, rebuilt and put in good and
tenantable order, or (ii) the date Tenant reopens the portion(s) of Tenant's
Facility so damaged or destroyed, the Annual Fixed Rent and other charges
hereunder, or a just and fair proportion thereof according to the nature and
extent of the damage sustained, shall be abated.
(E) ELECTION NOT TO RESTORE. Anything in this Article to the
contrary notwithstanding, it is agreed that if (i) Tenant's Facility is
damaged or destroyed by fire or other cause to such an extent that the cost
of restoration would exceed 25% of the amount it would have cost to replace
Tenant's Facility in its entirety at the time such damage or destruction
occurred, and (ii) such damage or destruction occurs during the last 3 years
of the initial fixed term hereof or during the last 2 years of any Option
Period, then either Landlord or Tenant shall have the right and option to
terminate this Lease by giving the other party to this Lease notice of such
election within 30 days after the date on which such damage or destruction
occurred, and if such notice is given this Lease shall terminate as of the
date Tenant vacates Tenant's Facility, which date shall be no later than 45
days after the giving of such notice, and the Annual Fixed Rent and other
charges hereunder
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shall be adjusted as of the effective date of termination; PROVIDED, HOWEVER,
that Tenant shall have the right to nullify any such notice of termination
given by Landlord if at the time such notice is given an option herein
granted Tenant to extend the term of this Lease for an additional period of 5
years or more remains unexercised and Tenant shall exercise such option
within 30 days after the receipt of such notice from Landlord, in which event
Landlord's notice of such termination shall be of no force or effect and the
parties shall perform the restoration and other work required of them under
the terms of this Article.
(F) RIGHTS TO INSURANCE PROCEEDS. If this Lease is terminated
as in this Article provided following damage to or destruction of Tenant's
Facility and/or Tenant's property, the proceeds of all hazard insurance on
Tenant's Facility which is maintained by Tenant or Landlord pursuant to the
Article captioned "Insurance; Indemnity; Waiver of Subrogation and Fire
Protection" shall belong to Landlord, except insurance proceeds in respect of
Tenant's Property, which shall belong to Tenant.
15. INSURANCE, INDEMNITY, WAIVER OF SUBROGATION AND FIRE
PROTECTION
(A) PROPERTY POLICY. During the term hereof, Tenant shall at
its expense except as provided below, keep Tenant's Facility (excluding
foundations, footings and underground improvements) insured in the name of
Tenant with Landlord as an additional insured as its interests may appear
against damage or destruction by fire and the perils commonly covered under a
standard policy of fire and extended coverage insurance (including vandalism
and malicious mischief and all physical loss perils) and so-called difference
in conditions coverage, as applicable, to the extent of not less than 100% of
the full replacement cost thereof. Such policy also shall cover floods, when
the Leased Premises
34
are located in whole or in material part in a designated flood plain area and
earthquake if the Leased Premises is located in California (and in other
locations if reasonably required by Landlord and designated on the
Commencement Date hereof) and other similar hazards as may be customary for
comparable properties in the area, and such other "additional coverage"
insurance as Landlord or any holder of a Mortgage, on the Leased Premises may
reasonably require, which at the time is usual and commonly obtained in
connection with properties similar in type of building size and use to
Tenant's Facility and located in the geographic area where the Leased
Premises are located. Landlord agrees that the amounts and coverages
maintained by Tenant with respect to the Leased Premises at the Commencement
Date hereof satisfies the requirements of this Section 15(A) as of the
Commencement Date hereof. Tenant shall be responsible for determining that
the amount of property damage coverage maintained with respect to the Leased
Premises complies with the requirements of this Lease. The proceeds of such
insurance in case of loss or damage shall be held in trust and applied on
account of the obligation of Tenant to repair and/or rebuild the Leased
Premises pursuant to the Article captioned "Damage Clause" to the extent that
such proceeds are required for such purpose, subject to any conflicting
provision in the Ground Lease or the REA, which conflicting provision (if
any) shall control the handling of such insurance proceeds. The insurance
required to be carried by Tenant under this paragraph and paragraph (C) of
this Article (i) may be covered under a so-called "blanket" policy covering
other operations of Tenant and Affiliates, so long as the amount of coverage
available under said "blanket" policy with respect to the Leased Premises, or
Tenant's liability under this Lease, at all times meets the requirements set
forth in this Lease, and (ii) shall be evidenced by a certificate of
insurance from Tenant's
35
insurer. Such insurance certificate with respect to property insurance shall
be issued on ACORD 27 or equivalent, and with respect to both property
insurance and liability insurance, in a form acceptable to Landlord. Upon
request, Tenant shall name the holder of any Mortgage on Tenant's Facility
pursuant to a standard mortgagee, additional insured or loss payee clause as
such holder shall elect with respect to the foregoing property insurance,
provided such holder agrees with Tenant in writing to disburse such insurance
proceeds to Tenant for, and periodically during the course of, repair and
restoration of Tenant's Facility as set forth in this Lease.
(B) LIABILITY INSURANCE; TENANT NEGLIGENCE. Tenant will,
subject to the provisions of paragraph (D) of this Article, and subject to
the provisions of paragraph (D) of the Article captioned "Governmental and
Ground Lease Compliance," indemnify and save harmless Landlord, its officers,
agents and servants, from and against any and all claims, actions, liability
and expense in connection with loss of life, bodily injury and/or damage to
property: (i) arising from or out of any occurrence in, upon or at Tenant's
Facility, the Leased Premises or the occupancy or use by Tenant of Tenant's
Facility, the Leased Premises or any part thereof, unless the same is caused
by the willful or negligent act or omission of Landlord; or (ii) occasioned
wholly or in part by any willful or negligent act or omission of Tenant, its
agents, employees, servants, subtenants, lessees or concessionaires. If any
action or proceeding is brought against Landlord, its officers, agents or
servants by reason of any of the aforementioned causes, Tenant, upon
receiving notice thereof from Landlord, agrees to defend such action or
proceeding by adequate counsel at its own expense. Tenant agrees to insure
the foregoing obligation by contractual endorsement under a commercial
general public liability policy (including
36
personal injury and property damage and which may be a blanket policy) to be
maintained by Tenant with combined single limits of not less than
$10,000,000.00. To the extent that Tenant does not self-insure, Tenant shall
furnish Landlord certificates of insurance from Tenant's insurer evidencing
that such insurance is in full force and effect at all times. Tenant shall
cause Landlord to be named as an additional insured as its interests may
appear on all policies of liability insurance maintained by Tenant (including
excess liability and umbrella policies) with respect to the Leased Premises.
(C) WORKERS' COMPENSATION INSURANCE. Tenant shall maintain,
with respect to its operations and all of its employees at the Leased
Premises, a policy or policies of workers' compensation insurance, in
accordance with and in the amounts required by Laws.
(D) LIABILITY INSURANCE; LANDLORD NEGLIGENCE. Landlord will,
subject to the provisions of paragraph (E) of this Article, and subject to
the provisions of paragraph (D) of the Article captioned "Governmental and
Ground Lease Compliance," indemnify and save harmless Tenant, its officers,
agents and servants, from and against any and all claims, actions, suits,
judgments, decrees, orders, liability and expense in connection with loss of
life, bodily injury and/or damage to property occasioned wholly or in part by
any willful or negligent act or omission of Landlord, its agents, employees
or servants. If any action or proceeding is brought against Tenant, its
agents or servants by reason of any of the aforementioned causes, Landlord,
upon receiving written notice thereof from Tenant in the manner provided
herein, agrees to defend such action or proceeding by adequate counsel at its
own expense. Landlord agrees to insure the foregoing obligation by
contractual endorsement under a commercial general public liability policy
(including personal injury and property damage and which may be a blanket
policy) to be maintained by Landlord
37
(on which Tenant is named as an additional insured) with single limits of not
less than $5,000,000.00. Landlord shall provide Tenant certificates of
insurance from Landlord's insurer evidencing that the insurance so required
to be maintained by Landlord is in full force and effect at all times.
(E) RELEASE; WAIVER OF SUBROGATION. Anything in this Lease to
the contrary notwithstanding, it is agreed that each party (the "RELEASING
PARTY") hereby releases the other (the "RELEASED PARTY") from any liability
which the Released Party would, but for this paragraph, have had to the
Releasing Party during the term of this Lease resulting from any accident or
occurrence or casualty (i) which is covered by Tenant's required insurance
hereunder, or (ii) which is or would be covered by a fire or "all risk"
property insurance policy in use in the state in which the Leased Premises is
located, whether or not the Releasing Party is actually maintaining such an
insurance policy, or (iii) which is covered by any other casualty or property
damage insurance being carried by the Releasing Party at the time of such
occurrence, which casualty may have resulted in whole or in part from any act
or neglect of the Released Party, its officers, agents or employees;
PROVIDED, HOWEVER, the release hereinabove set forth shall become inoperative
and null and void if the Releasing Party wishes to place such insurance with
an insurance company which (y) takes the position that the existence of such
release vitiates or would substantially adversely affect any policy so
insuring the Releasing Party and notice thereof is given to the Released
Party, or (z) requires the payment of a higher premium by reason of the
existence of such release, unless in the latter case the Released Party
within 20 days after notice thereof from the Releasing Party pays such
increase in premium. Notwithstanding anything to the contrary herein, except
as provided in Section 15(D)
38
hereof, Tenant agrees and acknowledges that Landlord shall have no
responsibility or liability for any loss, damage or injury to Tenant's
Property which is located in, on or about the Leased Premises or the Common
Facilities at any time and from time to time, regardless of the cause of such
loss, damage or injury, and that all of Tenant's Property is located in, on
or about the Leased Premises or the Common Facilities at Tenant's sole risk.
Tenant hereby releases Landlord from any and all claims with respect to loss,
damage or injury to Tenant's Property located in, on or about the Leased
Premises or the Common Facilities, regardless of the cause of such loss,
damage or injury.
(F) SELF-INSURE; DEDUCTIBLES. With respect to the casualty and
property damage insurance coverages to be provided by Tenant hereunder,
Tenant may reasonably determine to partially self-insure and/or purchase
insurance policies required hereunder with such deductibles as is customary
for the risks involved as long as Tenant can reasonably demonstrate to
Landlord its ability to satisfy such deductible or amount of self insurance.
In no event shall the amount of Tenant's deductible and self-insurance with
respect to the Tenant's Facility (both liability and property) exceed 1% of
the consolidated net worth of Tenant's Parent, as reflected on the most
recent audited balance sheet of Tenant's Parent.
16. INDEMNIFICATION GENERALLY. In addition and subject to the
parties' respective indemnification obligations set forth elsewhere in this
Lease including those in the Article captioned "Insurance, Indemnification,
Waiver of Subrogation and Fire Protection", Tenant agrees to indemnify and
save harmless Landlord, its officers, agents and servants from and against
all liabilities, costs and expenses (including reasonable attorneys' fees and
expenses) and all actual or consequential damages imposed upon or asserted
against the Landlord as owner of
39
the Leased Premises on account of, (i) any use, misuse, non-use, condition,
maintenance or repair by Tenant of the Leased Premises; (ii) any impositions
which are the obligation of Tenant to pay pursuant to the applicable
provisions of this Lease; (iii) any failure on the part of Tenant to perform
or comply with any other of the terms of this Lease or any sublease; (iv)
liability the Landlord may incur as a result of any permitted contest by
Tenant under the Lease; (v) any liability Landlord may incur or suffer as a
result of Laws, including the ADA (except those Laws referred to in (vi)
below), affecting the Leased Premises; (vi) accident, injury to or death of
any person or damage to property on or about the Leased Premises; and (vii)
any liability Landlord may incur or suffer as a result of any Laws relating
to the protection of human health or the environment in respect to the Leased
Property which liability arises as a result of any event or occurrence when
Tenant or any of its affiliates was an owner of the Leased Premises or a
tenant of the Leased Premises pursuant to a Ground Lease or is the Tenant
hereunder which does not result from the willful actions or negligence or
omissions of the Landlord or its agents or invitees. If at any time any
claims, costs, demands, losses or liabilities are asserted against Landlord
by reason of any of the matters as to which Tenant indemnifies Landlord
hereunder, Tenant will, upon written notice from Landlord given in accordance
with the provision hereof, defend any such claims, costs, demands, losses or
liabilities at Tenant's sole cost and expense by counsel reasonably
acceptable to Landlord. Landlord agrees to indemnify and save harmless,
Tenant from and against all liabilities, costs and expenses (including
reasonable attorneys' fees) imposed upon or asserted against Tenant as a
result of any failure on the part of Landlord to perform or comply with any
of the terms of this Lease.
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17. TENANT TO PAY TAXES.
Tenant shall pay all Taxes assessed or charged against the Leased
Premises or any part thereof as provided in the Rent and Expense Rider.
18. ALTERATIONS AND TENANT'S LIENS.
(A) TITLE TO TENANT'S ALTERATIONS. Subject to the provisions
of the Article captioned "Fixtures," any alterations, changes, improvements
and additions made by Tenant shall immediately become the property of
Landlord and shall be considered a part of Tenant's Facility.
(B) NO TENANT LIENS. Tenant shall not permit any mechanic's,
materialman's or other similar lien to be foreclosed against the Leased
Premises by reason of work, labor, services or materials performed by or
furnished to Tenant or anyone holding any part of the Leased Premises under
Tenant. If any such lien shall at any time be filed, Tenant may contest the
same in good faith but Tenant shall, prior to foreclosure thereof, cause such
lien to be released of record by payment, bond, order of a court of competent
jurisdiction or otherwise. Nothing contained in this Lease shall be
construed as a consent on the part of Landlord to subject Landlord's estate
in the Leased Premises to any lien or liability under the lien laws of the
state in which the Leased Premises are located. Notwithstanding the
foregoing, if any mechanics', materialmen's or other similar lien is filed
against the Leased Premises, and the amount of such lien claim exceeds
$250,000, then Tenant shall, within 10 days after the filing thereof, provide
to Landlord a bond in the amount of 125% of the amount of such lien claim, or
other security reasonably satisfactory to Landlord, protecting Landlord from
loss or liability by reason of such lien. Tenant hereby covenants and agrees
to indemnify and hold harmless Landlord from and against any and all claims,
41
costs, demands, losses or liabilities (including attorneys' fees) which
Landlord may suffer or incur by reason of any such mechanics', materialmen's
or other similar lien.
(C) LANDLORD ELECTIVE IMPROVEMENTS. During the term of this
Lease, Landlord shall not be required to build or rebuild any improvements to
the Leased Premises or Tenant's Facility, or to make any repairs,
replacements, alterations, restorations or renewals thereto. In the event
that Landlord should, in its sole discretion, elect to make capital
improvements to the Leased Premises, it may only do so with Tenant's consent,
which may be given or withheld in Tenant's sole discretion, and it is
understood and agreed that Landlord will generally condition any such
election on an increase in the Annual Fixed Rent to reflect such expenditures.
19. TENANT'S SIGNS.
(A) LOCATION AND TYPE. Tenant shall have the right to maintain
the following signs in accordance with and subject to any applicable
provisions of the Site Plan, the Ground Lease, the REA and Laws:
(1) Illuminated signs on the exterior walls of Tenant's
Facility and on the theatre canopy or marquee.
(2) Signs on the interior or exterior of any windows of
Tenant's Facility.
(3) Easel or placard signs within the lobby entrance or on
sidewalks immediately in front of Tenant's Facility, provided the
same do not unreasonably interfere with pedestrian traffic.
(4) Poster cases within the lobby of Tenant's Facility and on
the exterior walls of Tenant's Facility.
42
(5) Illuminated roadside sign(s) and attraction board
("TENANT'S PYLON") located as shown on the Site Plan.
(B) DESIGN. The design of all signs presently located on the
Leased Premises is hereby approved by Landlord with the design of all future
signs which Tenant elects to construct pursuant to clauses (1) and (5) of
paragraph (A) of this Article (such present and future signs referred to as
"TENANT'S SIGNS") to be subject to Landlord's approval, which Landlord agrees
not to unreasonably withhold or delay (Landlord hereby approving the Tenant's
Signs which are located on the Leased Premises on the Lease Commencement
Date), shall advertise Tenant's business in Tenant's Facility and shall be
constructed and maintained in good repair at Tenant's expense. Tenant shall
pay the cost of electricity consumed in illuminating Tenant's Signs.
(C) ACCESS TO TENANT'S PYLON. If Tenant's Pylon is located
outside the Leased Premises, Landlord hereby grants to Tenant such easement
rights as Landlord may have under any REA, which shall be appurtenant to the
Leased Premises, for the purpose of enabling Tenant to have access to
Tenant's Pylon, to maintain and service same and to insure the continued
availability of power thereto.
(D) LOSS OF TENANT'S PYLON. If Tenant shall be deprived of
Tenant's Pylon as the result of a condemnation, Landlord shall cooperate with
Tenant, at Tenant's cost and expense, (a) to make available a mutually
agreeable site (and power thereto) for a substitute pylon within the Leased
Premises or any applicable Entire Premises strategically located so as to be
visible to automobile traffic on highways adjoining Leased Premises or any
applicable Entire Premises or at entrances to the Entire Premises, and (b) to
Tenant in obtaining, at Tenant's cost and expense, easements similar to those
described in paragraph
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(C) of this Article with respect to the new site. Nothing herein shall
obligate Landlord to provide to Tenant, as the location for Tenant's Pylon,
any portion of the Entire Premises which Landlord reasonably determines to
have value as a developable parcel for another tenant or purchaser, or to
restrict Landlord's ability to sell, lease or develop the Entire Premises in
such manner as Landlord determines to be appropriate.
(E) PROTECTION OF SIGNS VISIBILITY. Landlord shall not erect
or permit to be erected any sign or advertising device on the roof or
exterior walls of Tenant's Facility, nor any landscaping, signs or other
obstructions on the Leased Premises which would block the view of Tenant's
Pylon from adjoining streets.
(F) INTERIOR SIGNS. Nothing in this Lease shall restrict
Tenant's unlimited right to maintain signs on the interior of Tenant's
Facility.
20. CONDEMNATION AND ECONOMIC OBSOLESCENCE.
(A) IN GENERAL. If any material part of the Leased Premises
(meaning any material part of the Tenant's Facility) shall be taken in any
proceeding by any Governmental Authority by condemnation or otherwise, or be
acquired for public or quasi-public purposes, or be conveyed under threat of
such taking or acquiring (which Landlord shall not do without Tenant's prior
consent), Tenant shall have the option of terminating this Lease by notice to
Landlord of its election to do so given on or before the date which is 3
months after Tenant shall have been deprived of possession of the condemned
property, and upon the giving of such notice, this Lease shall automatically
terminate and the Annual Fixed Rent and other charges hereunder shall be
adjusted as of the date of such notice. In the event a material part of the
Leased Premises (meaning any material part of the Tenant's Facility) is so
taken and Tenant elects not to terminate this Lease, or in the event of a
taking of less than a material paart of the Leased Premises, this Lease shall
terminate as of the portion of the Leased Premises so taken, and then Tenant
44
shall, to the extent and making use of the condemnation award, restore
Tenant's Facility to a complete unit as similar as reasonably possible in
design, character and quality to the building which existed before such
taking. In the event Tenant's Facility is partially taken and this Lease is
not terminated, the Annual Fixed Rent and other charges thereafter payable
hereunder shall be equitably reduced based on the value to Tenant of the
remaining premises. If Tenant shall perform restoration work under this
paragraph, so much of the Annual Fixed Rent and other charges payable by
Tenant as is fairly allocable to the space which is to be restored shall
abate until such restoration work shall have been completed. Any restoration
work to be performed pursuant to this paragraph shall be completed in
accordance with plans and specifications which shall have been approved by
Landlord and Tenant, such approvals not to be unreasonably withheld. In any
such proceeding whereby all or part of the Leased Premises is taken, whether
or not Tenant elects to terminate this Lease, each party shall be free to
make claim against the condemning authority for the amount of the actual
provable damage done to each of them by such proceeding. If the condemning
authority shall refuse to permit separate claims to be made, then Landlord
shall prosecute with counsel reasonably satisfactory to Tenant the claims of
both Landlord and Tenant, and the proceeds of the award, after payment of
Landlord's reasonable costs and attorney's fees incurred in such proceeding,
shall be divided between Landlord and Tenant in a fair and equitable manner;
provided, however, in the event of a condemnation which results in the
termination of this Lease, Tenant shall be entitled to its portion of the
condemnation award only so long as the amount of the award paid to the
Landlord is equal to the net book value of the property taken, as reflected
on the Landlord's financial statements on the date of the condemnation.
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(B) LOSS OF PARKING. If (i) any material part of the parking
areas serving the Leased Premises, whether located upon the Leased Premises
or on a parcel other than the Leased Premises are taken in any proceeding by
any Governmental Authority, and as a result of such taking (a) the total
number of parking spaces available for use by patrons of the Leased Premises
is reduced by fifteen percent (15%) or more, and the number of parking
spaces available for use by patrons of the Leased Premises does not satisfy
the zoning requirements applicable to the Leased Premises, taking into
account the total parking requirements of the Shopping Center or (ii) by
reason of any such taking in Tenant's reasonable judgment, Tenant's ability
to conduct its operations on the Leased Premises is materially adversely
affected or any means of access to the Leased Premises or the parking
areas serving the Leased Premises are terminated, lost or materially altered
by reason of any such taking, and such termination, loss or alteration
results, in Tenant's reasonable judgment, in a material adverse effect upon
Tenant's use and occupancy of the Leased Premises or Tenant's business
operation thereon, then in any of such events Tenant shall have the option of
terminating this Lease by notice to Landlord of its election to do so given
on or before the date which is 3 months after the occurrence of such event,
and this Lease shall automatically terminate 30 days after the giving of such
notice and the Annual Fixed Rent and other charges hereunder shall be
adjusted as of that date; provided, however, that Tenant's right to terminate
this Lease shall be nullified if Landlord shall (i) on or before the 30th day
after the giving of Tenant's notice, give Tenant notice of Landlord's
intention to forthwith provide a substitute parking area contiguous to the
Leased Premises or Parking Parcel and the remaining parking area, which
substitute parking area must be reasonably acceptable to Tenant and be of
46
comparable quality and equal in size to the area taken, and (ii) within 6
months after so notifying Tenant, subject to Force Majeure, actually provide
such substitute parking area and enter into a written agreement amending this
Lease to include said substitute parking area as part of the parking area
with respect to which Tenant is granted parking rights provided for in the
Article captioned "Common Facilities."
(C) TEMPORARY TAKING AWARDS. If by reason of a taking Tenant
shall be temporarily deprived in whole or in part of the use of Tenant's
Facility or any part thereof, the entire award made as compensation therefor
shall belong to Tenant, and there shall be no abatement of the Annual Fixed
Rent payable hereunder.
(D) NO TAKING BY LANDLORD ACTION. Landlord shall not initiate
or take any action seeking a public or private taking of Tenant's Facility or
of any part of the Leased Premises or any applicable Entire Premises.
(E) ECONOMIC OBSOLESCENCE. From and after the expiration or
earlier termination of Tenant's Operating Covenant, Tenant, notwithstanding
anything in this Lease to the contrary, may elect to terminate this Lease
upon a determination by Tenant, reasonably exercised, that the Leased
Premises have become economically obsolete to Tenant due to a change in
circumstances from those which existed at the Commencement Date, including,
without limitation, circumstances relating to the competitive market or the
condition of or development (or lack thereof) on property adjacent to or in
the vicinity of the Leased Premises. If said election is made by Tenant,
this Lease shall terminate 90 days from receipt by Landlord of such election
and the obligation to pay Annual Fixed Rent or Percentage Rent shall end on
such termination date. In the event of and as a condition to such
termination, Tenant shall pay to Landlord the greater of (i) Landlord's net
book value
47
of the Leased Premises or (ii) the appraised value of the Leased Premises
based on the capitalized value of Tenant's remaining rental payments under
this Lease during the applicable Fixed Term or Extended Term. The appraised
value shall be determined by an independent appraiser mutually agreeable to
Landlord and Tenant. If Landlord and Tenant are unable, within 30 days after
Landlord's delivery of its notice electing to terminate this Lease as
provided in this Section 20(E), to agree upon an appraiser to provide such
appraisal, then Landlord and Tenant shall each select an appraiser, and the
two (2) appraisers so selected shall upon an appraiser to provide such
valuation. All appraisers selected shall, unless Landlord and Tenant agree
otherwise, be members of the American Institute of Appraisers.
21. OTHER TENANCIES; REA. If the Leased Premises are a part of
a larger Entire Premises and if there is a reciprocal easement agreement,
operating agreement or similar agreement encumbering and/or benefiting all or
any portion of the Entire Premises (an "REA"), then Landlord hereby agrees
with Tenant with respect to the REA as follows:
(A) Landlord will not approve or agree to any amendments of the
REA which materially derogates the rights granted to Landlord thereunder
without Tenant's prior consent.
(B) Landlord hereby agrees to use its best reasonable efforts,
at Tenant's expense, to enforce the cross-easement rights, operating
covenants and other rights contained in the REA on Tenant's behalf, and if
Landlord fails to proceed with its best reasonable efforts to enforce said
rights on Tenant's behalf within 30 days after notice thereof from Tenant,
Landlord agrees that Tenant shall have the right to enforce said rights under
the REA
48
directly and in the name of and on behalf of Landlord if required (all at
Landlord's expense), Landlord hereby conferring such enforcement rights unto
Tenant.
(C) Concurrently with or within 30 days after the execution of
this Lease, Landlord shall reasonably cooperate with Tenant at Tenant's
expense in securing an agreement from the other party or parties to the REA
pursuant to which such other parties confirm for the benefit of Tenant that
the REA is in full force and effect without default thereunder.
22. COMMON FACILITIES. If the Leased Premises are a part of a
larger Entire Premises and there are Common Facilities covered by an REA that
affect Tenant's use of the Leased Premises, Landlord hereby agrees to
reasonably cooperate with Tenant and/or allow Tenant to enforce against any
responsible person or entity, if any, at Tenant's cost and expense, any of
the rights with respect to the Common Facilities which Landlord may have
under such REA benefiting the Leased Premises.
23. OPTIONS TO EXTEND; RIGHT OF FIRST OFFER TO LEASE BY TENANT.
(A) OPTIONS PERIODS. Provided Tenant is not in default under
this Lease, Tenant shall have the right to extend the term of this Lease for
the Option Periods from the date upon which the term would otherwise expire
upon the same terms and conditions as those herein specified. If Tenant
elects to exercise its option for any Option Period, it shall, subject to the
provisions of paragraph (B) of this Article, do so by giving Landlord notice
of such election at least 6 months before the beginning of the Option Period
for which the term hereof is to be extended by the exercise of such option.
If Tenant gives such notice, the term of this Lease shall be automatically
extended for the Option Period covered by the option so exercised without
execution of an extension or renewal lease.
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(B) PROTECTION AGAINST FORFEITURE. It is the intention of
Landlord and Tenant to avoid forfeiture of Tenant's right to extend the term
of this Lease under any of the extension options set forth in paragraph (A)
of this Article through failure to give notice of exercise thereof within the
time prescribed. Accordingly, if Tenant shall fail to give notice of
exercise of any such option within the time prescribed in paragraph (A) of
this Article, then the time to give such notice shall be deemed extended for
an additional period commencing on the last day on which such notice by
Tenant may be timely given pursuant to paragraph (A) above and ending 30 days
after the date Landlord gives Tenant notice of Tenant's failure to exercise
such option within the time prescribed. If Tenant exercises any such option
after the date prescribed in paragraph (A) above, but within the extended
time permitted above, the extended term to which such option relates shall
commence, or shall be deemed to have commenced, at the time it would have
commenced if such notice had been given within the time prescribed in
paragraph (A) above; otherwise, any period during which Tenant remains in
possession after the expiration of the term hereby created, or as extended by
the exercise of a previous option or options, shall be subject to the
provisions of the Article captioned "Continued Possession of Tenant." The
foregoing provisions of this Section 23(B) shall be inoperative, and the time
period for Tenant's exercise of each of its options to renew hereunder shall
expire as of that date which is 6 months prior to the expiration of the
then-current term of this Lease if Landlord shall give Tenant notice of
Tenant's right to renew this Lease not earlier than 12 months, and not later
than 7 months, prior to the expiration of the then-current term of this Lease.
(C) RIGHT OF FIRST OFFER TO LEASE BY TENANT. Upon the
expiration of the Lease Term and provided that Tenant has exercised each
Option Period Option and no event of
50
default then exists beyond any applicable notice and cure period, Tenant
shall have a right of first offer ("Tenant's Right of First Offer to Lease")
to lease the Leased Premises upon the same terms and conditions as Landlord,
at its election, intends to offer to lease the Leased Premises to a third
party; provided, however, Tenant's Right of First Offer to Lease shall only
be available if Landlord intends to offer to lease the Leased Premises to a
third party for use as a movie theatre at a rate less than the Annual Fixed
Rent or Percentage Rent then payable under this Lease. Tenant shall be
entitled to exercise Tenant's Right of First Offer to Lease only if at the
time of the giving of such notice and at the time of the commencement of the
applicable term no event of default then exists beyond any applicable notice
and cure period and only if Landlord elects to lease the Leased Premises at
the expiration of the Lease Term. Not more than nine (9) months and not less
than three (3) months prior to the expiration of the Lease Term, Landlord
shall, if applicable, give Tenant written notice of its intent to lease the
Leased Premises and shall indicate the terms and conditions upon which
Landlord intends to lease the Leased Premises.
Tenant shall thereafter have a period of 20 days to elect by unequivocal
written notice to Landlord to lease the Leased Premises on the same terms and
conditions as Landlord intends to offer to a third party; provided prior to
Tenant's acceptance Landlord shall retain the right to elect not to lease the
Leased Premises by giving Tenant written notice thereof. If Tenant elects
not to lease the Leased Property then Landlord shall be free to lease the
Leased Premises to a third party. However, if the base rent for such
proposed lease is reduced by five (5%) or more as compared to the base rent
included in the lease that Tenant rejected, then Landlord shall again offer
Tenant the right to acquire
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the Leased Premises upon the same terms and conditions, provided that Tenant
shall have only 10 days to accept such offer. Leased Premises as used in
this Article shall include any substantial portion of the entire Leased
Premises.
24. COMMON AREA CHARGE.
If the Leased Premises are part of a larger Entire Premises for which
Common Area charges under an REA are payable for the operation and
maintenance of Common Facilities, Tenant shall pay such charges and perform
all of Landlord's obligations under the REA.
25. OTHER THEATRES AND RESTRICTIONS.
(A) If at any time during the term hereof a movie theatre, other
than the one operated in Tenant's Facility, is open for business within the
Entire Premises or on premises which are (i) owned or controlled (directly or
indirectly) by Landlord or by any officer or partner of Landlord, and (ii)
located within 500 feet from any boundary line of the Entire Premises, then
in addition to Tenant's other remedies (including injunctive relief), the
Annual Fixed Rent hereunder shall be abated during the continuance of the
operation of such movie theatre, in lieu of the Annual Fixed Rent otherwise
payable by Tenant, Tenant shall pay Landlord an amount equal to the lesser of
(i) Percentage Rent only, or (ii) the Annual Fixed Rent otherwise payable by
Tenant, reduced by an amount equal to the product obtained by multiplying the
number of seats in such other theatre by the quotient obtained by dividing
the amount of the Annual Fixed Rent then payable under this Lease by the
number of seats then in Tenant's building.
(B) Landlord will not use and will use its best reasonable efforts
to prevent any other tenant from using, any other premises or equipment owned
or controlled by Landlord and located on the Entire Premises in any manner
that would result in any noise
52
or vibration interfering with the acoustics required by Tenant in its use of
Tenant's Building or would result in any offensive odors penetrating Tenant's
Building.
(C) Landlord will not sell or permit to be sold video cassettes or
discs or any candy, popcorn or other refreshments generally sold in theatre
concession stands in or from any premises owned or leased by Landlord located
within 150 feet from any wall of Tenant's Facility or in or from any part of
the parking area or other Common Facility on the Entire Premises owned or
leased by Landlord; provided, however, notwithstanding the foregoing, there
shall be no prohibition on the incidental sale of video cassettes or discs or
any candy, popcorn or other refreshments generally sold in theatre concession
stands or a restaurant use in or from any of the land parcels adjacent to the
Leased Premises acquired by Landlord at or about the Commencement Date of
this Lease. In no event shall Landlord lease or permit the occupancy of any
premises located in the Entire Premises or any out parcel adjacent to the
Leased Premises and owned by Landlord for any of the following uses: (a)
funeral home; (b) bookstore or other establishment engaged in the business of
selling, exhibiting or delivering pornographic or obscene materials; (c)
so-called "head shop;" (d) bowling alley; (e) skating rink; (f) health club
or exercise facility; or (g) game room or arcade.
26. NO MERCHANTS ASSOCIATION.
Tenant shall have no obligation to be a member of or pay any dues or
other amounts to any merchants association associated with any larger Entire
Premises of which the Leased Premises may be a part or otherwise, unless
required to do so under the REA or the Ground Lease.
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27. TENANT'S COVENANT TO OPERATE.
(A) IN GENERAL. So long as Landlord shall not be in default under
this Lease, Tenant will, except when prevented from so doing by Force Majeure
or by other causes beyond its reasonable control (including the
unavailability of film) and subject to the provisions of the Article
captioned "Subletting and Assigning," during Tenant's Operating Period,
operate or cause to be operated a movie theatre complex in Tenant's Facility
(such covenant being herein called "TENANT'S OPERATING COVENANT"). Tenant
shall operate Tenant's Facility in an efficient and professional manner.
(B) TENANT'S RIGHT TO CONTROL OPERATIONS. Nothing contained in this
Lease or in rules or regulations (if any) promulgated by Landlord shall be
deemed in any way to (i) regulate the manner of operation by Tenant of its
business in Tenant's Facility and/or the hours and/or days of such operation,
provided that Tenant agrees that it will operate its business in the Tenant's
Facility during at least the same general hours and days of operation as
other theatre operators operating other similar facilities located within the
Metropolitan Area, or (ii) require Tenant to operate more than a majority of
its theatre auditoriums, or (iii) give Landlord any right, express or
implied, of censorship over any attractions exhibited in Tenant's Facility or
over the content of Tenant's advertising.
(C) NO OTHER OPERATING REQUIREMENTS. Except as specifically
provided in paragraph (A) of this Article, Tenant shall have no obligation
whatsoever, either express or implied, to at any time operate or otherwise
use Tenant's Facility.
28. ESTOPPEL CERTIFICATE; ATTORNMENT AND PRIORITY OF LEASE; SUBORDINATION.
(A) ESTOPPEL CERTIFICATES. Each party agrees, within 20 days after
request by the other party, to execute, acknowledge and deliver to and in
favor of the proposed holder of
54
any Mortgage or purchaser of the Leased Premises, any encumbrance holder of
Tenant or any proposed sublessee of Tenant or assignee of Tenant's interest
in this Lease, an estoppel certificate stating: (i) whether this Lease is in
full force and effect; (ii) whether this Lease has been modified or amended
and, if so, identifying and describing any such modification or amendment;
(iii) the date to which rent and any other charges have been paid; and (iv)
whether such party knows of any default on the part of the other party or has
any claim against the other party and, if so, specifying the nature of such
default or claim.
(B) ATTORNMENT BY TENANT. Tenant shall, in the event any
proceedings are brought for the foreclosure of, or in the event of the
exercise of the power of sale under, any Mortgage prior in lien to this Lease
made by Landlord, attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as Landlord under this Lease, provided such
purchaser assumes in writing Landlord's obligations under this Lease.
(C) SUBORDINATION/NON-DISTURBANCE. Upon request of the holder of
any Mortgage, Tenant will subordinate its rights under this Lease to the lien
thereof and to all advances made or hereafter to be made upon the security
thereof, and Tenant shall execute, acknowledge and deliver an instrument
effecting such subordination; PROVIDED, HOWEVER, as a condition of any such
subordination, Landlord shall obtain and deliver to Tenant within 20 days
after demand by Tenant an agreement, in recordable form, from the holder of
any Mortgage to which this Lease is subordinate containing a covenant binding
upon the holder thereof to the effect that as long as Tenant shall not be in
default under this Lease, or, if Tenant is in default hereunder, as long as
Tenant's time to cure such default has not expired, this Lease shall not be
terminated or modified in any
55
respect whatsoever, nor shall the rights of Tenant hereunder or its occupancy
of the Leased Premises be affected in any way by reason of such Mortgage or
any foreclosure action or other proceeding that may be instituted in
connection therewith, and that, except to the extent that the holder of such
Mortgage is required to do so to effectively foreclose such Mortgage, Tenant
shall not be named as a defendant in any such foreclosure action or other
proceeding.
(D) FORM OF DOCUMENTS. Without limiting the foregoing provisions of
this Article, all documents requested by either party in order to effectuate
the provisions of this Article shall be in form and substance reasonably
satisfactory to the other party to the extent not inconsistent with such
provisions.
29. RIGHT OF FIRST REFUSAL TO PURCHASE BY TENANT.
(A) GRANT OF RIGHT OF FIRST OFFER. Subject to the terms and
conditions set forth in this Article 29, Landlord hereby grants to Tenant a
right of first offer ("First Offer Right") relating to the Transfer of any or
all of the Leased Premises. If, at any time during the Right to Purchase
Period, Landlord desires to Transfer all or any portion of the Leased
Premises (the "Offered Property"), Landlord shall first deliver to Tenant
written notice (the "Notice of Transfer"), which Notice of Transfer shall
state Landlord's desire to Transfer the Offered Property and contain an
accurate description of the Offered Property and its proposed operations.
(B) ELECTION TO OFFER. (i) If Tenant elects to make an offer to
purchase the Offered Property, Tenant shall deliver to Landlord within
60 days following the date the Notice of Transfer was received by Tenant
(the "Offer Date") a written offer (the "Offeree Offer"), which Offeree Offer
shall offer to purchase the Offered Property
56
on the terms and conditions, including price, timing and lease terms (if
applicable), specified therein. The Offeree Offer shall disclose all
material facts relating to the proposed transaction and, at Tenant's option,
may include a form purchase agreement or lease, as applicable. Each Offeree
Offer shall be an irrevocable commitment by Tenant to purchase the Offered
Property on the terms and conditions set forth therein.
(ii) If Tenant does not elect to make an offer to purchase the
Offered Property by the Offer Date or if Tenant makes an offer to purchase
the Offered Property by the Offer Date and Landlord elects not to Transfer
the Offered Property on the terms offered by Tenant, Landlord (X) shall be
under no obligation to Transfer any portion of the Offered Property to any
person, unless Landlord so elects, and (Y) may, within a period of 6 months
from and after the Offer Date, solicit offers relating to the Transfer of
such Offered Property; provided, however, any Transfer of the Property
within a period of 6 months from and after the Offer Date not on terms and
conditions and at a price more favorable to those offered by Tenant shall be
subject to the First Refusal Right set forth in subparagraph D of this
Article 29. The First Offer Right granted to Tenant under the terms and
conditions of this Article 29 shall revive in the event that Landlord fails
to Transfer the Offered Property within the 6 months from and after
the Offer Date.
(iii) Notwithstanding Tenant's election not to make an offer to
purchase the Offered Property by the Offer Date or Landlord's election not
to Transfer the Offered Property on the terms offered by Tenant, Landlord
shall be obligated to submit a Grantor Offer to Tenant following receipt of
a Bona Fide Offer from a Proposed Transferee pursuant to paragraph D of this
Article 29.
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(C) ACCEPTANCE OF OFFEREE OFFER. If Landlord elects to Transfer the
Offered Property on the terms offered by the Tenant, Landlord shall deliver
in writing its election to Transfer the Offered Property to Tenant within
30 days following the date the Offeree Offer was received by
Landlord. Such communication shall, when taken in conjunction with the
Offeree Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the Transfer of the Offered Property. Such
agreement may be evidenced by, but, unless otherwise agreed, shall not be
subject to, execution of a purchase agreement or lease, as applicable.
(D) GRANT OF RIGHT OF FIRST REFUSAL. Subject to the terms and
conditions set forth in this Article 29, Landlord hereby grants to Tenant a
right of first refusal ("First Refusal Right") relating to the Transfer any
or all of the Leased Premises. If, at any time during the Right to Purchase
Period, Landlord desires to Transfer any of the Leased Premises (the "Offered
Property") pursuant to a bona fide offer (the "Bona Fide Offer") from a third
party (the "Proposed Transferee"), Landlord shall first deliver to Tenant a
written offer (the "Grantor Offer"), which Grantor Offer shall offer to
Transfer the Offered Property to the Tenant on terms and conditions,
including price, timing and lease terms (if applicable), not less favorable
to the Tenant than the terms and conditions which Landlord proposes to
Transfer such Leased Premises to the Proposed Transferee. The Grantor Offer
shall disclose the identity of the Proposed Transferee, to the extent known
by Landlord, the person or persons, if any, that control such Proposed
Transferee, the terms and conditions, including price, timing and lease terms
(if applicable), of the proposed Transfer, any proposed form purchase
agreement or lease and any other material facts relating to the proposed
transaction. Each Grantor
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Offer is an irrevocable commitment by Landlord to sell the Offered Property
on the terms and conditions set forth therein.
(E) CONFIRMATION OF BONA FIDE OFFER. The Tenant shall be
permitted to confirm that the Bona Fide Offer is firm and subject only to
conditions that could reasonably be expected to be satisfied, by (i) review
of the documents involved in such Bona Fide Offer and (ii) requiring that the
Landlord cause the Proposed Transferee to submit evidence reasonably
satisfactory to the Tenant of financing for such purchase, but only to the
extent that the Bona Fide Offer has a financing contingency. If review of
such documents and of such evidence of financing by the Tenant would violate
a confidentiality obligation of Landlord to the Proposed Transferee, or of
the Proposed Transferee to any third party, Landlord shall designate a
recognized accounting or investment banking firm or similar third party
reasonably satisfactory to the Tenant, who shall at Tenant's expense (i)
certify that the terms set forth in the written documents are as described in
the Offer or are no more favorable to the Proposed Transferee than the terms
described in the Offer, and (ii) certify that financing has been obtained,
subject to no condition which, in such third party's reasonable judgment, is
likely to be unsatisfied, or based on the evidence provided, such third party
expects that financing for the sale to the Proposed Transferee will be
obtained.
(F) ACCEPTANCE OF GRANTOR OFFER. (i) If Tenant elects to
purchase the Offered Property on the terms set forth in the Grantor Offer,
Tenant shall deliver in writing its election to purchase the Offered Property
to Landlord within 45 days following the date the Grantor Offer
was received by the Tenant (the "Acceptance Date"), but not less than five
days prior to the expiration date of the Bona
59
Fide Offer, provided such election in any circumstance will not be due prior
to the expiration of 10 business days following the date the Grantor's Offer
was received by Tenant. Such communication shall, when taken in conjunction
with the Grantor Offer, be deemed to constitute a valid, legally binding and
enforceable agreement for the Transfer of the Leased Premises. Such
agreement may be evidenced by, but, unless otherwise agreed, shall not be
subject to, execution of a purchase agreement or lease, as applicable.
(G) If Tenant does not elect to purchase the Offered Property by the
Acceptance Date, Landlord (i) shall be under no obligation to Transfer any
portion of the Offered Property to any person, unless Landlord so elects, and
(ii) may, within a period of 6 months from and after the date the Grantor
Offer was received by the Tenant, Transfer the Offered Property to any
person, including the Proposed Transferee, on the terms and conditions equal
to or better than that included in the Grantor Offer and Landlord shall be
under no obligation to submit a Grantor Offer to Transfer such Offered
Property to the Tenant in connection therewith. The First Refusal Right
granted to the Tenant under the terms and conditions of this Article 29 shall
revive in the event that Landlord fails to Transfer the Offered Property
within the 6 month period specified above.
(H) DUE DILIGENCE. During the periods following the date the Notice
of Transfer was received by Tenant and prior to the Offer Date, following the
date the Grantor Offer was received by Tenant and prior to the Acceptance
Date and following any agreement to Transfer a Property, Landlord shall
provide Tenant access to the Offered Property, its books and records related
thereto and its officers and employees with
60
knowledge thereof during reasonable hours for purposes of conducting a due
diligence investigation of the Offered Property and its proposed operations.
(I) CLOSING. (a) The closing of any Transfer of Offered Property
pursuant to this Article 29 shall be determined by the Landlord and Tenant
(which, unless otherwise agreed, shall be within 90 days of the acceptance of
any offer hereunder).
(J) NO ASSIGNMENT. The First Refusal Right and First Offer Right
granted hereby are personal to Tenant, and, as an inducement to Landlord to
enter into this Article 29, it is expressly agreed that Tenant has no right,
directly or indirectly, to assign in whole or in part any rights granted by
this Article 29, unless such assignment is to an affiliate of Tenant or to a
person or entity which has acquired substantially all of the assets of
Tenant. Landlord shall have no obligation or requirement to deal with any
party other than Tenant in all matters relating to this Article 29. Any
purchase agreement or lease hereunder may be made with a subsidiary of
Landlord acceptable to Tenant.
(K) NO BROKER. Tenant represents that it has dealt with no broker in
connection with the First Refusal Right and First Offer Right granted hereby,
and agrees to indemnify and hold Landlord harmless from the claims of any
broker in connection with the transactions contemplated hereby.
(L) SPECIFIC PERFORMANCE. Landlord and Tenant agree that if any of
the provisions of this Article 29 were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur,
and no adequate remedy at law would exist and damages would be difficult to
determine, and that the Landlord
61
and Tenant shall be entitled to specific performance hereof (without
requirement to post bond), in addition to any and all other remedies at law
or in equity.
(M) RESTRICTION ON EXERCISE OF PURCHASE REFUSAL RIGHT.
Notwithstanding any other provision of this Article, Landlord shall not be
required to Transfer the Leased Premises, or any portion thereof which is a
real estate asset as defined in Paragraph 856(c)(6)(B), or functionally
equivalent successor provision, of the Code, to Tenant if Landlord's tax
counsel formally opines to Landlord and Tenant that the Transfer: (i) would
be a "prohibited transaction" under Paragraph 857(b)(6)(B)(iii), or
functionally equivalent successor provision, of the Code, and (ii) does not
qualify under Paragraph 857(b)(6)(C), or functionally equivalent successor
provision, of the Code to be treated other than as such a prohibited
transaction for reasons other than the occurrence of other sales of property
made by Landlord that prevent either of the conditions of clause (iii) of
such Paragraph 857(b)(6)(C) from being satisfied. If Landlord determines not
to Transfer such property pursuant to the above sentence, Tenant's right, if
any, to acquire any or all of such property shall continue and be
exercisable, upon and subject to all applicable terms and conditions set
forth in this Lease, at such time as the transaction, in the opinion of
either Landlord's tax counsel or Tenant's tax counsel, rendered to Landlord
and Tenant: (iii) would not constitute a "prohibited transaction" under
Paragraph 857(b)(6)(B)(iii), or functionally equivalent provision, of the
Code, or (iv) would constitute such a prohibited transaction and does not
qualify under Paragraph 857(b)(6)(C), or functionally equivalent successor
provision, of the Code to be treated other than as such a prohibited
transaction solely because of the occurrence of other sales of property that
prevent either of the conditions of clause (iii) of such
62
Paragraph 857(b)(6)(C) from being satisfied provided, however, that no legal
opinions shall be required in order for Tenant to exercise its rights
hereunder if at any time the conditions of clause (iii) or (iv) would
manifestly then be satisfied), and until such time Tenant shall lease the
Leased Property for the lesser of the rent otherwise called for in this Lease
or fair market rental. If the Transfer of the Leased Premises is delayed
pursuant to this part (B), Landlord will use its reasonable best efforts to
Transfer the Leased Premises to Tenant as soon as such Transfer is permitted
hereunder.
30. DEFAULT CLAUSE AND SELF-HELP.
(A) TENANT DEFAULT; CURE RIGHTS. If (i) Tenant neglects or fails to
pay any Annual Fixed Rent, Annual Percentage Rent or other charge hereunder,
or under a Related Lease prior to the Cross Default Termination Date, within
15 days after notice of default, or (ii) Tenant neglects or fails to perform
or observe any of the other covenants, terms, provisions or conditions on its
part to be performed or observed under this Lease, within 30 days after
notice of default (or if more than 30 days shall be reasonably required
because of the nature of the default, if Tenant shall fail to proceed
diligently to cure such default after such notice), or (iii) Tenant neglects
or fails to perform or observe any obligation pursuant to Tenant's Operating
Covenant hereunder, or under a Related Lease prior to the Cross Default
Termination Date, or (iv) Tenant or Tenant's Parent (a) admits in writing
its inability to pay its debts generally as they become due, (b) commences
any case, proceeding or other action seeking to have an order for relief
entered on its behalf as debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, liquidation, dissolution
or composition of it or its debts under any federal, state or local law
relating to bankruptcy, insolvency, reorganization or relief of debtors,
63
(c) makes an assignment for the benefit of its creditors, (d) is unable to
pay its debts as they mature, (e) seeks or consents to the appointment of a
receiver of itself or of the whole or any substantial part of its property,
or (f) files a petition or answer seeking reorganization or arrangement under
any federal, state or local law relating to bankruptcy, insolvency,
reorganization or relief of debtors; or (v) any case, proceeding or other
action is commenced against Tenant or Tenant's Parent seeking to have an
order for relief entered against it as debtor or to adjudicate it a bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment,
liquidation, dissolution or composition of it or its debts under any federal,
state or local law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking an order or decree appointing, without the
consent of Tenant, a receiver of Tenant of the whole or substantially all of
its property, and such case proceeding or other action is not dismissed
within 90 days after the commencement thereof; or (vi) the estate or interest
of Tenant in the Leased Premises or any part thereof, or the Leased Premises
under a Related Lease prior to the Cross Default Termination Date, is levied
upon or attached in any proceeding and the same is not vacated or discharged
within the later of 90 days after commencement thereof or 30 days after
receipt by Tenant of notice thereof from Landlord (unless Tenant is
contesting such lien or attachment in accordance with this Lease), then an
event of default shall exist hereunder and Landlord may immediately or at any
time thereafter, as permitted by law, (a) enter into and upon the Leased
Premises and repossess the same as of its former estate, without prejudice to
any remedies which Landlord might otherwise have for arrearages of rent or
preceding breach of covenant, and upon such entry this Lease shall terminate;
or (b) remain out of possession of the Leased Premises, treat the term of
this Lease as
64
subsisting and in full force and effect, in which event Landlord shall have
all rights and remedies available at law, in equity or hereunder; or (c)
without terminating the term of this Lease, reenter the Leased Premises and
take possession thereof pursuant to legal proceedings or pursuant to any
notice provided for by law, and having elected to reenter and take possession
of the Leased Premises without terminating this Lease, Landlord shall use
reasonable diligence as Tenant's agent to relet the Leased Premises, or parts
thereof, for such term or terms and at such rental and upon such other terms
and conditions as Landlord may deem advisable, with the right to make
alterations and repairs to the Leased Premises, and no such reentry or taking
of possession of the Leased Premises by Landlord shall be construed as an
election on Landlord's part to terminate this Lease, and no such reentry or
taking of possession by Landlord shall relieve Tenant of its obligation to
pay rent and other sums payable hereunder (at the time or times provided
herein), or of any of its other obligations under this Lease, all of which
shall survive such reentry or taking of possession, and Tenant shall continue
to pay the rent and other sums provided or in this Lease until the end of the
term and whether or not the Leased Premises shall have been relet, less the
net proceeds, if any, of any reletting of the Leased Premises, after
deducting all of Landlord's expenses in or in connection with such reletting,
including without limitation all repossession costs, brokerage commissions,
legal expenses, expenses of employees, alterations costs and expenses of
preparation for reletting; or (d) exercise any other right or remedy
available to Landlord at law or in equity or under this Lease. Having
elected either to remain out of possession and treating this Lease as
remaining in full force and effect or to reenter or to take possession of the
Leased Premises without terminating this Lease, Landlord may, by notice to
Tenant given at any time thereafter
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while Tenant is in default under this Lease, elect to terminate this Lease
and, upon such notice, this Lease shall thereupon be terminated. If in
accordance with any of the foregoing provisions of this Article 30 Landlord
shall have the right to elect to reenter or take possession of the Leased
Premises, Landlord may enter and expel Tenant and those claiming through or
under Tenant and remove the property and effects of both or either (forcibly
if necessary) without being guilty of any manner of trespass and without
prejudice to any remedies as set forth in this Article 30 are in addition to
and not exclusive of any other right or remedy provided herein or at law or
in equity. Tenant covenants and agrees, notwithstanding any entry or
re-entry by Landlord, to pay and be liable for, on the days originally fixed
herein for the payment thereof, amounts equal to the several installments of
Annual Fixed Rent and other charges reserved as such amounts would, under the
terms of this Lease, become due if this Lease had not been terminated or if
Landlord had not entered or re-entered as aforesaid, and whether the Leased
Premises are relet or remain vacant in whole or in part for all or part of
the remainder of the term hereof; provided, that if Landlord relets the
Leased Premises, Tenant shall be entitled to a credit for the net proceeds of
any reletting as provided herein. Alternatively, upon such an uncured
default by Tenant, Landlord may elect as its sole remedy to recover from
Tenant the difference between (i) all rent and other sums that would have
been payable under this Lease until what would have been the end of the then
term thereof, discounted to present value at ____% and (ii) the then fair
market value of the Leased Premises. In all events, Landlord shall use
reasonable efforts to mitigate its loss or damages. Following an event or
default, all amounts due from Tenant to Landlord pursuant to this Lease shall
bear interest at the Default Rate.
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(B) TENANT RIGHT TO CONTEST BY COURT ACTION. Notwithstanding
anything to the contrary contained in paragraph (A) of this Article, with
respect to any alleged default other than a default in the payment of Annual
Fixed Rent or a default under Section A(iv) or (v) of this Article, if within
45 days after Landlord's notice of such default, Tenant (i) notifies Landlord
that Tenant disputes such alleged default, and (ii) files an action in a
court of competent jurisdiction contesting such alleged default, then Tenant
shall not be deemed to be in default under this Lease with respect to such
alleged default, provided that if the final judgment in such action is
adverse to Tenant, in whole or in part, then Tenant shall forthwith commence
to correct the matters complained of by Landlord, or that portion thereof as
to which such judgment is adverse to Tenant, and complete the same within 30
days after such judgment, or if more than 30 days are required to complete
such corrections with reasonable diligence, commence to correct the same
within such 30 days and prosecute the same to completion with reasonable
diligence.
(C) LANDLORD DEFAULT, CURE RIGHTS. If Landlord neglects or fails to
perform or observe any of the covenants, terms, provisions or conditions on
its part to be performed or observed under this Lease, or within 30 days
after notice of default (or if more than 30 days shall be reasonably required
because of the nature of the default, if Landlord shall fail to proceed
diligently to cure such default after such notice), then Tenant may
immediately or at any time thereafter, in addition to any other rights and
remedies as may otherwise be provided in this Lease for a Landlord default,
pursue all rights and remedies it may have at law and equity generally.
(D) SELF HELP. If either party (the "DEFAULTING PARTY") fails to
perform any agreement or obligation on its part to be performed under this
Lease, the other party (the
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"CURING PARTY") shall have the right (i) if no emergency exists, to perform
the same after giving 30 days' notice to the Defaulting Party, and (ii) in
any emergency situation to perform the same immediately without notice or
delay. For the purpose of rectifying a default of the Defaulting Party as
aforesaid, the Curing Party shall have the right to enter the premises of the
Defaulting Party. The Defaulting Party shall on demand reimburse the Curing
Party for the costs and expenses incurred by the Curing Party in rectifying
defaults as aforesaid, including reasonable attorneys' fees, together with
interest thereon at the Default Rate. Any act or thing done by the Curing
Party pursuant to this paragraph shall not constitute a waiver of any such
default by the Curing Party or a waiver of any covenant, term or condition
herein contained or the performance thereof. In the event Landlord shall
fail to so reimburse Tenant within 30 days after Tenant's demand, Tenant
shall be entitled to an immediate credit against the Annual Fixed Rent and
other charges payable hereunder in an amount equal to the costs and expenses
incurred by Tenant in rectifying Landlord's defaults as aforesaid, together
with interest thereon at the Default Rate.
31. ACCESS TO PREMISES.
Tenant shall permit Landlord and its authorized representatives to
enter Tenant's Facility at all reasonable times for the purposes of (i)
serving or posting or keeping posted thereon notices required by Law, (ii)
conducting periodic inspections, (iii) performing any work thereon required
or permitted to be performed by Landlord pursuant to this Lease, and (iv)
showing the Leased Premises to prospective purchasers or lenders; PROVIDED,
HOWEVER, nothing set forth in this Lease shall be construed as authorizing
Landlord to enter the projection booths in Tenant's Facility without the
consent of Tenant, except in the case of an emergency.
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32. FORCE MAJEURE.
If either party shall be delayed or hindered in or prevented from the
performance of any act required under this Lease by reason of strikes,
lockouts, labor troubles, inability to procure materials, failure of power,
restrictive Laws (except as otherwise specifically provided herein), riots,
insurrection, war or other reason beyond the reasonable control of and not
the fault of the party delayed in performing the work or doing the acts
required under the terms of this Lease (collectively, "FORCE MAJEURE"), then
performance of such act shall be excused for the period of the delay, and the
period for the performance of any such act shall be extended for a period
equivalent to the period of such delay. The provisions of this Article shall
not (i) operate to excuse Tenant from prompt payment of rent or any other
payment required by Tenant under the terms of this Lease, except as may be
otherwise specifically provided herein to the contrary, or (ii) be applicable
to delays resulting from the inability of a party to obtain financing or to
proceed with its obligations under this Lease because of a lack of funds.
33. REMEDIES CUMULATIVE; LEGAL EXPENSES; TIME OF THE ESSENCE.
(A) The various rights and remedies given to or reserved to Landlord
and Tenant by this Lease or allowed by law shall be cumulative, irrespective
of whether so expressly stated.
(B) In case suit shall be brought because of the breach of any
agreement or obligation contained in this Lease on the part of Tenant or
Landlord to be kept or performed, and a breach shall be established, the
prevailing party shall be entitled to recover all expenses incurred in
connection with such suit, including reasonable attorneys' fees.
(C) Time is of the essence of this Lease.
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34. LEASE NOT TO BE RECORDED.
Upon request of Landlord or Tenant, the parties hereto shall promptly
execute and deliver a memorandum of this Lease for recording purposes in
recordable form. If Tenant elects to record such memorandum, Landlord shall
promptly cause the same to be recorded, at Landlord's expense. Neither party
shall record this Lease without the consent of the other party.
35. NOTICES.
All notices, consents, requests, approvals and authorizations
(collectively, "NOTICES") required or permitted hereunder shall only be
effective if in writing. All Notices shall be sent (A) by registered or
certified mail (return receipt requested), postage prepaid, or (B) by Federal
Express, U.S. Post Office Express Mail, Airborne or similar overnight courier
which delivers only upon signed receipt of the addressee, or (C) by facsimile
transmission and addressed as follows or at such other address, and to the
attention of such other person, as the parties shall give notice as herein
provided:
If intended for Landlord: Entertainment Properties Trust
1221 Baltimore Avenue
Kansas City, Missouri 64105
Phone: (816) 480-4649
Fax: (816) 480-4617
Attention: Robert L. Harris, President
With a copy to: Stinson, Mag & Fizzell, P.C.
1201 Walnut, Suite 2800
Kansas City, Missouri 64105
Phone: (816) 691-3180
Fax: (816) 691-3495
Attention: Michael G. O'Flaherty
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If intended for Tenant: American Multi-Cinema, Inc.
106 West 14th Street
Kansas City, Missouri 64105
Phone: (816) 221-4000
Fax: (816) 480-4617
Attention: Lease Administrator
With a copy to: Lathrop & Gage L.C.
2345 Grand Boulevard, Suite 2500
Kansas City, Missouri 64108
Phone: (816) 460-5515
Fax: (816) 292-2001
Attention: E.T. Bullard
A notice, request and other communication shall be deemed to be duly received
if delivered by a recognized delivery service, when delivered to the address
of the recipient, if sent by mail, on the date of receipt by the recipient as
shown on the return receipt card, or if sent by facsimile, upon receipt by
the sender of an acknowledgment or transmission report generated by the
machine from which the facsimile was sent indicating that the facsimile was
sent in its entirety to the recipient's facsimile number; provided that if a
notice, request or other communication is served by hand or is received by
facsimile on a day which is not a Business Day, or after 5:00 P.M. on any
Business Day at the addressee's location, such notice or communication shall
be deemed to be duly received by the recipient at 9:00 A.M. on the first
Business Day thereafter. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no Notice was given
shall be deemed to be receipt of the Notice as of the date of such rejection,
refusal or inability to deliver.
36. WAIVER OF PERFORMANCE AND DISPUTES.
(A) WAIVER LIMITED TO OCCURRENCE. One or more waivers of any
covenant, term or condition of this Lease by either party shall not be
construed as a waiver of a subsequent breach of the same or any other
covenant, term or condition, nor shall any
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delay or omission by either party to seek a remedy for any breach of this
Lease or to exercise a right accruing to such party by reason of such breach
be deemed a waiver by such party of its remedies or rights with respect to
such breach. The consent or approval by either party to or of any act by the
other party requiring such consent or approval shall not be deemed to waive
or render unnecessary consent to or approval of any similar act.
(B) RIGHT TO PROTEST WITHOUT WAIVER OR DEFAULT. If at any time a
dispute shall arise as to any amount or sum of money to be paid by one party
to the other party under the provisions hereof, the party against whom the
obligation to pay the money is asserted shall have the right to make payment
"under protest" and such payment shall not be regarded as a voluntary payment
and there shall survive the right on the part of said party to institute suit
within 90 days after such payment under protest is made for the recovery of
such sum, and if it shall be adjudged that there was no legal obligation on
the part of said party to pay such sum or any part thereof, said party shall
be entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease, together with interest
thereon at the Default Rate. If at any time a dispute shall arise between
the parties hereto as to any work to be performed by either of them under the
provisions hereof, the party against whom the obligation to perform the work
is asserted may perform such work and pay the cost thereof "under protest"
and the performance of such work shall in no event be regarded as a voluntary
performance and there shall survive the right on the part of said party to
institute suit within 90 days after such work is completed for the recovery
of the cost of such work, and if it shall be adjudged that there was no legal
obligation on the part of said party to perform the same
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or any part thereof, said party shall be entitled to recover the cost of such
work or the cost of so much thereof as said party was not legally required to
perform under the provisions of this Lease, together with interest thereon at
the Default Rate. If either party desires to exercise its rights under this
Section, it shall do so by delivering written notice that it is paying money
or performing work "under protest," with such notice to be given to the other
party concurrently with the payment of such money or prior to the
commencement of such work.
37. MODIFICATION OF LEASE.
The terms, covenants and conditions hereof may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of the change, modification or discharge is sought, or by such
party's agent.
38. CAPTIONS AND LEASE PREPARATION.
Captions throughout this instrument are for convenience and reference
only and the words contained therein shall in no way be deemed to explain,
modify, amplify or aid in the interpretation or construction of the
provisions of this Lease.
39. LEASE BINDING ON SUCCESSORS AND ASSIGNS, ETC.
Except as herein otherwise expressly provided, all covenants,
agreements, provisions and conditions of this Lease shall be binding upon and
inure to the benefit of the parties hereto and their heirs, devisees,
executors, administrators, successors in interest and assigns as well as
grantees of Landlord, and shall be deemed to run with the land. Without
limiting the generality of the foregoing, all rights of Tenant under this
Lease may be granted by Tenant to any sublessee of Tenant, subject to the
terms of this Lease.
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40. BROKERS.
Landlord represents and warrants to Tenant that it has not incurred
or caused to be incurred any liability for real estate brokerage commissions
or finder's fees in connection with the execution or consummation of this
Lease for which Tenant may be liable. Tenant represents and warrants to
Landlord that it has not incurred or caused to be incurred any liability for
real estate brokerage commissions or finder's fees in connection with the
execution or consummation of this Lease for which Landlord may be liable.
Each of the parties agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or expense (including reasonable
attorneys' fees) in connection with any breach of the foregoing
representations and warranties.
41. LANDLORD'S STATUS AS A REIT. Tenant acknowledges that Landlord
intends to elect to be taxed as a real estate investment trust ("REIT") under
the Code. Tenant shall exercise commercially reasonable efforts not do
anything which would materially adversely affect Landlord's status as a REIT.
Tenant agrees to enter into reasonable modifications of this Lease which do
not materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.
42. GOVERNING LAW. This Lease shall be governed by and construed in
accordance with the laws of the State where the Leased Premises are located,
but not including such State's conflict-of-laws rules.
43. CERTAIN LANDLORD RIGHTS ON TERMINATION.
(A) ADVERTISEMENT OF LEASED PREMISES. If Tenant has not exercised
the applicable Option Period option to extend this Lease, then Landlord or
its agent shall thereafter have
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the right to enter the Leased Premises at all reasonable times for the
purpose of exhibiting such Leased Premises to others and to place upon such
Leased Premises during the period commencing 180 days prior to the expiration
of the then current term "for sale" or "for rent" notices or signs of such
number and in such locations as Tenant shall reasonably approve.
(B) TRANSFER OF PERMITS, ETC. ON TERMINATION. Upon the expiration
or earlier termination of this Lease, Tenant shall, at the option of
Landlord, transfer to and relinquish to Landlord or Landlord's nominee and
reasonably cooperate with Landlord or Landlord's nominee in connection with
the processing by Landlord or such nominee of all licenses, operating
permits, and other governmental authorization and all assignable service
contracts, which may be necessary or appropriate for the operation by
Landlord or such nominee of the Leased Premises; provided that the costs and
expenses of any such transfer or the processing of any such application shall
be paid by Landlord or Landlord's nominee.
44. ESTOPPEL. Landlord and Tenant each confirm and agree that (a) it has
read and understood all of the provisions of this Lease; (b) it is an
experienced real estate investor and is familiar with major sophisticated
transactions such as that contemplated by this Lease; (c) it has negotiated
with the other party at arm's length with equal bargaining power; and (d) it
has been advised by competent legal counsel of its own choosing.
45. JOINT PREPARATION. This Lease (and all exhibits thereto) is deemed
to have been jointly prepared by the parties hereto, and any uncertainty or
ambiguity existing herein, if any, shall not be interpreted against any
party, but shall be interpreted according to the application of the rules of
interpretation for arm's-length agreements.
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46. COUNTERPARTS. This Lease may be executed at different times and in
any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to
this Lease by telecopier shall be as effective as delivery of a manually
executed counterpart of this Lease. In proving this Lease, it shall not be
necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
47. ATTORNEYS' FEES. If either party obtains a judgment against the
other party by reason of a breach of this Lease, a reasonable attorneys' fee
as fixed by the court shall be included in such judgment.
48. LIMITATION ON LANDLORD'S LIABILITY. Notwithstanding anything to the
contrary in this Lease, (A) Tenant will look solely to the interest of
Landlord (or its successor as Landlord hereunder) in the Leased Premises for
the satisfaction of any judgment or other judicial process requiring the
payment of money as a result of (i) any negligence (including gross
negligence) or (ii) any breach of this Lease by Landlord or its successor
(including any beneficial owners, partners, shareholders, trustees or others
affiliated or related to Landlord or such successor) and Landlord shall have
no personal liability hereunder of any kind, and (B) Tenant's sole right and
remedy in any action concerning Landlord's reasonableness (where the same is
required hereunder) will be an action for declaratory judgment and/or
specific performance, and in no event shall Tenant be entitled to claim or
recover any damages in any such action.
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49. WAIVER OF TRIAL BY JURY.
TENANT AND LANDLORD HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST
THE OTHER IN ANY MATTERS ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE AND OCCUPANCY OF TENANT'S
FACILITY OR THE ENTIRE PREMISES, AND ANY CLAIM OF INJURY OR DAMAGE.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly
executed as of the day and year first above written.
ENTERTAINMENT PROPERTIES TRUST, a
Maryland Real estate investment
trust
By: _________________________________
Name: _______________________________
Title: ______________________________
"Landlord"
AMERICAN MULTI-CINEMA, INC., a
Missouri corporation
ATTEST:
By:_____________________________ By: ________________________________
Name: __________________________ Name: ______________________________
Title: _________________________ Title: _____________________________
"Tenant"
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AMC Prior Owned
(EPT REIT Program)
RENT AND EXPENSE RIDER
Attached to and forming a part of Lease dated as of
November ___, 1997 by and between
ENTERTAINMENT PROPERTIES TRUST,
as Landlord,
and
AMERICAN MULTI-CINEMA, INC., as Tenant,
relating to premises in
__________________________
SECTION 1. RENT.
(A) ANNUAL FIXED RENT; ESCALATION. Tenant shall pay Landlord, during
the term of this Lease, the Annual Fixed Rent in the manner hereinafter
provided. The Annual Fixed Rent for each Lease Year shall be payable in equal
monthly installments on or before the first day of each calendar month in
advance during such Lease Year. If the Annual Fixed Rent is payable for a
fraction of a month, the amount payable shall be a pro rata share of a full
month's rent. The Annual Fixed Rent shall be prorated for any partial Lease
Year. Annual Fixed Rent will be increased each Lease Year by an amount equal
to the ANNUAL FIXED RENT ESCALATION.
(B) PERCENTAGE RENT.
(1) In addition to the Annual Fixed Rent, Tenant shall pay Landlord
as percentage rent (the "ANNUAL PERCENTAGE RENT") an amount for each Lease
Year equal to the Percentage Rate of the Gross Receipts for such Lease Year
in excess of an amount ("BASE AMOUNT") equal to the quotient obtained by
dividing the Annual Fixed Rent payable for such Lease Year by the Percentage
Rate. For the purpose of computing the Annual Percentage Rent for the first
Lease Year, the Gross Receipts for and the Annual Fixed Rent payable for the
partial calendar month, if any, preceding the first Lease Year shall be
included in the Annual Fixed Rent and Gross Receipts for the first Lease
Year. Within 60 days following the end of each Lease Year, Tenant shall
furnish Landlord with a statement, verified by a corporate officer of Tenant,
showing the amount of Gross Receipts for the preceding Lease Year, which
statement shall be accompanied by Tenant's payment of Annual Percentage Rent,
if any, is due.
(2) The term "LEASE YEAR" as used in this Lease shall mean a period
of 12 full calendar months. The first Lease Year shall begin on the first
day of the calendar month following the Commencement Date, unless the term
commences on the first day of a calendar month, in which case the first Lease
Year shall begin on the Commencement Date. Each succeeding Lease Year shall
commence on the anniversary of the first Lease Year.
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(3) Landlord shall have the right, not more often than once each
year, to audit Tenant's records of Gross Receipts, but only for the purpose
of ascertaining the amount of the Gross Receipts during the preceding Lease
Year. Such audit shall be made on behalf of Landlord by a certified public
accountant to be selected by Landlord. If Landlord wishes to audit Tenant's
records for any Lease Year, Landlord shall notify Tenant and proceed with
such audit within 12 months after the end of the Lease Year in question.
Should Landlord fail to exercise the right to audit the records of Tenant
within 12 months after the end of any Lease Year, then Landlord shall have no
further right to audit the records of Tenant for such Lease Year, and
Tenant's statement of Gross Receipts for such Lease Year shall conclusively
be deemed to be correct. Any such audit by Landlord shall be at Landlord's
own expense, except as hereinafter provided. If any such audit discloses that
Tenant has understated the Gross Receipts for such Lease Year by more than 3%
and Landlord is entitled to any additional Annual Percentage Rent as a result
of such understatement, then Tenant shall promptly pay to Landlord the cost
of such audit. Tenant shall, in any event, pay Landlord the amount of any
deficiency in Annual Percentage Rent plus interest at the Default Rate. Any
information obtained by Landlord from such statements or inspections shall be
kept confidential and shall not be disclosed except as provided in
subparagraph (14) of this paragraph (B).
(4) The term "GROSS RECEIPTS" as used in this Lease shall mean the
cash receipts from the sale of theatre admission tickets and concessions
received by Tenant in or from the Leased Premises during each Lease Year;
provided, however, there shall be deducted from such cash receipts in the
computation of Gross Receipts to the extent the same are included in Tenant's
computations:
(a) Credits or refunds made to customers.
(b) (i) All federal, state, county and city sales taxes or
other similar taxes, and (ii) all occupational taxes, use taxes and other
taxes which must be paid by Tenant or collected by Tenant, by whatever name
they are known or assessed, and regardless of whether or not they are
imposed under any existing or future orders, regulations, laws or
ordinances.
(c) Agency commissions paid to independent third parties for
selling tickets and surcharges in excess of the standard ticket price for
tickets purchased by use of credit cards, but only to the extent such
commissions or surcharges are actually remitted to independent third
parties.
(d) Receipts from the sale of student and senior citizens
discount cards.
(e) Proceeds from the sale of Tenant's Property.
(5) Should Tenant rent one or more theatres for special events such
as a rally, fashion show, speech or the like, the Gross Receipts shall be
deemed the rental received by Tenant and shall not include monies, if any,
received by the sponsor of the event. Pursuant to Sections 8(G) and (I) of
this Lease, the rental received by Tenant may not be based in whole or in
part on the net income or profits derived by any person in connection with
all or a portion of any theatre.
(6) For the purposes of computing and reporting Gross Receipts with
respect to "four-wall deals" as permitted by the Article captioned "Subletting
and Assigning," Tenant shall have the right to report as Gross Receipts only the
actual payments received by Tenant in connection with such use. Pursuant to
Sections 8(G) and (I) of this Lease, the actual payments received by Tenant
with respect to such "four-wall deals" may not be based in whole or in part
on the net income or profits derived by any person in connection with all or
a portion of a Tenant facility.
(7) Tenant shall be entitled to deduct from Gross Receipts any tax
on rents received by a distributor and/or rents paid by Tenant in respect of
films shown in Tenant's Building, to the extent Tenant (or its sublessees)
pays any such tax to the taxing authority whether by designation of such tax
specifically or as a part of the rental for a film or otherwise, provided
that the amount deducted hereunder shall not be duplicative of other
deductions from Gross Receipts.
(8) For the purposes of computing and reporting Gross Receipts with
respect to electronic games, other amusement devices, and other related services
provided as a convenience to patrons of Tenant's theatre operated or provided in
Tenant's Building, Tenant shall have the right to (a) report as Gross Receipts
only the actual payments received by Tenant in connection therewith, and (b)
exclude from Gross Receipts all receipts of any independent concessionaire,
licensee or other third party or parties in connection therewith and all
receipts derived by Tenant from pay telephones, cash dispensing ATM machines and
other customer related services provided as a convenience to patrons of Tenant's
theatre and which generate nominal fees. Pursuant to Sections 8(g) and (I) of
this Lease, the actual payments received by Tenant in connection with such
electronic games, other amusement devices and related services may not be
based in whole or in part on the net income or profits derived by any person.
(9) As and when during each Lease Year the Gross Receipts exceed
the Base Amount, the Gross Receipts thereafter received from theatre
admission tickets for pictures licensed for exhibition pursuant to particular
contracts hereinafter described shall be excluded from Gross Receipts and a
daily rent premium in the amount hereinafter set forth shall be paid in
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lieu thereof. Such license contracts shall consist of arrangements whereby a
predetermined weekly theatre operating cost is retained by the exhibitor from
the theatre ticket admission receipts in respect of a particular film, and
the distributor of the film is paid 90% of the balance. In such instances,
Tenant shall pay Landlord a daily rent premium of $15 per auditorium for each
day such film is exhibited in an auditorium in Tenant's Building.
(10) (a) If Tenant, in accordance with the provisions of paragraph
(B) of the Article captioned "Use of Premises," uses Tenant's Building for
purposes other than the uses set forth in paragraph (A) of said Article
("INITIAL USE"), then during the period of such other uses(s) ("OTHER
USE(S)"), Tenant shall pay as Percentage Rent, in lieu of the amount set
forth in subparagraph (1) of this paragraph (B), an amount for each Lease
Year equal to the amount, if any, by which the "Applicable Percentage Rate"
of Gross Receipts in each such Lease Year exceeds the Annual Fixed Rent
payable by Tenant for such Lease Year. The term "APPLICABLE PERCENTAGE
RATE" shall mean the percentage rate, if any, commonly used in the
submarket within the Metropolitan Area in which Tenant's Building is
located for the type of use for which Tenant's Building is then being used.
(b) During the period of use of Tenant's Building for the Other
Use(s), Gross Receipts shall be defined as follows (in lieu of the
definition thereof in subparagraphs (4) through (9) of this paragraph
(B)):
The term "GROSS RECEIPTS" shall mean: (i) the entire amount
of the price charged, whether wholly or partially in cash or on
credit, or otherwise, for all goods, wares, merchandise and chattels
of any kind sold, leased, licensed or delivered, and all charges for
services sold or performed in, at, upon or from any part of or through
the use of Tenant's Building or any part thereof by Tenant and any
other party, or by means of any mechanical or other vending device
(other than pay telephones and those soft drink and other similar
vending devices operated primarily for the convenience of Tenant's
employees); and (ii) all gross income of Tenant and any other party
from any operations in, at, upon or from the Tenant's Building which
are neither included in nor excluded from Gross Receipts by other
provisions of this Lease, but without any duplication.
Gross Receipts shall not include, or if included, there
shall be deducted (but only to the extent they have been included), as
the case may be, (i) the net amount of cash or credit refunds made
upon Gross Receipts, where the merchandise sold or some part of it is
returned by the purchaser to and accepted by Tenant (but not exceeding
in any instance the selling price of the item in question); (ii) the
amount of any sales tax, use tax or retail excise tax which is imposed
by any duly constituted
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governmental authority directly on sales and which is both added to
the selling price (or absorbed therein) and is paid to the taxing
authority by Tenant (but not any vendor of Tenant); (iii) exchanges
of merchandise between Tenant's Building and other stores of Tenant
or its affiliates to the extent the same are made solely for the
convenient operation of Tenant's business and not for the purpose of
depriving Landlord of the benefit of Gross Receipts; (iv) returns of
merchandise to shippers, suppliers or manufacturers; (v) the sale of
Tenant's Property; (vi) discount sales to employees and agents of
Tenant of merchandise not intended for resale; and (vii) separately
stated interest and service charges.
(c) During any Lease Year in which Tenant's Building is used in
part for the Initial Use and in part for Other Use(s), Tenant shall pay as
Percentage Rent the sum of (i) the amount, if any, by which the Percentage
Rate of Gross Receipts during the portion of such Lease Year that Tenant's
Building is used for the Initial Use ("INITIAL USE PERIOD") exceeds the
Annual Fixed Rent payable during the Initial Use Period, plus (ii) the
amount, if any, by which the Applicable Percentage Rate of Gross Receipts
during the portion of such Lease Year that Tenant's Building is used for
purposes other than the Initial Use ("OTHER USE PERIOD") exceeds an amount
equal to the Annual Fixed Rent payable for the Other Use Period.
(d) If the use of Tenant's Building shall be changed from one
Other Use to another Other Use during any Lease Year or shall otherwise be
used for more than one Other Use during any Lease Year, Tenant shall pay as
Percentage Rent the amount, if any, by which the Applicable Percentage Rate
in respect of each such Other Use of the separate Gross Receipts received
in such Lease Year attributable to each such Other Use exceeds the Annual
Fixed Rent payable for such Lease Year.
(e) The foregoing provisions of this subparagraph (10) shall
prevail over any conflicting provisions in this paragraph (B) and shall
apply only when Tenant uses Tenant's Building primarily for uses other than
those set forth in paragraph (A) of the article captioned "Use of
Premises".
(11) Nothing set forth in this Lease shall be construed as giving
Landlord any partnership or other interest in Tenant's business.
(12) It is understood and agreed by Landlord that Tenant has made no
representation of any kind whatsoever as to the minimum or maximum amount of
Gross Receipts which may or shall be made in the Leased Premises during any
Lease Year of the term of this Lease.
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(13) Landlord agrees not to divulge to any party the amount of Gross
Receipts made by Tenant in the Leased Premises, except to a ground lessor if the
Leased Premises is subject to a ground lease and the taxing authorities with
authority to inquire therein, to an existing or bona fide prospective mortgagee
or bona fide prospective purchaser of the Entire Premises or the Leased
Premises, or in connection with any action to collect Percentage Rent from
Tenant.
SECTION 2. TENANT'S REAL ESTATE TAXES.
(A) As used in this Article, the following terms shall have the following
meanings:
(1) "FISCAL TAX YEAR" shall mean the 12-month period established as
the real estate tax year by the taxing authority having jurisdiction over the
Entire Premises.
(2) "TAXES" shall mean ad valorem taxes and assessments and
governmental charges (including sewer charges), general or special, ordinary or
extraordinary, foreseen or unforeseen, of any kind or nature whatsoever, whether
imposed by any Governmental Authorities, which are levied on or charged against
the Leased Premises, Tenant's Facility, Tenant's Property, the real estate on
which the Tenant's Facility is located, personal property or rents, or on the
right or privilege of leasing real estate or collecting rents thereon, and any
other taxes and assessments attributable to the Leased Premises or its operation
by Tenant or any tax or assessment or governmental charge imposed or collected
in lieu of or in substitution for any such tax, assessment or governmental
charge, including without limitation all special assessments, impact fees,
development fees, traffic generation fees, parking fees in respect of any Fiscal
Tax Year falling wholly within the term of this Lease and a portion of any real
estate taxes so imposed in respect of any Fiscal Tax Year falling partly within
and partly without the term hereof, equal to the proportion which the number of
days of such Fiscal Tax Year falling within the term hereof bears to the total
number of days of such Fiscal Tax Year; excluding, however, any income,
franchise, corporate, capital levy, capital stock, excess profits, transfer,
revenue, estate, inheritance, gift, devolution or succession tax payable by
Landlord or any other tax, assessment, charge or levy upon, or measured, in
whole or in part, by the rent payable hereunder by Tenant, except to the extent
any such tax, assessment, charge or levy is imposed in substitution for any ad
valorem tax or assessment.
(3) "TAXES APPLICABLE TO LEASED PREMISES" shall mean an amount equal
to the Taxes levied against the land and improvements within the Leased
Premises.
(B) Tenant shall pay the Taxes Applicable to the Leased Premises directly
to the appropriate taxing authorities within 60 days after the end of each
Fiscal Tax Year.
(C) Tenant shall have the right (but shall not be obligated) to contest
the Taxes Applicable to the Leased Premises or the validity thereof by
appropriate legal proceedings or in such other manner as it shall deem
suitable, and Landlord shall join in such contest, protest or proceeding, but
at Tenant's sole cost and expense. Landlord shall not, during the pendency
of such legal or other proceeding or contest, pay or discharge any Taxes on
the Leased Premises, or tax lien or tax title pertaining thereto, provided
Landlord may do so in order to stay a sale of the Leased Premises through
foreclosure of a tax lien thereon. Any refund obtained by Tenant shall be
paid first to Tenant to the extent of its costs and expenses of such contest
and on account of any portion of the Taxes so refunded which was previously
paid by Tenant.
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SECTION 3. COMMON FACILITIES EXPENSE. If the Leased Premises are a part of a
larger Entire Premises and subject to an REA as such terms are defined herein,
the following provisions of this Section 3 shall apply:
(A) "COMMON FACILITIES EXPENSE" shall mean, to the extent covered by such
REA, actual, reasonable and competitive costs of maintaining, repairing,
insuring, lighting, protecting and securing the Common Facilities. Tenant shall
pay directly to the appropriate person or entity under the REA in each Lease
Year as hereinafter provided the Common Facilities Expense for such Lease Year
attributable or allocable to the Leased Premises ("TENANT'S COMMON FACILITIES
CONTRIBUTION"), which shall be computed and paid as set out in the REA.
(B) To the extent Landlord is entitled to grant such rights to Tenant
under the REA, Landlord hereby grants to Tenant the right to receive all
statements and otherwise enforce directly Landlord's rights under the REA with
respect to the Common Facilities Expense for such Lease Year and Tenant's Common
Facilities Contribution, and how such amount was computed.
SECTION 4. AUDIT.
To the extent Landlord is entitled to grant such right to Tenant under the
REA, Landlord hereby grants to Tenant the right to exercise and enforce directly
Landlord's rights to audit (or authorize an accountant designated by Tenant to
audit) books and records of the Common Facilities Expense of the applicable
person or entity under the REA.
SECTION 5. ADDRESS FOR PAYMENT.
Until Tenant receives other instructions in writing from Landlord, Tenant
shall pay all rents and other charges under this Lease by check to the order of
Landlord, at its address first written in this Lease.
"Landlord" ENTERTAINMENT PROPERTIES TRUST, a
Maryland real estate investment trust
By:___________________________________
Name:_________________________________
Title:________________________________
"Tenant" AMERICAN MULTI-CINEMA, INC., a Missouri
corporation
By:___________________________________
Name:_________________________________
Title:________________________________
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