<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- ---------
Commission file number 0-14993
--------
CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-1469127
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901-2109
(Address of principal Executive Offices) (Zip Code)
(706) 576-3400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock, $.03 par value --
9,942,487 shares outstanding as of August 10, 1998
Class B Common Stock, $.03 par value --
l,420,700 shares outstanding as of August 10, 1998
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------- ------------
Unaudited)
(000's omitted)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,366 $ 16,545
Short-term investments 956 3,042
Recoverable construction allowances
under capital leases -0- 2,100
Accounts and notes receivable 2,039 758
Inventories 4,088 3,082
Prepaid expenses 5,885 5,448
-------- --------
TOTAL CURRENT ASSETS 21,334 30,975
OTHER ASSETS 20,897 23,817
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization 545,621 497,056
EXCESS OF COST OVER FAIR
VALUE OF TANGIBLE ASSETS
ACQUIRED 67,253 68,149
-------- --------
$655,105 $619,997
======== ========
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
(Unaudited)
(000's omitted)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 35,998 $ 26,122
Accrued expenses 16,930 17,833
Current maturities of long-term debt
and capital lease obligations - Note B 15,271 19,077
----------- ----------
TOTAL CURRENT LIABILITIES 68,199 63,032
LONG-TERM DEBT - less current maturities - Note B 260,604 222,242
SENIOR NOTES - less current maturities 65,909 79,870
CAPITAL LEASE OBLIGATIONS -
less current maturities 39,025 39,550
DEFERRED INCOME TAXES 13,931 12,431
SHAREHOLDERS' EQUITY
Class A Common Stock, $.03 par value, one vote per share, authorized
22,500,000 shares, issued and outstanding
9,941,287 and 9,918,587 shares, respectively 298 298
Class B Common Stock, $.03 par value, ten votes per
share, authorized 5,000,000 shares, issued and outstanding
1,420,700 shares 43 43
Paid-in capital 105,085 104,677
Retained earnings 102,011 97,854
----------- ------------
207,437 202,872
----------- -----------
$ 655,105 $ 619,997
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
----------- ---------- ---------- ----------
(000's omitted except per share data)
<S> <C> <C> <C> <C>
REVENUES
Admissions $ 76,026 $ 75,577 $ 156,651 $ 152,847
Concessions and other 34,672 34,497 71,189 65,684
----------- ---------- ----------- -----------
110,698 110,074 227,840 218,531
COSTS AND EXPENSES
Film exhibition costs 42,435 39,056 85,101 78,595
Concession costs 4,937 4,374 9,611 8,381
Other theatre operating costs 45,407 41,918 92,057 85,870
General and administrative 1,768 1,634 3,499 3,228
Depreciation and amortization 9,088 8,103 18,074 15,837
---------- ---------- ----------- -----------
103,635 95,085 208,342 191,911
---------- ---------- ----------- -----------
OPERATING INCOME 7,063 14,989 19,498 26,620
Interest expense 6,477 5,406 12,794 10,643
---------- ---------- --------- -----------
INCOME BEFORE INCOME TAXES 586 9,583 6,704 15,977
Income tax expense 224 3,642 2,548 6,071
---------- ---------- ----------- -----------
NET INCOME $ 362 $ 5,941 $ 4,156 $ 9,906
========== ========== =========== ===========
NET INCOME PER SHARE
Basic $ .03 $ .53 $ .37 $ .88
========== ========== =========== ===========
Diluted $ .03 $ .52 $ .36 $ .87
========== ========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
----------- -----------
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,156 $ 9,906
Items which did not use cash:
Depreciation and amortization 18,074 15,837
Deferred income taxes 1,500 -0-
Gain on sale of property and equipment (682) (1,809)
Changes in operating assets and liabilities:
Accounts and notes receivable and inventories (2,287) (2,750)
Prepaid expenses (437) (1,509)
Accounts payable 9,877 (388)
Accrued expenses (903) 2,260
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 29,298 21,547
INVESTING ACTIVITIES
Purchases of property and equipment (65,612) (68,609)
Purchases of assets from other theatre operators -0- (16,800)
Disposals of property and equipment 682 4,207
Decrease (increase) in:
Short-term investments 2,086 4,549
Other 2,789 (6,969)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (60,055) (83,622)
FINANCING ACTIVITIES Debt and other liabilities:
Borrowings under revolving credit line 1,489,000 974,000
Repayments of revolving credit line (1,450,500) (902,000)
Payments on long term obligations (18,430) (14,349)
Issuance of Class A Common Stock 408 4,713
Due from lessor under capital leases 2,100 2,778
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 22,578 65,142
---------- ----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (8,179) 3,067
Cash and cash equivalents at beginning of period 16,545 5,569
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 8,366 $ 8,636
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1998
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six-month periods ended June
30, 1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
NOTE B -- REVOLVING CREDIT FACILITY
On October 17, 1997, the Company entered into a credit agreement (the "1997
Credit Agreement") with a consortium of twelve banks which provides a revolving
line of credit of up to $275 million for working capital, acquisitions and other
general corporate purposes. The revolving line of credit under the 1997 Credit
Agreement is available for a five-year period. The Company has the option to
borrow at rates based on either the base rate of Wachovia Bank, N.A. or LIBOR +
.50% and is required to pay annual fees of .225% on the full amount of the
facility. The interest rate and facility fees are subject to adjustment based
upon the Company's ratio of defined funded debt to defined cash flows.
On August 3, 1998, Wachovia Bank of Georgia, N.A. provided the Company a $50
million loan (the "Loan") (the Loan and the 1997 Credit Agreement are
collectively known as the "Agreements"). The Loan matures November 30, 1998 and
the Company pays interest under the Loan at the same rates as under the 1997
Credit Agreement. No amounts were outstanding under the Loan at June 30, 1998.
At June 30, 1998, the Company had $66.5 million available for borrowings under
the Agreements. The Company has classified all amounts outstanding under the
1997 Credit Agreement as long-term in the accompanying Consolidated Balance
Sheets because management intends that at least that amount would remain
outstanding during 1998.
INTEREST RATE SWAPS: The Company has entered into interest rate swap agreements
to modify the interest characteristics of a portion of its outstanding debt. The
agreements involve the exchange of amounts based on a variable interest rate for
amounts based on a fixed interest rate over the life of the agreements without
an exchange of the notional amounts upon which the payments are based.
The interest rate swap agreements changed floating interest rate expense on
amounts outstanding under the 1997 Credit Agreement. Under one interest rate
swap agreement, the Company has fixed $50.0 million of its floating rate debt
through February 7, 2003. The effective rate at June 30, 1998 was 6.205%, equal
to a fixed rate of 5.705% plus the margin the Company pays over LIBOR (.50% at
June 30, 1998). Under another interest rate swap agreement, the Company has
fixed $20.0 million of its floating rate debt through February 7, 2001 at a
fixed rate of 5.51% plus the margin the Company pays over LIBOR (.50% at June
30, 1998) for a total effective rate of 6.01%.
6
<PAGE> 7
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1998
The Company is exposed to credit losses in the event of non-performance by
counter-parties on interest rate swap agreements. The Company does not believe
there is a significant risk of non-performance by any of the counter-parties to
these instruments and the Company monitors the financial stability of such
parties on a periodic basis.
NOTE C -- EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- ------------ ---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING
<S> <C> <C> <C> <C>
Basic 11,360 11,251 11,350 11,215
Effect of dilutive securities -
Employee stock options 74 132 79 120
---------- ----------- --------- ----------
Diluted 11,434 11,383 11,429 11,335
========== ========== --------- ----------
NET INCOME $ 362 $ 5,941 $ 4,156 $ 9,906
========== =========== ========= ==========
EARNINGS PER COMMON SHARE
Basic $ .03 $ .53 $ .37 $ .88
========== =========== ========= ==========
Diluted $ .03 $ .52 $ .36 $ .87
========== =========== ========= ==========
</TABLE>
NOTE D - ACCOUNTING POLICIES NOT YET ADOPTED
In June 1998, the FASB issued Statement No. 133, Accounting for Derivative
Instruments and for Hedging Activities. Statement No. 133 provides a
comprehensive standard for the recognition and measurement of derivatives and
hedging activities. Statement No. 133 requires all derivatives to be recorded on
the balance sheet at fair value and establishes "special accounting" for the
different types of hedges. Though the accounting treatment and criteria for each
type of hedge is unique, they all result in recognizing offsetting changes in
value or cash flows of both the hedge and the hedged item in earnings in the
same period. Changes in the fair value of derivatives that do not meet the hedge
criteria are included in earnings in the period of the change.
In April 1998, AcSEC issued SOP 98-5, Reporting on the Costs of Start-Up
Activities. Start-up costs, including organizational costs, are expensed as
incurred under SOP 98-5. Upon adoption, SOP-98-5 requires the write-off, as a
cumulative effect of a change in accounting principle, of any previously
capitalized start-up or organizational costs.
The Company plans to adopt Statement No. 133 in 2000 and SOP 98-2 in 1999, but
has not yet completed its analysis of the impact, if any, that Statement No. 133
and SOP 98-2 may have on its financial statements.
7
<PAGE> 8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
COMPARISON OF THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1998 AND JUNE 30, 1997
The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the financial information included
herein and the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1997 (the "1997 Form 10-K"), as filed with the Securities and
Exchange Commission (the "SEC"). Except for the historical information contained
herein, the following discussion contains forward-looking statements that
involve a number of risks and uncertainties. Factors which could cause the
Company's actual results in future periods to differ materially include, but are
not limited to, the availability of suitable motion pictures for exhibition in
the Company's markets, the availability of opportunities for expansion, the
effect of consolidations in the movie exhibition industry and competition with
other forms of entertainment, as well as those discussed or identified from time
to time in the Company's filings with the SEC, including, but not limited to,
the Company's 1997 Form 10-K.
RESULTS OF OPERATIONS
Total revenues for the quarter ended June 30, 1998 increased .6% to $110.7
million from $110.1 million for the quarter ended June 30, 1997. This increase
consists of a $.4 million increase in admissions and a $.2 million increase in
concessions and other. The increases are attributed to additional revenues
generated by the increased number of screens in operation, an increase in the
average concession sale per patron and additional income from the Company's
family entertainment center, The Hollywood Connection(SM); however, such
increases were partially offset by a .6% decrease in the average admission price
and a 2.3% decline in attendance per average screen. For the quarter ended June
30, 1998, the Company's average admission price was $4.25, its average
concession sale per patron was $1.77 and revenue per average screen was $40,445.
For the quarter ended June 30, 1997, the Company's average admission price was
$4.27, its average concession sale per patron was $1.73 and revenue per average
screen was $41,663.
Total revenues for the six months ended June 30, 1998 increased 4.3% to $227.8
million from $218.5 million for the six months ended June 30, 1997. This
increase consists of a $3.8 million increase in admissions and a $5.5 million
increase in concessions and other. These increases are due primarily to the
additional revenues generated by the increase in the number of screens in
operation, increases in admission prices, an increase in the average concession
sale per patron and additional income from the Company's family entertainment
center, The Hollywood Connection(SM); however, such increases were offset
partially by a 3.2% decrease in attendance per average screen. For the six
months ended June 30, 1998, the Company's average admission price was $4.28, its
average concession sale per patron was $1.77 and revenue per average screen was
$83,642. For the six months ended June 30, 1997, the Company's average admission
price was $4.26, its average concession sale per patron was $1.67 and revenue
per average screen was $84,636.
Cost of operations (film exhibition costs, concession costs and other theatre
operating costs) increased 8.7% from $85.3 million for the quarter ended June
30, 1997 to $92.8 million for the quarter ended June 30, 1998. This dollar
increase is due to the increased number of screens in operation plus a higher
level of film rentals paid on films that did not play for an extended period of
time, higher film terms on the picture GODZILLA, a slight increase in concession
costs, and the amount of fixed costs included in this cost category that do not
vary directly with revenues. As a percentage of total revenues, cost of
operations increased to 83.8% of total revenues in the quarter ended June 30,
1998 from 77.5% for the quarter ended June 30, 1997 for the reasons enumerated
above.
8
<PAGE> 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
COMPARISON OF THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 1998 AND JUNE 30, 1997
Cost of operations for the six months ended June 30, 1998 increased 8.1% from
$172.8 million for the six months ended June 30, 1997 to $186.8 million, due to
the increased number of screens in operation, plus a higher level of film
rentals paid due to films that did not play for an extended period of time and
higher film terms on the picture GODZILLA, a slight increase in concession
costs, and the amount of fixed costs included in this cost category that do not
vary directly with revenues. As a percentage of total revenues, cost of
operations increased from 79.1% of total revenues to 82.0% of total revenues in
the six months ended June 30, 1998 for the reasons enumerated above.
General and administrative costs for the quarter ended June 30, 1998 increased
to 1.6% of total revenues from 1.5% of total revenues for the quarter ended June
30, 1997.
General and administrative costs for the six months ended June 30, 1998 remained
at 1.5% of total revenues.
Depreciation and amortization increased to $9.1 million for the quarter ended
June 30, 1998 from $8.1 million due to additional depreciation and amortization
from the Company's acquisitions and expansions in 1997 and 1998.
Depreciation and amortization for the six months ended June 30, 1998 increased
from $15.8 million to $18.1 million due to additional depreciation and
amortization from the Company's acquisitions and expansions in 1997 and 1998.
Interest expense for the quarter ended June 30, 1998 increased to $6.5 million
from $5.4 million due to the increase in the average amount of outstanding debt.
Interest expense for the six months ended June 30, 1998 increased to $12.8
million from $10.6 million for the six months ended June 30, 1997 due to the
increase in the average amount of outstanding debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues are collected in cash, principally through box office
admissions and theatre concessions. Because its revenues are received in cash
prior to the payment of related expenses, the Company has an operating "float"
which partially finances its operations.
On October 17, 1997, the Company entered into a new credit agreement (the "1997
Credit Agreement") with a consortium of twelve banks which provides a revolving
line of credit of up to $275 million for working capital, acquisitions and other
general corporate purposes. The revolving line of credit under the 1997 Credit
Agreement is available for a five-year period. The Company has the option to
borrow at interest rates based on either the bank base rate or LIBOR plus .50%
and is required to pay annual commitment fees of .225% on the full amount of the
facility. The interest rate, facility fees and commitment fees are subject to
adjustment based upon the Company's ratio of total debt to defined cash flows.
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's credit facilities contain certain restrictive provisions which,
among other things, limit additional indebtedness of the Company, limit the
payment of dividends and other defined restricted payments, require that certain
debt to capitalization ratios be maintained and require minimum levels of cash
flows.
The Company's capital expenditures arise principally in connection with theatre
acquisitions, renovation and expansion of existing theatres and the development
of new theatres. During the first six months of 1998, such capital expenditures
totaled $65.6 million. The Company estimates that total capital expenditures for
1998 will be approximately $150.0 million.
The Company believes that its presently anticipated capital needs for theatre
construction and possible acquisitions will be satisfied by the cash and cash
equivalents and short-term investments on hand, borrowings under the revolving
credit lines (see Note B of the Notes to Condensed Consolidated Financial
Statements (Unaudited) herein), additional sale of debt and/or equity
securities, additional bank financings and other forms of long-term debt,
internally generated cash flow and, where appropriate, future lease financings.
On August 10, 1998, the Company had approximately $17.9 million in cash and
short term investments on hand and approximately $70.0 million was available
under the Company's revolving credit lines.
Cash from operating activities was $29.3 million for the six months ended June
30, 1998, compared to $21.5 million for the six months ended June 30, 1997. The
increase in cash flow from operating activities was primarily due to the
increase in accounts payable. Net cash used in investing activities was $60.1
million for the six months ended June 30, 1998 as compared to $83.6 million in
the prior year period. This decrease in cash used in investing activities was
primarily due to the decreased level of capital expenditures. For the six-month
periods ended June 30, 1998 and 1997, cash provided by financing activities was
$22.6 million and $65.1 million, respectively. The decrease in cash provided by
financing activities was due to a decreased level of net borrowings under the
Company's revolving credit line.
The Company has initiated an internal review of its systems to ensure that Year
2000 issues do not have a material adverse effect on the Company's core business
operations or transactions with customers, suppliers and financial institutions.
Based on this review, which was substantially completed at December 31, 1997,
the Company has determined that it will need to modify or replace portions of
its IQ-Zero software so that it will properly generate reports and manage
certain operations properly after December 31, 1999. In connection with its
review, the Company will also discuss the Year 2000 issues with its significant
suppliers and financial institutions to ensure that their systems are fully Year
2000 compliant relative to how their systems interface with the Company's
systems or otherwise impact the Company's operations. The Company will evaluate
alternatives should such suppliers and financial institutions fail to remediate
their Year 2000 problems. The Company believes that its review is adequate to
address its Year 2000 concerns and that the cost of its Year 2000 initiatives
has not had, and is not expected to have, a material adverse effect on the
Company's operating results or financial condition. However, there can be no
assurance that the Company's systems nor the systems of other companies with
whom the Company conducts business will be Year 2000 complaint prior to December
31, 1999 or that the failure of any such system will not have a material adverse
effect on the Company's business, operating results and financial condition.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders.
The annual meeting of shareholders of the Company was held on May 11,
1998. At the annual meeting, the shareholders voted on the election of six
directors and the adoption of the Carmike Cinemas, Inc. 1998 Class A Stock
Option Plan. The results of the voting were as follows:
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
FOR VOTE WITHHELD
--- -------------
<S> <C> <C>
C. L. Patrick 22,007,792 116,276
Michael W. Patrick 22,007.792 116,276
Carl L. Patrick, Jr. 22,007,792 116,276
Carl E. Sanders 21,959,592 165,476
John W. Jordan, II 22,009,492 114,576
David W. Zalaznick 22,009,492 114,576
PROPOSAL NO. 2 - APPROVAL OF THE CARMIKE CINEMAS, INC. 1998 CLASS A STOCK OPTION PLAN
<CAPTION>
<S> <C>
For 19,044,534
Against 1,290,452
Abstain 99,955
</TABLE>
ITEM 5. Other Information
On June 30, 1998, the Company executed a Settlement Agreement with the U.S.
Department of Justice under Title III of the Americans with Disabilities
Act("ADA"). Under this agreement, Carmike agreed to complete the readily
achievable removal of barriers to accessibility, or alternatives to barrier
removal, at two theatres operated by Carmike in Des Moines, Iowa. Additionally,
as per the Settlement Agreement, Carmike distributed to all of its theatres a
questionnaire designed to assist Carmike management in the identification of
existing, potential barriers and a threshold determination of what steps might
be available for removal of such existing, potential barriers.
The Company constructs new theatres to be accessible to the disabled and
believes it is otherwise in substantial compliance with applicable regulations
relating to accommodating the needs of the disabled. The Company does not
currently anticipate that ongoing compliance with the ADA and the regulations
thereunder will require the Company to expand substantial funds.
11
<PAGE> 12
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10 - Master Lease dated November 20, 1997 between Movieplex Realty
Leasing, L.L.C. and the Company (confidential treatment has been applied for
with respect to certain provisions of the exhibit).
27.1 - Financial Data Schedule (for SEC use only)
27.2 - Restated Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CARMIKE CINEMAS, INC.
(Registrant)
Date: August 11, 1998 By: /s/ Michael W. Patrick
----------------- -----------------------------------
Michael W. Patrick - President
(Chief Executive Officer)
Date: August 11, 1998 By: /s/ John O. Barwick, III
----------------- -----------------------------------
John O. Barwick, III -
Vice President - Finance
(Chief Accounting and
Financial Officer)
13
<PAGE> 1
Exhibit 10
MASTER LEASE
BETWEEN
MOVIEPLEX REALTY LEASING, L.L.C.,
AS LANDLORD
AND
CARMIKE CINEMAS, INC.,
AS TENANT
DATED: NOVEMBER 20, 1997
THIS LEASE AND THE LEASED PROPERTY COVERED HEREBY HAVE BEEN ASSIGNED TO AND
ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF WACHOVIA BANK, N.A., AS AGENT
(THE "AGENT") UNDER AND TO THE EXTENT SET FORTH IN MORTGAGES AND ASSIGNMENTS OF
RENTS, EACH DATED THE DATE HEREOF, BY LANDLORD IN FAVOR OF THE AGENT AS SUCH
AGREEMENTS MAY BE SUPPLEMENTED, AMENDED, OR MODIFIED FROM TIME TO TIME IN
ACCORDANCE WITH THE PROVISIONS THEREOF. TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE STATE), NO SECURITY INTEREST IN THIS LEASE
MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART HEREOF
OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE AGENT ON OR
IMMEDIATELY FOLLOWING THE SIGNATURE PAGE HEREOF OR THEREOF.
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND USAGE
Section 1.1. Definitions.......................................................1
Section 1.2. Number and Gender; Captions; References; Capitalized Terms.......26
Section 1.3. Accounting Terms and Determinations..............................27
ARTICLE 2. REPRESENTATIONS, COVENANTS AND WARRANTIES;
DISCLAIMERS
Section 2.1. Representations, Covenants and Warranties of Tenant..............27
Section 2.2. Representations, Covenants and Warranties of Landlord............39
Section 2.3. Disclaimer.......................................................40
Section 2.4. Amendments Relating to Bonds.....................................41
Section 2.5. Actions Taken by Tenant..........................................41
ARTICLE 3. DEMISE OF PREMISES; TERM; RENT; OTHER PAYMENTS
Section 3.1. Demise of Premises...............................................41
Section 3.2. Rent.............................................................41
Section 3.3. Rental Payments to be Unconditional, No Abatement or Set-off.....41
Section 3.4. Termination of Term/Rental Payment Obligation....................44
Section 3.5. Basic Rent.......................................................44
Section 3.6. [Intentionally Omitted]..........................................45
Section 3.7. Basic Rent; No Bonds Outstanding.................................45
Section 3.8. Supplemental Rent................................................45
Section 3.9. Surplus Moneys in Bond Fund......................................48
ARTICLE 4. ACQUISITION AND CONSTRUCTION;
SUBSTITUTION OF PROPERTIES
Section 4.1. Acquisition and Construction of the Individual Properties........49
Section 4.2. Projects Not Completed...........................................49
Section 4.3. Aggregate Fair Market Value Not Achieved.........................49
Section 4.4. Substitution of Properties.......................................49
Section 4.5. Moneys Remaining in Project Fund.................................49
Section 4.6. Investment and Use of Fund Moneys................................50
Section 4.7. Ownership of Leased Property.....................................50
Section 4.8. Change in Location of Records....................................50
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ARTICLE 5. USE
Section 5.1. Use..............................................................50
Section 5.2. Prohibited Uses..................................................50
ARTICLE 6. COMPLIANCE WITH LEGAL REQUIREMENTS
Section 6.1. Tenant's Compliance with Legal Requirements......................51
ARTICLE 7. IMPOSITIONS
Section 7.1. Utilities........................................................51
Section 7.2. Payment of Impositions...........................................51
Section 7.3. Tax Contests.....................................................52
Section 7.4. Tax Refund.......................................................52
ARTICLE 8. EXTENSION OPTIONS
Section 8.1. Extension Options................................................52
Section 8.2. Renewal Rent; Procedure for Determination........................52
Section 8.3. Lease Amendment..................................................52
Section 8.4. No Assignment....................................................53
Section 8.5. Invalidity.......................................................53
ARTICLE 9. LANDLORD'S RIGHT OF ENTRY
Section 9.1. Landlord's and Agent's Right of Entry............................53
ARTICLE 10. MAINTENANCE, REPAIR AND REPLACEMENT BY TENANT
Section 10.1. Maintenance of the Leased Property..............................53
Section 10.2. Repair and Replacement of the Leased Property...................53
Section 10.3. Maintenance of Leased Property..................................54
Section 10.4. Landlord Not Responsible........................................54
ARTICLE 11. ALTERATIONS BY TENANT
Section 11.1. Tenant Alterations..............................................54
Section 11.2. Construction of Alterations.....................................55
ARTICLE 12. ASSIGNMENT AND SUBLETTING
Section 12.1. Restrictions on Assignment and Subletting.......................55
Section 12.2. Procedure; Requirements.........................................56
Section 12.3. No Release from Liability.......................................58
Section 12.4. No Waiver.......................................................58
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ARTICLE 13. SURRENDER
Section 13.1. Surrender of Premises...........................................58
ARTICLE 14. HOLDING OVER
Section 14.1. Holding Over....................................................59
ARTICLE 15. PURCHASE OPTION
Section 15.1. Purchase Option.................................................60
Section 15.2. Purchase Price; Calculation.....................................60
Section 15.3. Procedure.......................................................61
Section 15.4. Subperforming Theater Purchase Option...........................61
Section 15.5. Purchase Upon Casualty Loss.....................................61
Section 15.6. Conveyance of Title.............................................61
Section 15.7. Special Right of Termination and Purchase.......................62
ARTICLE 16. PREMISES SUBJECT TO SECURITY DOCUMENTS
QUIET ENJOYMENT
Section 16.1. Quiet Enjoyment.................................................62
ARTICLE 17. EVENTS OF DEFAULT, REMEDIES
Section 17.1. Events of Default...............................................62
Section 17.2. Tenant Obligations on Default...................................65
Section 17.3. Landlord Remedies...............................................65
Section 17.4. Election of Remedies; No Waiver of Elected Remedies.............66
Section 17.5. No Additional Waiver Implied by One Waiver......................66
Section 17.6. Agreement to Pay Attorneys' Fees and Expenses...................66
Section 17.7. Late Charges....................................................66
Section 17.8. Delay; Notice...................................................66
Section 17.9. Conversion to Fixed Rate........................................66
ARTICLE 18. SUBORDINATION AND ESTOPPEL
Section 18.1. Subordination of Lease..........................................67
Section 18.2. [Intentionally Omitted].........................................67
Section 18.3. Estoppel Certificate............................................67
ARTICLE 19. DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF NET PROCEEDS
Section 19.1. Damage and Destruction..........................................68
Section 19.2. Net Proceeds....................................................68
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Section 19.3. Total and Partial Taking........................................69
Section 19.4. Temporary Taking................................................70
Section 19.5. Cooperation of Landlord.........................................71
Section 19.6. No Waiver.......................................................71
Section 19.7 Reserve Fund.....................................................71
ARTICLE 20. PREPAYMENT OF RENT
Section 20.1. No Optional Prepayment..........................................72
Section 20.2. Mandatory Prepayment............................................72
ARTICLE 21. PROCEDURE UPON PURCHASE
Section 21.1. State of Title..................................................72
Section 21.2. Closing Requirements............................................72
ARTICLE 22. INSURANCE
Section 22.1. General Provisions..............................................73
Section 22.2. General Liability...............................................75
Section 22.3. Auto Liability Insurance........................................76
Section 22.4. Builders' Risk Insurance........................................76
Section 22.5. Worker's Compensation and Employer's Liability..................76
Section 22.6. Property Insurance..............................................77
Section 22.7. [Intentionally Omitted].........................................77
Section 22.8. [Intentionally Omitted].........................................77
Section 22.9. Umbrella or Excess Liability....................................78
Section 22.10. Net Proceeds of Insurance; Form of Policies....................78
ARTICLE 23. NO WAIVER
Section 23.1. Written Waiver..................................................78
Section 23.2. No Acceptance of Surrender......................................78
Section 23.3. No Accord and Satisfaction......................................79
Section 23.4. Payment of Rent Not Waiver......................................79
ARTICLE 24. NON-LIABILITY OF LANDLORD
Section 24.1. Non-Liability of Landlord.......................................79
Section 24.2. Landlord Not Responsible for Tenant's Property..................79
ARTICLE 25. INDEMNIFICATION
Section 25.1. Indemnification.................................................80
Section 25.2. Exceptions to Indemnification...................................81
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Section 25.3. Right of Set-Off................................................82
Section 25.4. Miscellaneous; Survival.........................................82
ARTICLE 26. NOTICES
Section 26.1. Notices.........................................................82
ARTICLE 27. MECHANICS' LIENS
Section 27.1. Mechanics' Liens................................................84
ARTICLE 28. DEFINITION OF LANDLORD
Section 28.1. Definition of Landlord..........................................84
ARTICLE 29. DEFINITION OF TENANT
Section 29.1. Definition of Tenant............................................85
ARTICLE 30. PERSONAL LIABILITY
Section 30.1. No Personal Liability or Accountability.........................85
ARTICLE 31. ENVIRONMENTAL COMPLIANCE
Section 31.1. Environmental Compliance........................................85
Section 31.2. Existence of Hazardous Substances...............................86
Section 31.3. Environmental Inspection........................................86
Section 31.4. De Minimis Quantities...........................................86
ARTICLE 32. MISCELLANEOUS
Section 32.1. Entireties; Exhibits; Conflicts; Modifications..................87
Section 32.2. Further Assurances and Corrective Instruments...................87
Section 32.3. Jury Trial Waiver...............................................87
Section 32.4. Severability....................................................88
Section 32.5. Interpretation..................................................88
Section 32.6. No Offer; No Option, etc........................................88
Section 32.7. Recording.......................................................89
Section 32.8. Consent by Landlord.............................................89
Section 32.9. No Merger.......................................................89
Section 32.10. Landlord, Agent and Tenant Representatives.....................89
Section 32.11. Binding; Counterparts..........................................90
Section 32.12. Time is of the Essence.........................................90
Section 32.13. Receipt of Lease...............................................90
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Section 32.14. Unavoidable Delay..............................................90
Section 32.15. Relation of Parties............................................90
Section 32.16. Survival of Indemnification and Other Obligations..............92
Section 32.17. Brokerage Indemnity............................................92
Section 32.18. Reference to Trustee and Agent.................................92
Section 32.19. Date for Identification Purposes...............................92
EXHIBITS
Exhibit A - Copy of Agency and Development Agreement
Exhibit B - Letter of Credit Fee Pricing Schedule Matrix
Exhibit C - [INTENTIONALLY OMITTED]
Exhibit D - [INTENTIONALLY OMITTED]
Exhibit E - Form of Lease Supplement
Exhibit F - Restricted Investments
Exhibit G - Subsidiaries
Exhibit H - Estimated Basic Rent
Exhibit I - Master Assignment
Exhibit J - Payment Direction Agreement
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MASTER LEASE
------------
THIS MASTER LEASE is dated November 20, 1997 between MOVIEPLEX REALTY
LEASING, L.L.C., a New Jersey limited liability company having an address at 2
World Trade Center, Suite 2112, New York, New York 10048, as Landlord, and
CARMIKE CINEMAS, INC., a Delaware corporation having an address at 1301 First
Avenue, Columbus, Georgia 31901-2105, as Tenant.
FOR AND IN CONSIDERATION of the premises and of the mutual representations,
covenants and agreements herein set forth, the Landlord and the Tenant, each
binding itself, its successors and assigns, do mutually promise, covenant and
agree as follows; PROVIDED THAT in the performance of the agreements of the
Landlord herein contained, any obligation it may incur for the payment of money
with respect to the Bonds shall be payable solely from the Trust Estate or from
the liquidation of collateral pledged by the Landlord as security for its
performance under the Indenture:
ARTICLE 1. DEFINITIONS AND USAGE
Section 1.1. DEFINITIONS. Capitalized terms used but not defined in this
Lease shall have the meanings given to them in the Indenture or the
Reimbursement Agreement, as the case may be. In addition, the following terms
shall have the meanings specified in this Article, unless the context otherwise
requires.
"ACCOUNT" means any account established in any of the Funds established
under the Indenture.
"ADDITIONAL BONDS" means any Series of Additional Bonds issued pursuant to
Section 2.05(A) of the Indenture.
"ADDITIONAL RENT" has the meaning given to it in Section 3.8(a)(ii).
"ADJUSTED CASH FLOW" means, for any period, Consolidated Operating Income
for such period, PLUS, to the extent deducted in determining the amount thereof,
(i) Rental Obligations (less any principal portion of any Off-Balance Sheet
Leases), (ii) depreciation and amortization, and (iii) any aggregate net income
during such period arising from the sale, exchange or other distribution of
capital assets, PROVIDED that the total amount so included pursuant to this
clause (iii) shall not exceed 5% of Consolidated Operating Income for such
period.
"AFFILIATE" of any Person means (i) any other Person which directly, or
indirectly through one or more intermediaries, controls such Person, (ii) any
other Person which directly, or indirectly through one or more intermediaries,
is controlled by or is under common control with such Person, or (iii) any other
Person of which such Person owns, directly or indirectly, 20% or more of the
common stock or equivalent equity interests. As
<PAGE> 9
used herein, the term "control" means possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGENCY AND DEVELOPMENT AGREEMENT" means the Agency and Development
Agreement dated the date hereof between the Landlord and the Tenant, a copy of
which is attached hereto as EXHIBIT A, pursuant to which, among other things,
the Tenant agrees to act as development agent for the Landlord for the purpose
of selecting the Individual Properties and constructing the Applicable Projects.
"AGENT" means, (i) initially, Wachovia Bank, N.A., and its successors and
assigns in that capacity as agent for the Financial Institutions issuing the
Letters of Credit, and (ii) thereafter, either (A) in the event that only one
Alternate Letter of Credit is outstanding, the Financial Institution issuing
such Alternate Letter of Credit or (B) in the event that there are no Letters of
Credit or Alternate Letters of Credit outstanding, the Trustee.
"AGGREGATE FAIR MARKET VALUE" means the aggregate fair market value of the
Individual Properties comprising the Leased Property, as determined and
confirmed by the appraisals delivered by the Tenant to the Landlord and the
Agent pursuant to Sections 6(b) and 7(e)(v) of the Agency and Development
Agreement.
"ALLOCABLE COSTS" means, with respect to any Individual Property, the Costs
allocable to such Individual Property.
"ALTERATIONS" shall have the meaning given to such term in Section 11.1.
"ALTERNATE LETTERS OF CREDIT" means, collectively, any and all irrevocable,
direct-pay letters of credit issued in confirmation of, or in replacement or
substitution for, any Letters of Credit or Alternate Letters of Credit, which
(i) authorize drawings thereunder by the Trustee, (ii) are issued by one or more
national banking associations, banks, trust companies or other financial
institutions which are Eligible Lenders and (iii) satisfy the requirements of
Section 5.08 of the Indenture.
"APPLICABLE ACQUISITION AGREEMENT" means, with respect to each Individual
Property, the agreement between the Landlord, as purchaser or ground lessee, as
the case may be, and the seller of such Individual Property, as seller or ground
lessor, as the case may be, pursuant to which the Landlord has agreed or will
agree to purchase or ground lease such Individual Property.
"APPLICABLE APPROVALS" means, with respect to each Individual Property, all
permits, approvals and authorizations, including without limitation site plan
approval or similar land development approvals, which are required under Legal
Requirements or by Governmental Authorities in connection with the acquisition
or lease of such Individual Property, the
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construction of the Improvements and the Off-Site Improvements and the other
activities constituting part of the Applicable Project.
"APPLICABLE ASSIGNMENT OF RENTS" means, with respect to each Individual
Property, the assignment of rents pursuant to which the Landlord assigns to the
Agent all of the Landlord's right, title and interest in and to all leases
affecting or relating to such Individual Property.
"APPLICABLE COMPLETION DATE" means, with respect to each Individual
Property, the date as of which the Improvements thereon are substantially
completed, as such date shall be evidenced by a final certificate of occupancy
issued by the applicable Governmental Authority and certified by the Tenant to
the Landlord and the Agent pursuant to Section 7(e) of the Agency and
Development Agreement.
"APPLICABLE CONSTRUCTION AGREEMENT" means, with respect to each Individual
Property, the agreement or agreements between the Landlord and any contractor(s)
with respect to the construction of the Improvements on or at such Individual
Property.
"APPLICABLE MARGIN" means the Applicable Margin as set forth on the Letter
of Credit Fee Pricing Schedule Matrix attached hereto and made a part hereof as
EXHIBIT B, as the same may be amended or replaced from time to time.
"APPLICABLE MORTGAGE" means, with respect to each Individual Property, the
fee or leasehold mortgage and security agreement, deed of trust or similar
document pursuant to which the Landlord grants to the Agent a first lien on and
security interest in and to its interest in such Individual Property.
"APPLICABLE PLANS AND SPECIFICATIONS" means, with respect to each
Individual Property, the architectural and engineering drawings and
specifications describing the construction of the Improvements thereon which
have been prepared for and accepted by the Tenant and which are approved by the
Landlord and the Agent prior to the commencement of any construction with
respect to the Applicable Project.
"APPLICABLE PROJECT" means, with respect to each Individual Property, the
acquisition or lease, construction, renovation or installation of such
Individual Property, the Improvements thereon and the Off-Site Improvements
relating thereto, including any expansion of, or additional equipment installed
in, any Individual Property, which is funded in whole or in part by the proceeds
of the issuance of the Bonds, for use by the Tenant pursuant to this Lease or
any Lease Supplement.
"APPLICABLE STATE" means, with respect to each Individual Property, the
state or commonwealth within which such Individual Property, or any portion
thereof, is located.
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"ASSIGNMENTS OF RENTS" means, collectively, all of the Applicable
Assignments of Rents from time to time.
"ASSUMED RATE" shall mean six (6%) percent per annum.
"AUTHORIZED OFFICER" or "AUTHORIZED REPRESENTATIVE" means, (1) with respect
to the Landlord: any manager of the Landlord; (2) with respect to the Tenant:
the President, any Executive Vice President or any Vice President or such other
person at the time and from time to time designated by written certificate
furnished to the Landlord and the Trustee containing the specimen signatures of
such person and signed on behalf of the Tenant by the Secretary or Assistant
Secretary of the Tenant; (3) with respect to the Trustee: any officer of the
Trustee authorized by the Trustee to act or execute documents on behalf of the
Trustee; and (4) with respect to the Agent: any officer.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11 U.S.C.
ss.ss.101 ET SEQ.) as amended from time to time, and any successor statute
thereto.
"BASIC RENT" means the rent required to be paid pursuant to the provisions
of Section 3.5.
"BASIC RENT COMMENCEMENT DATE" means the earlier of (i) the Final Project
Completion Date or (ii) the date on which there are insufficient moneys
available in the Capitalized Interest Account or the Capitalized Interest
Reserve Account to make a payment then due on the Bonds or (iii) the date on
which there are insufficient funds in the Financing Costs Account to make a
payment of Financing Costs then due and payable.
"BASIC RENT PAYMENT" means the payment of Basic Rent.
"BASIC RENT PAYMENT DATE" means, on and after the Basic Rent Commencement
Date, (A) the first Monday of each month, or if such Monday is not a Business
Day, the next succeeding Business Day, and (B) on and after any date, with
respect to a prepayment of Rent or acceleration of amounts due under this Lease,
the Prepayment Date or date of acceleration, as the case may be.
"BOARD OF DIRECTORS" means the Board of Directors of the Tenant or a duly
authorized committee of directors lawfully exercising the relevant powers of
such Board.
"BOND" or "BONDS" means any one or more of the Series A Bonds or the Series
B Bonds or of any Series of Additional Bonds or Refunding Bonds or any Bonds
which are thereafter authenticated and delivered in lieu of or in substitution
for such Bonds pursuant to the Indenture.
"BOND FUND" means the Fund so designated and established by the Indenture.
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"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in Georgia are authorized by law to close.
"CAPITAL LEASE" as applied to any Person, means any lease of any property
(whether real, personal or mixed) by such Person as lessee which would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person, other than, in the case of
the Tenant or a Restricted Subsidiary, any such lease under which the Tenant or
a Wholly Owned Restricted Subsidiary is the lessor.
"CAPITAL LEASE OBLIGATIONS" means, with respect to any Capital Lease, the
amount of the obligations of the lessee thereunder which would, in accordance
with GAAP, appear on a balance sheet of such lessee (or the notes thereto) in
respect of such Capital Lease.
"CAPITALIZATION RATE", as used in Section 8.2, means the rate of return on
investment required by a purchaser or an owner of income-producing real
property, which return consists of Net Operating Income to be generated by such
real property.
"CAPITALIZED INTEREST ACCOUNT" means the account within the Project Fund so
designated and established by the Indenture.
"CAPITALIZED INTEREST COSTS" means all deposits in the appropriate Funds
and Accounts established under the Indenture for payment of capitalized interest
on the Bonds.
"CERTIFICATE," "ORDER," "REQUEST," "REQUISITION" and "STATEMENT" means,
respectively, a written certificate, order, request, requisition or statement
signed by an Authorized Representative of the Landlord, the Trustee or the
Agent. Any such instrument and supporting opinions or representations, if any,
may, but need not, be combined in a single instrument with any other instrument,
opinion or representation, and the instruments so combined shall be read and
construed as a single instrument. Any requisition signed by an Authorized
Representative of the Tenant requesting the disbursement of funds from the
Project Fund for Costs of the Projects shall have also been signed by an
Authorized Representative of the Landlord and of the Agent evidencing their
approval thereof.
"CHANGE OF CONTROL" means the occurrence of either of the following: (i)
the consummation of any transaction (including, without limitation, any merger
or consolidation) the result of which is that any "person" or "group" (as such
terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) becomes the beneficial owner of more of the voting power of the
outstanding voting stock of the Tenant than that beneficially owned by the
"Patrick Family" (as defined in the Credit Agreement) or (ii) the first day on
which more than a majority of the members of the Board of Directors of the
Tenant are not Continuing Directors.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMENCEMENT DATE" means the date of the issuance of the Bonds.
"COMMUNICATIONS" shall have the meaning given to such term in Section 26.1.
"COMPLIANCE CERTIFICATE" shall have the meaning given to such term in
Section 2.1(s)(iii).
"CONSOLIDATED CASH FLOW" means, for any period, the sum of Consolidated
Operating Income of the Tenant, and its Restricted Subsidiaries, PLUS to the
extent deducted in determining such Consolidated Operating Income (i)
depreciation and amortization and (ii) any aggregate net income during such
period arising from the sale, exchange or other distribution of capital assets;
PROVIDED, HOWEVER, that the total amount so included pursuant to this clause
(ii) shall not exceed 5% of Consolidated Operating Income for such period;
PROVIDED FURTHER, HOWEVER, that, in calculating Consolidated Cash Flow for any
such period, any acquisition or disposition of assets that shall have occurred
during such period will be deemed to have occurred at the beginning of such
period; PROVIDED FURTHER, HOWEVER, that (x) for purposes of determining the
ratio of Consolidated Funded Debt to Consolidated Cash Flow, Rent paid under
this Lease or any other Off-Balance Sheet Lease which has been deducted in
computing Consolidated Net Income shall be added back in computing Consolidated
Cash Flow, and (y) with respect to any Individual Property which was acquired or
ground leased by the Landlord within the 12-month period ending on the date of
the determination of Consolidated Cash Flow. Consolidated Cash Flow shall
include Theater-Level EBITDA with respect to such Individual Property and shall
be determined on the basis of actual Theater-Level EBITDA within such period and
projected Theater-Level EBITDA for the remainder of such period (with such
projections being based on the average Theater-Level EBITDA of comparable
theater properties of the Tenant which were operated during the entire 12-month
period).
"CONSOLIDATED FUNDED DEBT" means at any date the Funded Debt of the Tenant
and its Restricted Subsidiaries, determined on a consolidated basis as of such
date.
"CONSOLIDATED NET INCOME" means for any period, the net income (or deficit)
of the Tenant and its Restricted Subsidiaries for such period in question (taken
as a cumulative whole) after deducting, without duplication, all operating
expenses, provisions for all taxes and reserves (including reserves for deferred
income taxes) and all other proper deductions, all determined in accordance with
GAAP on a consolidated basis, after eliminating material inter-company items in
accordance with GAAP and after deducting portions of income properly
attributable to outside minority interests, if any, in Subsidiaries; PROVIDED,
HOWEVER, that there shall be excluded (a) any income or deficit of any other
Person accrued prior to the date it becomes a Subsidiary or merges into or
consolidates with the Tenant or another Subsidiary, (b) the net income in excess
of an amount equal to
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<PAGE> 14
5% of Consolidated Net Income for such period before giving effect to this
clause (b) (or deficit) of any Person (other than a Subsidiary) in which the
Tenant or any Subsidiary has any ownership interest, except to the extent that
any such income has been actually received by the Tenant or such Subsidiary in
the form of cash dividends or similar distributions, and PROVIDED that the
resulting income is generated by lines of businesses substantially similar to
those of the Tenant and its Restricted Subsidiaries taken as a whole during the
fiscal year ended December 31, 1996, (c) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of income accrued during such period, (d) any deferred credit or
amortization thereof from the acquisition of any properties or assets of any
Person, (e) any aggregate net income (but not any aggregate net loss) during
such period arising from the sale, exchange or other distribution of capital
assets (such term to include all fixed assets, whether tangible or intangible,
all inventory sold in conjunction with the disposition of fixed assets and all
securities) to the extent the aggregate gains from such transactions exceed
losses from such transactions, (f) any impact on the income statement resulting
from any write-up of any assets after the Effective Date (as defined in the
Credit Agreement), (g) any items properly classified as extraordinary in
accordance with GAAP, (h) proceeds of life insurance policies to the extent such
proceeds exceed premiums paid to maintain such life insurance policies, (i) any
portion of the net income of a Restricted Subsidiary which is unavailable for
the payment of dividends to the Tenant or a Restricted Subsidiary, (j) any gain
arising from the acquisition of any debt securities for a cost less than
principal and accrued interest, (k) in the case of a successor to the Tenant by
permitted consolidation or merger or transfer of assets pursuant to Section
2.1(bb), any earnings, of such successor or transferee prior to the
consolidation, merger or transfer of assets and (1) any earnings on any
Investments of the Tenant or any Subsidiary except to the extent that such
earnings are received by the Tenant or such Subsidiary as cash, PROVIDED that
earnings which would otherwise be excluded from Consolidated Net Income pursuant
to the preceding provisions of this clause (1) shall be included in Consolidated
Net Income but only to the extent that such earnings are attributable to the net
income of any Person (other than a Subsidiary) in which the Tenant or any
Subsidiary has any ownership interest and such net income is not otherwise
excluded from Consolidated Net Income by virtue of clause (b) of this
definition.
"CONSOLIDATED NET WORTH" means as of any date of determination (a) the sum
of (i) the net book value (after deducting related depreciation, obsolescence,
amortization, valuation and other proper reserves other than any such reserve
maintained in accordance with GAAP in connection with the use of the
last-in-first-out method of inventory valuation) at which the assets of the
Tenant and its Restricted Subsidiaries would be shown on a consolidated balance
sheet at such date prepared in accordance with GAAP, but excluding any amount on
account of write-ups of assets after the date of the most recent audited
financial statements delivered pursuant to Section 2.1(s), and (ii) the net book
value of the Leased Property and all other property leased by the Tenant and its
Subsidiaries pursuant to Off-Balance Sheet Leases minus (b) the sum of (i) the
net book value of all items of the following character to the extent, if any,
they are included in consolidated assets of the
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Tenant and its Restricted Subsidiaries or deducted from consolidated liabilities
of the Tenant and its Restricted Subsidiaries: (A) Investments which, solely by
reason of the description in clause (c) of the definition of Restricted
Investments, do not constitute Restricted Investments, and (B) Restricted
Investments made as permitted by the provisions of Section 2.1(w), and (ii) the
amount at which the consolidated liabilities of the Tenant and its Restricted
Subsidiaries (other than capital stock and surplus) would be shown on such
balance sheet, and including as liabilities all reserves for contingencies and
other potential liabilities and all minority interests in Restricted
Subsidiaries.
"CONSOLIDATED OPERATING INCOME" means, for any period, Consolidated Net
Income for such period PLUS, to the extent deducted in determining the amount
thereof, (i) the aggregate amount paid, or required to be paid, in cash by the
Tenant and its Restricted Subsidiaries in respect of income taxes (including
deferred taxes) during such period PLUS (ii) Interest Expense.
"CONSOLIDATED SUBSIDIARY" means, for any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of such Person in accordance with GAAP.
"CONSOLIDATED TOTAL CAPITALIZATION" means, at any time, the sum of: (i)
Consolidated Net Worth, and (ii) Consolidated Funded Debt.
"CONTINUING DIRECTOR" means, as of any date of determination, any member of
the Board of Directors of the Tenant who (i) was a member of such Board of
Directors on the Commencement Date or (ii) was nominated for election or elected
to such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"CONTRACTOR" means, with respect to each Applicable Project, any contractor
selected by the Tenant, with the approval of the Landlord and the Agent, to
construct, renovate and install such Applicable Project.
"COSTS" or "COSTS OF THE PROJECTS" means (i) all Hard and Soft Costs, plus
(ii) all Financing Costs, plus (iii) all Capitalized Interest Costs, minus (iv)
all interest earned prior to the Final Project Completion Date on all amounts
held in the Funds and Accounts under the Indenture.
"CREDIT AGREEMENT" means the Credit Agreement dated October 17, 1997 among
Tenant, each of the banks listed therein and Wachovia Bank, N.A., as agent, as
heretofore amended, modified and supplemented.
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<PAGE> 16
"CURRENT DEBT" means as at any date of determination all Debt for borrowed
money maturing or payable on demand or within one year from the date of the
creation thereof including any Debt that is by its terms or by the terms of any
instrument or agreement relating thereto directly or indirectly renewable or
extendible, at the option of the debtor, to a date beyond such year, including
any outstanding amounts of any revolving credit facility, but excluding any
fixed or contingent payments maturing or required to be made not more than one
year after such date in respect of the principal and premium, if any, on any
Funded Debt. Any Debt that is extended or renewed shall be deemed to have been
created at the date of such extension or renewal.
"DEBT" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under Capital Leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument, (viii) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, and (ix) all
Debt of others Guaranteed by such Person. In determining the Debt and assets of
any Person, no effect shall be given to deposits, trust arrangements or similar
arrangements which, in accordance with GAAP, extinguish Debt for which such
Person remains legally liable, except Debt shall not include the promissory note
of the Tenant in a principal amount not to exceed $3,622,974 and bearing
interest at the rate of 10.083% per annum payable to Columbus Bank and Trust
Company, and any extensions and renewals thereof, provided the proceeds of such
promissory note are used to pay the full purchase price of a certificate of
deposit (the "IRB Certificate of Deposit"), such promissory note (and any such
extension or renewal thereof) is secured by the pledge of such IRB Certificate
of Deposit issued by Columbus Bank and Trust Company in an amount and bearing
interest at a rate sufficient to pay all obligations under such promissory note,
such promissory note is nonrecourse to the Tenant or to any Restricted
Subsidiary except to such IRB Certificate of Deposit and the obligation under
such promissory note is not, in accordance with GAAP, to be classified on its
balance sheet as debt.
"DEFAULT" means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.
"DEFERRED MAINTENANCE OBLIGATION" *[material omitted]
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 17
"EASTWYNN" means EastWynn Theaters, Inc., an Alabama corporation and a
wholly owned subsidiary of the Tenant.
"ENVIRONMENTAL REQUIREMENTS" means all present and future statutes,
regulations, rules, ordinances, permits, approvals and similar items of all
Governmental Authorities relating to the protection of the environment
including, without limitation, those statutes regulating the use, transport,
storage, disposal, discharge, release or threatened release of Hazardous
Substances applicable to the Leased Property and the Off-Site Improvements
(until legal title to any portion of the Off-Site Improvements shall have been
transferred to a Governmental Authority) and/or the use thereof.
"EQUIPMENT" means, collectively, all furniture, fixtures and equipment,
including all additions and modifications and accessions thereto and
substitutions and replacements thereof, purchased or acquired, or to be
purchased or acquired, by the Tenant (excluding any such items acquired with the
proceeds from the issuance of the Bonds) and located on, installed at or
otherwise used in connection with any Individual Property, including without
limitation all seats, movie screens, projection equipment and concession
equipment.
"EQUITY RETURN RATE" * [material omitted]
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means (i) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Tenant; (ii) a partnership or other trade or business (whether or
not incorporated) which is under common control (within the meaning of Section
414(c) of the Code) with the Tenant; and (iii) solely for purposes of liability
under Section 12(c)(11) of the Code, the Lien created under Section 412(n) of
the Code, or for tax imposed for failure to meet minimum funding standards under
Section 4971 of the Code, a member of the same affiliated service group (within
the meaning of Section 414(m) of the Code) as the Tenant, any corporation
described in clause (i) above or any partnership or trade or business described
in clause (ii) above.
"EVENT OF DEFAULT" means the happening or occurrence of one of the events
or circumstances described in Section 17.1.
"EXPIRATION DATE" means the day preceding the sixteenth (16th) anniversary
of the Final Project Completion Date; PROVIDED, HOWEVER, that if the Initial
Term is extended
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 18
pursuant to the renewal provisions of Article 8 of this Lease, the Expiration
Date shall mean the last day of any such Renewal Term.
"FAIR MARKET VALUE" shall have the meaning given to such term in Section
15.2(b).
"FINAL DISBURSEMENT" means, with respect to each Individual Property, the
final disbursement by the Trustee from the Project Fund for the Costs of the
Applicable Project.
"FINAL PROJECT COMPLETION DATE" means the date which is twenty-four (24)
months after the Commencement Date.
"FINANCIAL ADVISOR" means RealVest Capital Corporation, a New Jersey
corporation.
"FINANCING COSTS" means and includes all fees and expenses necessary to
issue, offer and sell the Bonds and to arrange for the Landlord's Equity Amount,
including without limitation (i) the fees and reimbursable expenses of the
Financial Advisor, the Placement Agent, the Agent and the LC Issuers and LC
Participants, (ii) the fees and reimbursable expenses of the attorneys for the
Landlord, the Tenant, the Agent and the LC Issuers and LC Participants and (iii)
all other costs relating to the issuance and sale of the Bonds, including Rating
Agency fees, printing expenses, Trustee setup fees and Trustee's counsel fees.
"FIRST RENEWAL TERM" shall have the meaning set forth in Article 8.
"FISCAL QUARTER" means any fiscal quarter of the Tenant.
"FIXED CHARGES" for any period, means without duplication, the sum of (i)
the aggregate amount of Interest Expense during such period plus (ii) the
aggregate amount of Rental Obligations (less any principal portion of any
Off-Balance Sheet Leases) for such period.
"FUND" means any of the funds established under the Indenture.
"FUNDED DEBT" of any Person means (i) all Debt of such Person which in
accordance with GAAP would be classified on a balance sheet of such Person as of
such date as long-term debt, and including in any event all Debt of such Person,
whether secured or unsecured, having a final maturity (or which, pursuant to its
terms, is renewable or extendible at the option of such Person for a period
ending) more than one year after the date of the creation thereof (including any
portion thereof which is on such date included in current liabilities of such
Person), plus (ii) all Current Debt of such Person; it being understood and
agreed that, with respect to the Tenant, the term "Funded Debt" shall include,
in addition to all Debt which would otherwise be included pursuant to the
foregoing definition, but without duplication, (x) the sum of the principal
amount of the Outstanding
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<PAGE> 19
Bonds and the Tenant's obligations under any Off-Balance Sheet Leases, less
amounts in the Project Fund (and any comparable funds and accounts under
documentation executed and delivered in connection with any Off-Balance Sheet
Leases) and (y) the Landlord's Equity Amount.
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those which, in accordance with Section 1.3, are to be used in
making the calculations for purposes of determining compliance with this Lease.
"GOVERNMENTAL AUTHORITY" means any and all courts, boards, agencies,
commissions, offices or authorities of any nature whatsoever for any government
unit (federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
"GUARANTEE" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Debt of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to secure, purchase or pay
(or advance or supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to provide
collateral security, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part), provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"HARD AND SOFT COSTS" means and shall be deemed to include, together with
any other proper item of cost which is not specifically mentioned herein,
whether incurred prior to or after the date of this Lease, (a) the cost of the
acquisition or the ground leasing of the Leased Property, fees and expenses
related thereto; (b) the costs and expenses of the Landlord which are incurred
for labor and materials and payments to Contractors, builders and materialmen in
connection with the acquisition or leasing, construction, renovation and
installation of any Individual Property; (c) the cost of contract bonds and of
insurance of any kind that may be required or that may be necessary during the
course of acquisition, construction, renovation and installation of any
Individual Property which is not paid by the Contractor or Contractors; (d) the
costs and expenses of the Landlord for test borings, surveys, estimates, plans
and specifications and preliminary investigations therefor, and for supervising
construction, as well as for the performance of all other duties which are
required by or which are consequent to the proper construction, acquisition,
renovation and installation of any Individual Property; (e) [Intentionally
Omitted]; (f) all other costs which the Landlord shall be required to pay under
the terms of any Acquisition Agreement or Construction Agreement for the
acquisition, construction, renovation or installation of any Individual
Property; (g) any sums which are required to reimburse the Landlord or the
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<PAGE> 20
Tenant for any advances which are made by either of them for any of the above
items, or for any other costs which are incurred and for work which has been
done by either or both of them, provided that same is properly chargeable to any
Individual Property; and (h) such other expenses which are not specified in this
Lease or the Agency and Development Agreement and which may be necessary or
incidental to the construction, acquisition, renovation and installation of any
Individual Property, the financing thereof and the placing of the same in use
and operation. "Hard and Soft Costs" shall also include the costs and expenses
incurred by any agent of the Landlord or any other Person for any of the
above-mentioned items.
"HAZARDOUS SUBSTANCES" means any hazardous or toxic substance, waste,
pollutant or contaminated material, including without limitation, those
substances within the scope of any federal, state or local environmental laws,
regulations and ordinances, including the Resource Conservation and Recovery
Act, as amended, the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, the Superfund Amendment and Reauthorization Act of
1986, as amended, the Federal Water Pollution Control Act, as amended, the Clean
Air Act, as amended, and the Safe Drinking Water Act, as amended.
"IMPOSITIONS" means:
(i) all real estate taxes, payments in lieu of real estate taxes,
water and sewer rents and special assessments for public improvements or
benefits levied against the Leased Property, any taxes levied against any other
personal property owned by the Tenant and located at or upon the Leased
Property, charges for public utilities, excises, levies, license and permit fees
and other charges, ordinary or extraordinary, whether foreseen or unforeseen, of
any kind and nature whatsoever, which during the Term may be levied, charged,
confirmed, assessed or imposed upon or become due and payable out of or in
respect of, or become a Lien upon, the Leased Property or any part thereof
(together with any interest and penalties thereon), including, without
limitation, any taxes or assessments hereafter assessed in lieu of any of the
foregoing;
(ii) all charges for water, gas, light, heat, telephone, electricity,
power and other utilities and communications services rendered or used on or
about the Leased Property or any part thereof;
(iii) all state and local taxes (specifically excluding taxes imposed
upon or measured by net income) imposed upon the Landlord or any member, manager
or other principal of the Landlord by reason or as a result of (A) the payments
of Rent to the Landlord hereunder or (B) the ownership or leasing of the Leased
Property by the Landlord hereunder;
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<PAGE> 21
(iv) all actual, reasonable costs, fees and expenses incurred by or on
behalf of the Landlord in connection with the Landlord's compliance with any and
all tax laws, rules and regulations (specifically excluding the costs, fees and
expenses of compliance with federal income tax laws, rules and regulations and
state and local taxes imposed upon or measured by net income), including without
limitation the costs, fees and expenses of preparing and submitting any reports
or other filings in connection therewith; and
(v) monetary obligations of the Tenant as to the insurance required to
be maintained pursuant to the provisions hereof.
"IMPROVEMENTS" means (i) with respect to each Individual Property, all
buildings, structures and other improvements (and additions thereto or
substitutions or modifications thereof) presently existing thereon, and all
buildings, structures and other improvements (and additions thereto or
substitutions or modifications thereof) to be constructed thereon as part of the
Applicable Project in accordance with the Applicable Construction Agreement, the
Applicable Approvals and the Applicable Plans and Specifications, and (ii) with
respect to the Leased Property, all Improvements constructed or to be
constructed, collectively, on all of the Individual Properties; PROVIDED,
HOWEVER, that the Improvements shall not include any Equipment.
"INDEMNIFIED PARTY" or "INDEMNIFIED PARTIES" shall have the meanings given
to such terms in Section 25.1 hereof.
"INDENTURE" means the indenture of trust dated as of November 1, 1997 by
and between the Landlord and the Trustee, pursuant to which the Bonds are to be
issued, including any indentures supplemental thereto as therein permitted.
"INDIVIDUAL COMMENCEMENT DATE" means, with respect to each Individual
Property, the effective date of the Lease Supplement relating to such Individual
Property.
"INDIVIDUAL PROPERTY" means, individually, (i) each Supplemental Property
and (ii) each Substitute Property which is substituted for an Individual
Property pursuant to Section 4.4.
"INITIAL RENT" means Rent payable by the Tenant during the Initial Term,
including Basic Rent and Supplemental Rent.
"INITIAL TERM" means the initial term of this Lease commencing on the
Commencement Date and expiring on the Expiration Date (determined without regard
to the proviso contained in the definition thereof).
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<PAGE> 22
"INTEREST EXPENSE" for any period, means the aggregate amount (determined
in accordance with GAAP on a consolidated basis after eliminating all
intercompany items) of all interest accrued (whether or not actually paid) by
the Tenant and its Restricted Subsidiaries during such period in respect of Debt
of the Tenant and its Restricted Subsidiaries (including Capital Lease
Obligations), provided that the term "Interest Expense" shall (i) include,
without limitation, net amounts paid or accrued during such period in connection
with interest rate protection products (including, without limitation, interest
rate swaps, caps, floors and collars), amortized (if appropriate under GAAP)
appropriately over the term of the applicable Debt, any amortized discount in
respect of Debt issued at a discount and any fees or commissions payable in
connection with any letters of credit, the portion of any Capital Lease
Obligation allocable to interest in accordance with GAAP, the amount of interest
costs incurred by any Person during any period that is capitalized in accordance
with GAAP and is not included as an interest cost in calculating Consolidated
Net Income for such period, and (ii) shall exclude all costs associated with the
prepayment of fixed-rate debt.
"INTEREST PAYMENT DATE" means an Interest Payment Date as defined in the
Indenture.
"INVESTMENT" means as to any Person, (a) any direct or indirect purchase or
other acquisition by such Person, for cash or other property, of stock or other
securities of any other Person, or (b) any direct or indirect loan, advance or
capital contribution by such Person to any other Person, including all Debt and
accounts receivable from such other Person which are not current assets or did
not arise from sales to such other Person in the ordinary course of business. In
computing the amount involved in any Investment, (i) undistributed earnings of,
and interest accrued in respect of Debt owing by, such other Person accrued
after the date of such Investment shall not be included, (ii) there shall not be
deducted from the amounts invested in such other Person any amounts received as
earnings (in the form of dividends, interest or otherwise) on such Investment or
as loans from such other Person and (iii) unrealized increases or decreases in
value, or write-ups, write-downs or write-offs, of Investments in such other
Person shall be disregarded.
"LAND ACQUISITION DISBURSEMENT" means, with respect to each Individual
Property, a disbursement by the Trustee from the Project Fund for the Costs of
acquiring title to, or ground leasing, such Individual Property.
"LANDLORD" means Movieplex Realty Leasing, L.L.C., a New Jersey limited
liability company, and its successors and assigns.
"LANDLORD'S EQUITY AMOUNT" * [material omitted]
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 23
"LC ISSUERS" shall have the meaning given to such term in the Reimbursement
Agreement.
"LC PARTICIPANTS" shall have the meaning given to such term in the
Reimbursement Agreement.
"LEASE" means this Master Lease between the Landlord, as lessor, and the
Tenant, as lessee, and any amendments or supplements hereto in accordance with
the terms hereof, including without limitation all Lease Supplements.
"LEASED PROPERTY" means, collectively, all of the Individual Properties now
or from time to time hereafter leased by the Landlord to the Tenant pursuant to
this Lease or any Lease Supplement hereafter entered into between the Landlord
and the Tenant.
"LEASE SUPPLEMENT" means each Lease Supplement, substantially in the form
attached hereto as EXHIBIT E, entered into between the Landlord and the Tenant
in connection with the leasing, on or after the date hereof, of an Individual
Property by the Landlord to the Tenant; it being understood and agreed that,
upon execution and delivery of each Lease Supplement by the Landlord and the
Tenant, such Lease Supplement shall be deemed to become, and shall in fact
become, a part of this Lease.
"LEASE YEAR" means a 12 month period during the Initial Term. The first
Lease Year shall begin on the Basic Rent Commencement Date and shall end on the
date preceding the first anniversary of the Basic Rent Commencement Date.
Subsequent Lease Years shall begin and end on the same dates as the first Lease
Year but in succeeding calendar years.
"LEGAL REQUIREMENTS" means, as to the Tenant in the conduct of its business
wherever situated, and as to the Leased Property and the construction,
ownership, use, occupancy, possession, environmental condition, operation,
maintenance, alteration, repair or reconstruction thereof, (i) any and all
present and future judicial decisions, statutes, rulings, rules, regulations,
permits, certificates or ordinances of any Governmental Authority and applicable
to the Tenant or the Leased Property or by which the Tenant or the Leased
Property is bound, (ii) any and all terms, provisions, agreements or
restrictions created or imposed pursuant to any lease, contract, instrument of
restrictive covenants or other document applicable to and enforceable against
the Leased Property or the operator of the Leased Property, or applicable to the
Tenant or by which the Tenant is bound, (iii) all terms and provisions of the
Applicable Approvals and (iv) all Environmental Requirements.
"LENDERS" shall have the meaning given to such term in the Reimbursement
Agreement.
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<PAGE> 24
"LETTERS OF CREDIT" means, collectively, the irrevocable, direct-pay
letters of credit issued by the LC Issuers to the Trustee on the date of
execution and delivery of the Indenture and any Alternate Letters of Credit,
under which the Trustee is authorized, subject to the terms and conditions
thereof, to draw, in the aggregate, up to (a) an amount equal to the principal
amount of the Outstanding Bonds (i) to enable the Trustee to pay the principal
amount of the Bonds when due, at maturity, upon redemption or upon acceleration
and (ii) to enable the Trustee to pay the portion of the purchase price of Bonds
tendered to it and not remarketed corresponding to the principal amount of such
Bonds, plus (b) an amount equal to interest to accrue at the Maximum Rate on the
Outstanding Bonds for 42 days (i) to enable the Trustee to pay interest on the
Bonds when due and (ii) to enable the Trustee to pay the portion of the purchase
price of Bonds tendered to it and not remarketed corresponding to the accrued
interest on such Bonds, as the same may be amended, transferred, reissued or
extended in accordance with the Indenture.
"LETTER OF CREDIT FEES" means all fees payable in connection with the
issuance, origination, maintenance or renewal of the Letters of Credit and any
Alternate Letters of Credit, including without limitation, the fees payable in
the amounts and at the times set forth in Section 2.03(h) of the Reimbursement
Agreement.
"LIBOR" means the rate per annum determined on the basis of the offered
rate for deposits in Dollars of amounts equal or comparable to the amount of the
then Landlord's Equity Amount offered for a term of three months, which rate
appears on the Telerate Page 3750 effective as of 11:00 a.m. London time as of
the first Business Day of each calendar quarter.
"LIEN" means, with respect to any asset, any mortgage, deed to secure debt,
deed of trust, lien, pledge, charge, security interest, security title,
preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. The
Tenant or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset.
"MASTER ASSIGNMENT" means the master assignment of contracts and agreements
of even date herewith from the Landlord and the Tenant, as assignors, to the
Agent, as assignee, in the form set forth as Exhibit I hereto.
"MATERIAL ADVERSE EFFECT" means, with respect to any event, act, condition
or occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or
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<PAGE> 25
occurrences, whether or not related, a material adverse change in, or a material
adverse effect upon, any of (a) the financial condition, operations, business,
properties or prospects of the Tenant and its Restricted Subsidiaries taken as a
whole, (b) the rights and remedies of the Landlord or the Agent under the
Transaction Documents, or the ability of the Tenant to perform its obligations
under the Transaction Documents to which it is a party, as applicable, or (c)
the legality, validity or enforceability of any Transaction Document.
"MAXIMUM RATE" shall have the meaning ascribed thereto in the Indenture.
"MORTGAGES" means, collectively, all of the Applicable Mortgages from time
to time.
"MOVIE THEATER(S)" means, individually and collectively, as the context may
require, state-of-the-art (as of the Final Project Completion Date) multiplex
movie theaters operated or to be operated by the Tenant containing approximately
eight (8) to sixteen (16) movie screens each (it being understood and agreed
that entertainment facilities other than movie screens may occupy no more than
fifteen (15%) percent of the usable square footage of the building housing such
movie theater).
"MULTIEMPLOYER PLAN" means any Plan which is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NET OPERATING INCOME" means net rental income for leased real property
generated by such property for the benefit of the owner thereof, net of
Impositions and operating and maintenance expenses, if any, assumed by the owner
of such real property.
"NET PROCEEDS" means any insurance proceeds or condemnation award paid with
respect to any Individual Property remaining after payment therefrom of all
expenses incurred in the collection thereof.
"OBLIGATIONS" means, when used with respect to a Party hereto, any and all
of the covenants, warranties, representations and other obligations made or
undertaken by such Party to the other Party hereto pursuant to the provisions
hereof.
"OFF-BALANCE SHEET LEASE" means any lease which is treated as an operating
lease for accounting purposes and as a financing instrument for property law and
bankruptcy purposes.
"OFF-SITE IMPROVEMENTS" means (i) with respect to each Individual Property,
those improvements required to be constructed or installed pursuant to the
Applicable Approvals on land other than such Individual Property, and (ii) with
respect to the Leased Property, all Off-Site Improvements constructed or to be
constructed, collectively, on all of the Individual Properties.
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<PAGE> 26
"OFFERING STATEMENT" means, collectively, the Preliminary and Final
Offering or Placement Memorandum prepared and circulated by the Placement Agent
in connection with the issuance of the Bonds.
"OPERATING AGREEMENT" means the amended and restated operating agreement of
the Landlord dated November 20, 1997.
"OPERATING LEASE" means a lease of real or personal property other than, in
the case of the Tenant or a Restricted Subsidiary, (a) any such lease under
which the Tenant or a Wholly Owned Restricted Subsidiary is the lessor and (b)
any Capital Lease.
"OUTSTANDING BONDS", "BONDS OUTSTANDING" or "OUTSTANDING" shall have the
meaning ascribed thereto in the Indenture.
"PARTIES" or "PARTY" means the Landlord and the Tenant collectively or
individually as the context may require.
"PAYMENT DIRECTION AGREEMENT" means the payment direction agreement dated
November 20, 1997 by and among the Landlord, the Tenant, the Trustee and the
Agent in the form set forth as Exhibit J hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"PERMITTED ENCUMBRANCES" means, with respect to each Supplemental Property,
only those liens, easements, building lines, restrictions, security interests
and other matters accepted or approved by the Landlord and the Agent in writing.
"PERSON" means any individual, corporation, company, limited liability
company, voluntary association, partnership, limited liability partnership,
joint venture, trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"PLACEMENT AGENT" means RealVest Securities Corporation, a New York
corporation.
"PLAN" means any "employee pension benefit plan" (as such term is defined
in Section 3 of ERISA) which is or has been established or maintained, or to
which contributions are or have been made, by the Tenant or any ERISA Affiliate.
"PREFERRED MEMBER" *[material omitted]
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 27
"PREFERRED MEMBERSHIP INTEREST" *[material omitted]
"PREFERRED MEMBER'S UNRECOVERED CAPITAL ACCOUNT" *[material omitted]
"PREFERRED RETURN RATE" *[material omitted]
"PREFERRED STOCK" means, as applied to any corporation, shares of such
corporation which are entitled to preference or priority over any other shares
of such corporation in respect of either the payment of dividends or the
distribution of assets upon liquidation.
"PREMIER THEATER FACILITY" *[material omitted]
"PREPAYMENT DATE" means any date on which the Rent is subject to optional,
mandatory or extraordinary optional prepayment pursuant to Article 20.
"PREPAYMENT RATIO" means, with respect to any Individual Property, the
greater of: (i) the ratio, expressed as a percentage, that the fair market value
for such Individual Property (as determined and confirmed by the appraisals
delivered by the Tenant to the Landlord and the Agent pursuant to Sections 6(d)
and 7(e)(v) of the Agency and Development Agreement) bears to the Aggregate Fair
Market Value of the Leased Property, or (ii) the ratio, expressed as a
percentage, that the Allocable Costs for such Individual Property bear to the
total aggregate Costs of the Projects.
"PRINCIPAL OFFICE" means, when used with reference to the Landlord and the
Tenant, the addresses set forth in Section 26.1 and with reference to the
Trustee, or any other Fiduciary, the respective addresses of such parties as set
forth in the Indenture, and any further or different addresses as such parties
may designate pursuant hereto or thereto.
"PRINCIPAL PAYMENT DATE" means, a date on which a principal installment of
the Bonds is required to be paid to the holders thereof as set forth in the
Indenture, but shall not include a Purchase Date.
"PROJECT FUND" means the Fund so designated and established by the
Indenture.
"PROPERTY" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"QUALIFIED INVESTMENTS" shall have the meaning ascribed thereto in the
Indenture.
"RATING AGENCIES" means Moody's Investor Service, Inc., if the Bonds are
rated by such Person at the time, Standard & Poor's Ratings Group, if the Bonds
are rated by such
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 28
Person at the time, and Fitch Investors Service, if the Bonds are rated by such
Person at the time, and their respective successors and assigns, or if either
shall be dissolved or no longer assigning credit ratings to long term debt, then
any other nationally recognized Person assigning credit ratings to long term
debt designated by the Landlord.
"REDEEMABLE PREFERRED STOCK" of any Person means any preferred stock issued
by such Person which is at any time prior to the Maturity Date (as defined in
the Credit Agreement) either (i) mandatorily redeemable (by sinking fund or
similar payments or otherwise) or (ii) redeemable at the option of the holder
thereof.
"REFUNDING BONDS" means all Bonds, whether issued in one or more Series,
authenticated and delivered on original issuance pursuant to Section 2.05(B) of
the Indenture, and any Bonds thereafter authenticated and delivered in lieu of
or in substitution for such Bonds.
"REIMBURSEMENT AGREEMENT" means, initially, the reimbursement and credit
agreement dated the date hereof among the Agent, as agent for the LC Issuers,
the LC Issuers, the LC Participants and the Landlord, as the same may be amended
or supplemented from time to time in accordance with the provisions thereof, and
means, with respect to any Alternate Letters of Credit, the reimbursement
agreement, if any, relating to the issuance of such Alternate Letters of Credit
as the same may be amended or supplemented from time to time in accordance with
the provisions thereof.
"REIMBURSEMENT NOTES" shall have the meaning given to such term in the
Reimbursement Agreement.
"REIMBURSEMENT OBLIGATIONS" shall mean (i) the "Reimbursement Obligations"
and (ii) all other "Obligations", as those terms are defined in the
Reimbursement Agreement.
"RENEWAL RENT" means Rent payable by the Tenant during the Renewal Terms
pursuant to Section 8.2.
"RENEWAL TERM" means each period for which the Tenant elects to extend the
Term pursuant to Article 8.
"RENT" means, collectively, Basic Rent and Supplemental Rent.
"RENT DIFFERENTIAL" *[material omitted]
"RENT PAYMENTS" means the payments of Rent.
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 29
"RENTAL OBLIGATIONS" means for any period, the total amount (whether or not
designated as rentals or additional or supplemental rentals) payable by the
Tenant or any Restricted Subsidiary under any Operating Lease during such period
(in each case exclusive of amounts so payable on account of maintenance,
repairs, insurance, taxes, assessments and other similar charges); if and to the
extent that the amount of any Rental Obligation during any future period is not
definitely determinable under the Operating Lease in question, the amount of
such Rental Obligation shall be estimated in such reasonable manner as the Board
of Directors in good faith may determine.
"REQUIRED LENDERS" shall have the meaning given to such term in the
Reimbursement Agreement.
"RESERVE FUND" means the reserve fund referred to in Article 19, to be held
by the Landlord as security for the payment of the Deferred Maintenance
Obligation.
"RESERVED RIGHTS" means (i) subject to the terms of the Payment Direction
Agreement, the Landlord's right to receive Supplemental Rent hereunder (other
than Supplemental Rent which is payable to or for the account of the Agent),
(ii) the Landlord's rights of reimbursement and indemnity hereunder or under any
Transaction Document, (iii) [Intentionally Omitted], (iv) any rights of the
Landlord to be released from liabilities and obligations hereunder or under the
Transaction Documents and to indemnity contained in this Lease or the
Transaction Documents and (v) the concurrent right of the Landlord to receive
any and all notices, reports, surveys, certificates, financial statements and
evidences of performance which the Tenant may be required to furnish pursuant to
the terms hereof.
"RESTRICTED INVESTMENT" means any Investment by the Tenant or a Restricted
Subsidiary in any Person (including a Subsidiary) other than (a) Investments
existing on February 29, 1996 and set forth in EXHIBIT F hereto; (b) Investments
in (i) any Restricted Subsidiary or any Person which is or simultaneously
therewith becomes a Restricted Subsidiary; (ii) readily marketable direct
obligations issued by the United States of America or by any agency thereof
which in the case of the latter are unconditionally guaranteed by, or backed by
the full faith and credit of, the United States of America, in each case having
a maturity not in excess of one year from the date of acquisition thereof; (iii)
open market commercial paper maturing not later than 270 days from the date of
creation thereof of corporations that are organized under the laws of the United
States of America or any state thereof, and having the rating of P-1 or A-1 or
such other comparable rating by the Rating Agencies; (iv) obligations of
municipalities or corporations organized under the laws of the United States of
America or any state thereof maturing not later than one year from the date of
acquisition thereof by the Tenant or any Restricted Subsidiary, and having the
rating of AA or Aa or such other comparable rating by the Rating Agencies; (v)
certificates of deposit maturing within one year from the date of acquisition
thereof ("Certificates of Deposit") issued by commercial banks or trust
companies organized under the laws of the United
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<PAGE> 30
States of America or any state thereof having not less than $100,000,000 of
capital, surplus and undivided profits and currently having the rating not less
than A or such other comparable rating by the Rating Agencies; (vi) Certificates
of Deposit not to exceed in aggregate principal amount $1,500,000 issued by
Columbus Bank and Trust Company; (vii) Certificates of Deposit issued by
SunTrust Bank, Atlanta and Wachovia Bank, N.A., provided that each such bank is
owned by a "bank holding company" (within the meaning of the Bank Holding
Company Act of 1956, as amended), which shall have a rating of not less than A
or such other comparable rating by each of the Rating Agencies; (viii)
Eurodollar certificates of deposit maturing within one year of the date of
acquisition thereof issued by any bank having not less than $1,000,000,000 of
capital, surplus and undivided profits; and (ix) the IRB Certificate of Deposit
acquired as provided in the proviso set forth in the definition of "Debt"; and
(c) Investments acquired after the Effective Date (as defined in the Credit
Agreement) in exchange for, or out of the net cash proceeds of the substantially
concurrent sale of, capital stock of the Tenant or a Restricted Subsidiary.
"RESTRICTED PAYMENT" means any payment or the incurrence of any liability
to make any payment, in cash, property or other assets (other than in shares of
any class of capital stock, other than Preferred Stock, of the Tenant) upon or
in respect of any share of any class of capital stock of the Tenant, including
without limiting the generality of the foregoing, payments as dividends and
payments (other than out of the net cash proceeds from the substantially
concurrent sale of common shares of the Company) for the purpose of purchasing,
retiring or redeeming any such shares of stock (or any warrants, options or
other rights evidencing a right to purchase any such shares of stock) or the
making of any other distribution in respect of any such shares of stock (or any
warrants, options or other rights evidencing a right to purchase any such shares
of stock).
"RESTRICTED SUBSIDIARY" means any Subsidiary (i) which is organized under
the laws of, and which at the time in question conducts substantially all of its
business and maintains substantially all of its property and assets within, the
United States of America, or any state thereof, Canada, or any province thereof,
or Puerto Rico and (ii) at least 80% of the Voting Stock of which is at the time
owned by the Tenant or by one or more Wholly Owned Restricted Subsidiaries or by
the Tenant and one or more Wholly Owned Restricted Subsidiaries.
"RETURN ON LANDLORD'S EQUITY AMOUNT" *[material omitted]
"REVENUES" means all (a) the Rent Payments, (b) other moneys received or to
be received by the Landlord or the Trustee in respect of Rent Payments,
including without limitation, all moneys and investments in the Bond Fund, (c)
the payments pursuant to the Security Documents received or receivable by the
Landlord from the Tenant, (d) any proceeds of Bonds originally deposited with
the Trustee for the payment of interest accrued
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 31
on the Bonds or otherwise paid to the Trustee by or on behalf of the Tenant or
the Landlord for deposit in the Bond Fund or any excess moneys remaining in the
Project Fund following Final Project Completion Date, and (e) investment income
with respect to any moneys held by the Trustee under the Indenture.
"SECOND RENEWAL TERM" shall have the meaning set forth in Section 8.1.
"SECURED INTERESTS" shall have the meaning given to such term in Section
18.1.
"SECURITY DOCUMENTS" means, collectively, the Mortgages, the Assignments of
Rents and the Master Assignment.
"SERIES" means all of the Bonds authenticated and delivered on original
issuance and identified pursuant to the Indenture or a Supplemental Indenture
authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter
authenticated and delivered in lieu of or in substitution for such Bonds
pursuant to the Indenture, or a Supplemental Indenture, regardless of variations
in maturity, interest rate, principal installments or other provisions.
"SERIES A BONDS" means the Landlord's Adjustable Rate Tender Securities
Bonds (Carmike Cinemas, Inc.) 1997 Series A (consisting of a Series A-1, a
Series A-2 and a Series A-3) in the aggregate principal amount of $59,775,000,
to be issued by the Landlord pursuant to the Indenture.
"SERIES B BONDS" means the Landlord's Adjustable Tender Securities Bonds
(Carmike Cinemas, Inc.) 1997 Series B (consisting of a Series B-1, a Series B-2
and a Series B-3) in the aggregate principal amount of $12,975,000, to be issued
by the Landlord pursuant to the Indenture.
"STIPULATED LOSS VALUE" means, with respect to any purchase of an
Individual Property pursuant to Section 15.5, an amount equal to (i) the
Unamortized Total Project Cost, multiplied by (ii) the Prepayment Ratio.
"SUBPERFORMING THEATER PROPERTY" means any Individual Property with respect
to which Theater EBITDA shall be negative for the most recent consecutive
12-month period.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or
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<PAGE> 32
indirectly owned or controlled by such Person or one or more Subsidiaries of
such Person or by such Person and one or more Subsidiaries of such Person.
"SUBSTITUTE PROPERTY" means any parcel of real property, together with any
and all Improvements constructed thereon and any and all personal property
acquired by the Landlord in connection therewith, substituted for any Individual
Property pursuant to the terms of Section 4.4.
"SUPPLEMENTAL INDENTURE" means any indenture amending or supplementing the
Indenture, which may be entered into in accordance with the provisions of the
Indenture.
"SUPPLEMENTAL PROPERTY" means each property hereafter acquired or ground
leased by the Landlord and leased to the Tenant pursuant to a Lease Supplement,
together with any and all Improvements constructed thereon and any and all
personal property acquired by the Landlord in connection therewith.
"SUPPLEMENTAL RENT" shall have the meaning given to such term in Section
3.8.
"SUPPLEMENTAL RENT PAYMENTS" means all payments of Supplemental Rent.
"TENANT" means Carmike Cinemas, Inc., a Delaware corporation and its
successors and assigns.
"TENANT'S VISITORS" means persons invited by the Tenant and/or its
permitted subtenants onto the Leased Property as guests or doing lawful business
with the Tenant and/or its permitted subtenants including, without limitation,
the agents, servants, employees, contractors, invitees and licensees of the
Tenant and/or its permitted subtenants.
"TERM" means the period of time covered by the Initial Term and, if the
Term is extended pursuant to Article 8 hereof, all of the Renewal Terms.
"THEATER-LEVEL EBITDA" means with respect to any Individual Property,
operating income derived therefrom, without provision for any interest, taxes
related to income, depreciation, amortization and corporate general and
administrative expenses.
"TITLE COMPANY" means, with respect to each Individual Property, the title
insurance company, which shall be authorized to transact business in the
Applicable State and satisfactory to the Landlord and the Agent, that issues the
title insurance policy in connection with the acquisition of such Individual
Property and the recording of the Applicable Mortgage.
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<PAGE> 33
"TRANSACTION DOCUMENTS" means this Lease, the Indenture, the Reimbursement
Agreement, the Reimbursement Notes, the Applicable Construction Agreements, the
Lessee Undertaking, the Mortgages, the Assignments of Rents, the Master
Assignment, the Agency and Development Agreement, the Payment Direction
Agreement, the Placement, Indexing and Remarketing Agreement and all agreements,
documents or contracts between the Landlord and the Tenant or the Landlord and
the Agent and, if applicable, the Lenders in connection with the transactions
contemplated by any of the foregoing.
"TRUSTEE" means First Union National Bank and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at any time serving
as successor trustee under the Indenture.
"TRUST ESTATE" shall have the meaning ascribed to such term in the
Indenture.
"UNAMORTIZED TOTAL PROJECT COST" *[material omitted]
"UNCOMPLETED PROJECT PURCHASE PRICE" * [material omitted]
"VOTING STOCK" means capital stock of a corporation the holders of which
are ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or persons performing similar functions).
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary, all
of the equity securities (except directors' qualifying shares) of which are
owned by the Tenant or another Wholly Owned Restricted Subsidiary.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, any such
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are owned or controlled by such Person or one or
more Wholly Owned Subsidiaries of such Person.
Section 1.2. NUMBER AND GENDER; CAPTIONS; REFERENCES; CAPITALIZED TERMS.
Pronouns, wherever used herein, and of whatever gender, shall include natural
persons, corporations and associations of every kind and character, and the
singular shall include the plural wherever and as often as may be appropriate.
Article and section headings in this Lease are for convenience of reference only
and shall not affect the construction or interpretation of this Lease. Whenever
the terms "hereof", "hereby", "herein", or words of similar import are used in
this Lease, they shall be construed as referring to this Lease in its entirety
rather than to a particular section or provision, unless the context
specifically
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* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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<PAGE> 34
indicates to the contrary. Unless otherwise indicated, any reference to a
particular "Article" or "Section" shall be construed as referring to the
indicated article or section of this Lease.
Section 1.3. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP, applied on a basis consistent (except for changes
concurred in by the Tenant's independent public accountants or otherwise
required by a change in GAAP) with the most recent audited consolidated
financial statements of the Tenant and its Consolidated Subsidiaries delivered
to the Landlord and the Agent, unless with respect to any such change concurred
in by the Tenant's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this Lease or any of the
other Transaction Documents: (i) the Tenant shall have objected to determining
such compliance on such basis at the time of delivery of such financial
statements, or (ii) the Required Lenders shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made; provided that, if either the Tenant or the Required Lenders
shall so object, then the Tenant and the Landlord shall negotiate in good faith
to modify the relevant covenants set forth in Article V in order to
appropriately reflect such changes in GAAP and, in the event such covenants are
so modified, upon execution of an amendment to this Agreement effectuating such
modification, the related changes in GAAP will be effective for calculation and
reporting purposes under this Lease.
ARTICLE 2. REPRESENTATIONS, COVENANTS AND WARRANTIES; DISCLAIMERS
Section 2.1. REPRESENTATIONS, COVENANTS AND WARRANTIES OF TENANT. The
Tenant represents, covenants and warrants as follows:
(a) CORPORATE EXISTENCE AND POWER. The Tenant is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, unless the failure to be so qualified or to have such corporate
powers or governmental licenses, authorizations, consents or approvals would not
have a Material Adverse Effect.
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO CONTRAVENTION. The
execution, delivery and performance by the Tenant of this Lease and the other
Transaction Documents (i) are within the Tenant's corporate powers, (ii) have
been duly authorized by
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<PAGE> 35
all necessary corporate action, (iii) require no action by or in respect of, or
filing with, any governmental body, agency or official, (iv) do not contravene,
or constitute a default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Tenant or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
the Tenant or any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Tenant or any of its Subsidiaries
other than the Lien created by or arising as a result of the Transaction
Documents.
(c) BINDING EFFECT. This Lease and the other Transaction Documents
constitute valid and binding agreements of the Tenant enforceable in accordance
with their respective terms, provided that the enforceability hereof and thereof
is subject in each case to general principles of equity and to bankruptcy,
insolvency and similar laws affecting the enforcement of creditors' rights
generally.
(d) FINANCIAL INFORMATION.
(i) The consolidated balance sheet of the Tenant and its
Restricted Subsidiaries as of December 31, 1996 and the related consolidated
statements of income, shareholders' equity and cash flows for the Fiscal Year
then ended, reported on by Ernst & Young, copies of which have been delivered to
the Agent, and the unaudited consolidated financial statements of the Tenant and
its Restricted Subsidiaries for the interim period ended June 30, 1997, fairly
present, in conformity with GAAP, the consolidated financial position of the
Tenant and its Restricted Subsidiaries as of such dates and their consolidated
results of operations and cash flows for such periods stated.
(ii) Since December 31, 1996, there has been no event, act,
condition or occurrence having a Material Adverse Effect (other than any such
event, act, condition or occurrence which is disclosed in the consolidated
financial statements of the Tenant and its Restricted Subsidiaries for that
portion of the Fiscal Year ended on June 30, 1997).
(e) LITIGATION. There is no action, suit or proceeding pending, or to
the knowledge of the Tenant threatened, against or affecting the Tenant or any
of its Subsidiaries before any court or arbitrator or any governmental body,
agency or official which could have a Material Adverse Effect or which in any
manner draws into question the validity or enforceability of, or could impair
the ability of the Tenant to perform its obligations under, this Lease or any of
the other Transaction Documents.
(f) COMPLIANCE WITH ERISA.
(i) The Tenant and each member of the Controlled Group have
fulfilled their obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and are in compliance in all material respects
with the presently
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<PAGE> 36
applicable provisions of ERISA and the Code, and have not incurred any liability
to the PBGC or a Plan under Title IV of ERISA.
(ii) Neither the Tenant nor any member of the Controlled Group is
or ever has been obligated to contribute to any Multiemployer Plan.
(g) TAXES. There have been filed on behalf of the Tenant and its
Subsidiaries all Federal, state and local income, material excise, material
property and other material tax returns which are required to be filed by them
and all taxes due pursuant to such returns or pursuant to any assessment
received by or on behalf of the Tenant or any Subsidiary have been paid prior to
the same becoming delinquent, other than (i) those presently payable without
penalty or interest and (ii) those being contested in good faith by appropriate
proceedings with respect to which adequate reserves have been established in
accordance with GAAP. The charges, accruals and reserves on the books of the
Tenant and its Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Tenant, adequate. United States income tax returns of
the Tenant and its Subsidiaries (other than Westwynn Theaters, Inc.) have been
examined and closed through the Fiscal Year ended December 31, 1993.
(h) SUBSIDIARIES. Each of the Tenant's Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such qualification is
necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, unless the failure to be so qualified or to have such corporate
powers or governmental licenses, authorizations, consents or approvals would not
have a Material Adverse Effect. The Tenant has no Subsidiaries as of the date
hereof except those Subsidiaries listed on EXHIBIT G hereto, which accurately
sets forth (i) each such Subsidiary's complete name and jurisdiction of
incorporation and (ii) whether such Subsidiary is a Restricted Subsidiary or an
Unrestricted Subsidiary.
(i) NOT AN INVESTMENT COMPANY. Neither the Tenant nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(j) PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Tenant nor
any of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended.
(k) OWNERSHIP OF PROPERTY; LIENS. Each of the Tenant and its
Subsidiaries has title to its properties sufficient for the conduct of its
business, and none of such property is subject to any Lien except as permitted
in Section 5.07 of the Credit Agreement.
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<PAGE> 37
(l) NO DEFAULT. Neither the Tenant nor any of its Subsidiaries is
in default under or with respect to any agreement, instrument or undertaking to
which it is a party or by which it or any of its property is bound which could
have or cause a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing.
(m) FULL DISCLOSURE. All information heretofore furnished by the
Tenant to the Landlord, the Agent or the Lenders for purposes of or in
connection with this Lease or any transaction contemplated hereby is, and all
such information hereafter furnished by the Tenant to the Landlord, the Agent or
the Lenders will be, true, accurate and complete in every material respect or
based on reasonable estimates on the date as of which such information is stated
or certified. The Tenant has disclosed to the Landlord, the Agent and the
Lenders in writing any and all facts which could have or cause a Material
Adverse Effect.
(n) ENVIRONMENTAL MATTERS.
(i) Except as otherwise provided in Exhibit 4.14A to the
Credit Agreement, (1) neither the Tenant nor any of its Subsidiaries is subject
to Environmental Liabilities which could cause a Material Adverse Effect, (2) to
the best of the Tenant's knowledge, neither the Tenant nor any Subsidiary has
been designated a potentially responsible party under CERCLA or under any state
statute similar to CERCLA, and (3) to the best of the Tenant's knowledge, none
of the Individual Properties has been identified on any current National
Priorities List or CERCLIS List.
(ii) Except as otherwise provided in Exhibit 4.14(B) to the
Credit Agreement, to the best of the Tenant's knowledge, (1) the Tenant, and
each of its Subsidiaries, have used, managed, stored and otherwise handled
Hazardous Materials at the Individual Properties in compliance with applicable
Environmental Laws, excluding any violation of Environmental Laws which did not
cause a Material Adverse Effect, and (2) neither the Tenant nor any of its
Subsidiaries has caused an Environmental Release of Hazardous Materials into the
subsurface soil or groundwater underlying the Individual Properties which could
reasonably be expected to cause a Material Adverse Effect.
(iii) Except as otherwise provided in Exhibit 4.14(C) to the
Credit Agreement, to the best of the Tenant's knowledge, the Tenant and each of
its Subsidiaries maintain all Environmental Authorizations necessary for the
conduct of their respective businesses and are in compliance with all
Environmental Laws applicable to the operation of the Individual Properties and
their respective businesses, excluding any omission of Environmental
Authorizations or violation of Environmental Requirements which could not
reasonably be expected to cause a Material Adverse Effect.
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<PAGE> 38
(o) COMPLIANCE WITH LAWS. The Tenant and each of its Subsidiaries is
in compliance with all Legal Requirements, including, without limitation, all
Environmental Requirements, except where any failure to comply with any such
laws would not, alone or in the aggregate, have a Material Adverse Effect. The
Tenant shall also maintain in full force and effect all of its governmental and
other authorizations, approvals, consents, permits, licenses, certifications and
qualifications necessary for the operation and leasing of the Leased Property.
Tenant has not received, has no knowledge of any violation, nor is there any
notice or other record of any violation, of any zoning, subdivision,
environmental, building, fire, safety, health or other statute, ordinance,
regulation, restrictive covenant or other restriction applicable to the Leased
Property except for those constituting Permitted Encumbrances.
(p) CAPITAL STOCK. All Capital Stock, debentures, bonds, notes and all
other securities of the Tenant and its Subsidiaries presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including, but not limited to, the "Blue Sky" laws of all applicable
states and the federal securities laws; provided that this representation shall
not extend to any violation of applicable laws in connection with any such
issuance occurring by reason of the action or inaction of any Person other than
the Tenant, any Subsidiary or any Person retained or employed by the Tenant or
any Subsidiary. The issued shares of Capital Stock of the Tenant's Wholly Owned
Subsidiaries are owned by the Tenant free and clear of any Lien or adverse
claim. At least a majority of the issued shares of capital stock of each of the
Tenant's other Subsidiaries (other than Wholly Owned Subsidiaries) is owned by
the Tenant free and clear of any Lien or adverse claim.
(q) MARGIN STOCK. Not more than 25% of the aggregate fair market value
of the assets of the Tenant and its Restricted Subsidiaries which are subject to
the provisions of Section 5.07 of the Credit Agreement consists of Margin Stock.
Neither the Tenant nor any of its Subsidiaries is engaged principally, or as one
of its important activities, in the business of purchasing or carrying any
Margin Stock.
(r) INSOLVENCY. After giving effect to the execution and delivery of
the Transaction Documents, including this Lease, the Tenant will not be
"insolvent," within the meaning of such term as used in O.C.G.A. 18-2-22 or as
defined in 101 of Title 11 of the United States Code or Section 2 of the Uniform
Fraudulent Transfer Act, or any other applicable state law pertaining to
fraudulent transfers, as each may be amended from time to time, or be unable to
pay its debts generally as such debts become due, or have an unreasonably small
capital to engage in any business or transaction, whether current or
contemplated.
(s) INFORMATION. The Tenant will deliver to the Landlord and the
Agent:
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(i) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the Tenant and its
Restricted Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of income, shareholders' equity and cash flows for such
Fiscal Year, setting forth in each case in comparative form the figures for the
previous fiscal year, all certified by Ernst & Young or other independent public
accountants of nationally recognized standing, with such certification to be
free of exceptions and qualifications not acceptable to the Landlord and the
Agent;
(ii) as soon as available and in any event within 45 days after
the end of each of the first 3 Fiscal Quarters of each Fiscal Year, a condensed
consolidated balance sheet of the Tenant and its Restricted Subsidiaries as of
the end of such Fiscal Quarter and the related condensed statement of income and
condensed statement of cash flows for such Fiscal Quarter and for the portion of
the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each
case in comparative form the figures for the corresponding Fiscal Quarter and
the corresponding portion of the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief executive officer of the
Tenant;
(iii) simultaneously with the delivery of each set of financial
statements referred to in clauses (i) and (ii) above, a certificate,
substantially in the form as shall be mutually satisfactory to the Tenant, the
Landlord and the Agent (a "Compliance Certificate"), of the chief financial
officer or the chief executive officer of the Tenant (A) setting forth in
reasonable detail the calculations required to establish whether the Tenant was
in compliance with the requirements of Sections 2.1(u) through 2.1(x),
inclusive, on the date of such financial statements and (B) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Tenant is taking or
proposes to take with respect thereto;
(iv) simultaneously with the delivery of each set of annual
financial statements referred to in clause (i) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(v) within 5 Business Days after the Tenant becomes aware of the
occurrence of any Default, a certificate of the chief financial officer or the
chief executive officer of the Tenant setting forth the details thereof and the
action which the Tenant is taking or proposes to take with respect thereto;
(vi) promptly upon the mailing thereof to the shareholders of the
Tenant generally, copies of all financial statements, reports and proxy
statements so mailed;
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(vii) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Tenant shall have filed with the Securities and Exchange
Commission;
(viii) if and when the Tenant or any member of the Controlled
Group (A) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (B) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (C) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to administer any Plan, a copy of such
notice;
(ix) promptly after the Tenant knows of the commencement thereof,
notice of any litigation, dispute or proceeding involving a claim against the
Tenant and/or any Subsidiary for $1,000,000 or more in excess of amounts covered
in full by applicable insurance;
(x) promptly after the Tenant knows of the existence thereof, any
and all facts which could have or cause a Material Adverse Effect; and
(xi) from time to time such additional information regarding the
financial position or business of the Tenant and its Subsidiaries as the Agent
or the Landlord may reasonably request.
(t) INSPECTION OF PROPERTY, BOOKS AND RECORDS. The Tenant will (i)
keep, and will cause each Restricted Subsidiary to keep, proper books of record
and account in which full, true and correct entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its business and
activities; and (ii) permit, and will cause each Restricted Subsidiary to
permit, representatives of the Landlord and the Agent at their expense prior to
the occurrence of an Event of Default and at the Tenant's expense after the
occurrence of an Event of Default to visit and inspect any of their respective
properties, including the Leased Property, to examine and make abstracts from
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants. The Tenant agrees to cooperate and assist in
such visits and inspections, in each case at such reasonable times and as often
as may reasonably be desired.
(u) RATIO OF CONSOLIDATED FUNDED DEBT TO CONSOLIDATED TOTAL
CAPITALIZATION. At the end of each Fiscal Quarter, commencing with the Fiscal
Quarter
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ending June 30, 1997, the ratio of Consolidated Funded Debt to Consolidated
Total Capitalization will not at any time exceed .70 to 1.00.
(v) RATIO OF CONSOLIDATED FUNDED DEBT TO CONSOLIDATED CASH FLOW. At
the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending June
30, 1997, the ratio of Consolidated Funded Debt at the end of such Fiscal
Quarter to Consolidated Cash Flow for the period of 4 consecutive Fiscal
Quarters ending on such date will not be greater than 4.5 to 1.00.
(w) RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. The Tenant will
not, directly, or indirectly through a Subsidiary or otherwise, declare, order,
pay, make or set apart any sum or property for any Restricted Payment and the
Tenant will not and will not permit any Restricted Subsidiary to make or become
obligated to make any Restricted Investment, in each case unless, both at the
time of the proposed action and immediately after giving effect thereto, (x) no
condition or event shall exist which constitutes a Default or an Event of
Default; and (y) the aggregate amount of:
(A) all sums and property included in all Restricted Payments
directly or indirectly declared, ordered, paid, made or set apart by the Tenant
during the period (the "Computation Period") (taken as one accounting period)
from and including April 1, 1993 to and including the date of such proposed
action, plus
(B) the aggregate amount of all Restricted Investments of the
Tenant and all Restricted Subsidiaries made during the Computation Period and
outstanding on the date of such proposed action and all commitments for such
Restricted Investments made by the Tenant or any Restricted Subsidiary
outstanding on such date, shall not exceed the sum of $5,000,000 plus 80% (or
minus 100% in the case of a deficit) of Consolidated Net Income during the
Computation Period; provided that the Tenant may declare, order, pay, make or
set apart funds for the payment of a dividend on, and in accordance with the
terms of, any class of its Preferred Stock that is issued and sold by the Tenant
for cash after the date hereof, if, both at the time of the proposed action and
immediately after giving effect thereto, (x) the aggregate amount of Restricted
Payments after the date hereof with respect to all classes of Preferred Stock of
the Tenant shall not exceed the aggregate net proceeds to the Tenant from all
issuances and sales of its Preferred Stock after the date hereof, and (y) no
condition or event shall exist which constitutes a Default or an Event of
Default.
For all purposes of this Section 2.1(w), (1) the amount involved in
any Restricted Payment directly or indirectly declared, ordered, paid, made or
set apart in property and the amount of any Restricted Investment made through
the transfer of property, shall be the greater of (x) the fair value of such
property (as determined in good faith by the Board of Directors of the Tenant)
and (y) the net book value thereof on the
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books of the Tenant (as determined in accordance with GAAP), in each case as
determined on the date such Restricted Payment is declared, ordered, paid, made
or set apart or the date such Restricted Investment is made or committed to be
made, as the case may be, and (2) all Investments of any Person existing
immediately after such Person becomes a Restricted Subsidiary which would be
Restricted Investments if made by such Person while subject to the provisions of
the Credit Agreement shall be deemed to be Restricted Investments and to have
been made at the time such Person becomes a Restricted Subsidiary.
(x) FIXED CHARGE COVERAGE. At the end of each Fiscal Quarter,
commencing with the Fiscal Quarter ending June 30, 1997, the ratio of Adjusted
Cash Flow to Fixed Charges, in each case for the current Fiscal Quarter and the
immediately preceding 3 Fiscal Quarters, shall not be less than 1.50 to 1.00.
(y) NEGATIVE PLEDGE. Neither the Tenant nor any Restricted Subsidiary
will create, assume or suffer to exist any Lien on any asset now owned or
hereafter acquired by it, except:
(i) Liens existing on the date of this Lease securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $18,000,000;
(ii) any Lien existing on any asset of any corporation at the
time such corporation becomes a Restricted Subsidiary and not created in
contemplation of such event;
(iii) any Lien on any asset securing Debt incurred or assumed for
the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or completion of
construction thereof;
(iv) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Tenant or a
Restricted Subsidiary and not created in contemplation of such event;
(v) any Lien existing on any asset prior to the acquisition
thereof by the Tenant or a Restricted Subsidiary and not created in
contemplation of such acquisition;
(vi) Liens securing Debt owing by any Subsidiary to the Tenant;
(vii) any Lien arising out of the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by any of the foregoing
clauses (ii)
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through (vii) of this Section, provided that (A) such Debt is not secured by any
additional assets, and (B) the amount of such Debt secured by any such Lien is
not increased;
(viii) any Lien on Margin Stock;
(ix) Liens for taxes or other Impositions not yet delinquent or
which are being contested in good faith by appropriate proceedings and for which
the Tenant shall have set aside any reserves required by GAAP;
(x) Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar Persons incurred in the ordinary course of
business for sums not yet due;
(xi) Liens (other than any Lien created or imposed under ERISA)
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive in any case of
obligations incurred in connection with the borrowing of money or the obtaining
of advances of credit);
(xii) any attachment or judgment Lien arising in connection with
court proceedings, provided that (i) the execution or other enforcement of such
Lien is effectively stayed and the claims secured thereby are being actively
contested in good faith and by appropriate proceedings diligently conducted, and
(ii) such reserve or other appropriate provision, if any, as shall be required
by GAAP shall have been made therefor and neither the Tenant's nor any such
Restricted Subsidiary's title to or right to use any of its property is impaired
in any material respect by reason of such contest;
(xiii) easements, licenses, rights-of-way and other rights and
privileges in the nature of easements and similar Liens incidental to the
ownership of property and not incurred in connection with the borrowing of money
or the obtaining of advances of credit, and which do not, individually or in the
aggregate, interfere with the ordinary conduct of the business of the Tenant or
any Restricted Subsidiary or materially detract from the value of the properties
subject to any such Liens;
(xiv) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt in an aggregate principal amount at any time
outstanding not to exceed 15% of Consolidated Total Capitalization; and
(xv) any Lien created by or arising as a result of any of the
Transaction Documents.
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(z) MAINTENANCE OF EXISTENCE.
(i) The Tenant shall, and shall cause each Restricted Subsidiary
to, maintain its corporate existence and carry on its business in substantially
the same manner and in substantially the same fields as such business is now
carried on and maintained; provided that (A) the Tenant and its Restricted
Subsidiaries may engage in any transaction permitted by Section 2.1(bb) and (B)
dissolution of any Restricted Subsidiary shall not be prohibited by this Section
if all of the assets of such Restricted Subsidiary are transferred to the Tenant
or any other Restricted Subsidiary following such dissolution.
(ii) Without limiting the generality of the foregoing, the Tenant
shall qualify and maintain such qualification in good standing as a foreign
corporation in every Applicable State.
(aa) DISSOLUTION. The Tenant shall not suffer or permit dissolution or
liquidation either in whole or in part or redeem or retire any shares of its own
stock, except (i) through corporate reorganization to the extent permitted by
Section 2.1(bb), and (ii) through Restricted Payments permitted by Section
2.1(w).
(bb) CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. The Tenant will not,
nor will it permit any Restricted Subsidiary to, consolidate or merge with or
into, or sell, lease or otherwise transfer all or any substantial part of its
assets to, any other Person, or discontinue or eliminate any business line or
segment, provided that (a) the Tenant may merge with another Person if (i) such
Person was organized under the laws of the United States of America or one of
its states, (ii) the Tenant is the corporation surviving such merger and (iii)
immediately after giving effect to such merger, no Default shall have occurred
and be continuing, (b) Restricted Subsidiaries of the Tenant may merge or
consolidate with one another or with the Tenant, (c) any Restricted Subsidiary
of the Tenant may be merged or consolidated with or into another Person to
consummate an acquisition of such other Person permitted by Section 2.1(w),
provided that the surviving Person shall be a Restricted Subsidiary of the
Tenant, and (d) the foregoing limitation on the sale, lease or other transfer of
assets and on the discontinuation or elimination of a business line or segment
shall not prohibit (i) the sale, lease or other transfer of assets by a
Restricted Subsidiary to any other Restricted Subsidiary or to the Tenant, or
(ii) during any Fiscal Quarter, a transfer of assets or the discontinuance or
elimination of a business line or segment (in a single transaction or in a
series of related transactions) unless the aggregate assets to be so transferred
or utilized in a business line or segment to be so discontinued, when combined
with all other assets transferred, and all other assets utilized in all other
business lines or segments discontinued, during such Fiscal Quarter and the
immediately preceding seven Fiscal Quarters (excluding, however, transfers of
assets permitted by clause (i) of this Section), either (x) constituted more
than 15% of Consolidated Total Assets at the end of the eighth Fiscal Quarter
immediately preceding
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such Fiscal Quarter, or (y) contributed more than 10% of Consolidated Operating
Income during the 8 consecutive Fiscal Quarters immediately preceding such
Fiscal Quarter.
(cc) COMPLIANCE WITH LAWS; PAYMENT OF TAXES. The Tenant will, and will
cause each of its Restricted Subsidiaries and, in the case of ERISA, each member
of the Controlled Group to, comply in all material respects with applicable laws
(including but not limited to ERISA), regulations and similar requirements of
governmental authorities (including but not limited to PBGC), except where the
necessity of such compliance is being contested in good faith through
appropriate proceedings diligently pursued. The Tenant will, and will cause each
of its Restricted Subsidiaries to, pay promptly when due all taxes, assessments
and governmental charges imposed upon the Tenant or the Leased Property, claims
for labor, supplies, rent and other obligations which, if unpaid, might become a
lien against the property of the Tenant or any Restricted Subsidiary, except (i)
liabilities being contested in good faith by appropriate proceedings diligently
pursued and against which, if requested by the Landlord, the Tenant shall have
set up reserves in accordance with GAAP and (ii) liabilities the nonpayment of
which would reasonably be expected to have a Material Adverse Effect.
(dd) CHANGE IN FISCAL YEAR. The Tenant will not change its Fiscal
Year.
(ee) MAINTENANCE OF PROPERTY. The Tenant shall, and shall cause each
Restricted Subsidiary to, maintain all of its material properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
(ff) OPERATION OF UNRESTRICTED SUBSIDIARIES. The Tenant shall cause
each Unrestricted Subsidiary to conduct its business and operations separate and
apart from that of any Restricted Subsidiary or the Tenant, including, without
limitation, (i) segregating assets of the Tenant and each Restricted Subsidiary
from, and not allowing funds or other assets of the Tenant or any Restricted
Subsidiary to be commingled with, the funds or other assets of any Unrestricted
Subsidiary, (ii) maintaining books and financial records of each Unrestricted
Subsidiary separate from the books and financial records of the Tenant or any
Restricted Subsidiary, (iii) observing all corporate procedures and formalities
in connection with the operation of each Unrestricted Subsidiary, including,
without limitation, maintaining minutes of shareholders' and directors' meetings
of each Unrestricted Subsidiary, (iv) causing each Unrestricted Subsidiary to
pay its liabilities from assets of such Unrestricted Subsidiary or any other
Unrestricted Subsidiary, and (v) causing each Unrestricted Subsidiary to conduct
its dealings with third parties in its own name and as a separate and
independent entity; provided that nothing contained in this Section shall
prohibit the Tenant from acting as collection agent and paying agent for an
Unrestricted Subsidiary, as long as proper books of account are maintained and
reconciled in connection therewith.
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(gg) ADDITIONAL RESTRICTED SUBSIDIARIES. The Tenant shall deliver to
the Agent and the Landlord notice that a Person has become a Restricted
Subsidiary within 10 days after the day on which such Person became a Restricted
Subsidiary.
Section 2.2. REPRESENTATIONS, COVENANTS AND WARRANTIES OF LANDLORD. The
Landlord represents, covenants and warrants as follows:
(a) ORGANIZATION.
(i) The Landlord is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of New Jersey.
Prior to entering into each Lease Supplement, the Landlord shall qualify to do
business and be in good standing as a foreign limited liability company in the
Applicable State to which such Lease Supplement relates. The Landlord has, and
will have, the full power and authority to enter into this Lease, each Lease
Supplement and each Transaction Document to which it is a party and to engage in
the transactions contemplated hereby and thereby, and the joinder, consent or
approval of no other Person is required for the execution, delivery and
performance hereof and thereof to properly consummate the transactions herein or
therein contemplated or, if required, such joinder, consent or approval has been
obtained and evidence thereof has been delivered to the Tenant and the Agent.
(ii) The Landlord shall maintain its existence, continue to be a
limited liability company organized under the laws of the State of New Jersey,
not dissolve or otherwise dispose of all or substantially all of its assets and
not consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it unless the Landlord shall be the
surviving entity of any such consolidation or merger.
(iii) The Landlord shall maintain in full force and effect all of
its governmental and other authorizations, approvals, consents, permits,
licenses, certifications and qualifications necessary for the conduct of its
business as it is presently being conducted or contemplated to be conducted
hereunder to the extent the failure to so maintain the foregoing would
constitute a Material Adverse Event.
(iv) The Landlord currently constitutes, and shall maintain its
status as, a single-purpose, bankruptcy-remote entity. The Landlord shall not
terminate the Operating Agreement or amend, modify or supplement the provisions
thereof if such amendment, modification or supplement (A) would change or expand
its purposes, business or permitted activities; (B) would amend, modify or
supplement Section 11(h) thereof; or (C) could have an adverse effect on the
classification of this Lease for GAAP or federal income tax purposes. The
Landlord shall not distribute or permit the distribution of any excess earnings
of the Landlord other than in accordance with the terms of the Operating
Agreement. The Landlord shall conduct no business other than the business
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contemplated by this Lease, the Reimbursement Agreement and the other
Transaction Documents.
(b) NO CONFLICT. Neither the execution and delivery of this Lease nor
the fulfillment of or compliance with the terms and conditions hereof, nor the
consummation of the transactions contemplated hereby conflicts with or results
in a breach of the terms, conditions or provisions of any restriction, any
agreement or any instrument to which the Landlord is now a party or by which the
Landlord or its property are bound, or constitutes a default under any of the
foregoing, or results in the creation or imposition of any Lien whatsoever upon
any of the property or assets of the Landlord, or upon the Leased Property
except Permitted Encumbrances.
(c) BINDING OBLIGATION. Upon the execution and delivery hereof, and
assuming the valid execution and delivery hereof by the Tenant, this Lease shall
be a valid and binding obligation of the Landlord enforceable against the
Landlord in accordance with its respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, moratorium or other similar laws
relating to the enforcement of creditors' rights generally from time to time in
effect and to the scope of equitable remedies which may be available.
(d) AMENDMENT TO TRANSACTION DOCUMENTS. The Landlord will not amend,
modify or supplement any of the Transaction Documents to which it is a party
without the prior approval of the Tenant and the Agent.
(e) FINANCIAL STATEMENTS.
(i) The Landlord shall deliver to the Tenant quarterly financial
statements within thirty-five (35) days after the end of each of the first,
second and third fiscal quarters of the Landlord and annual financial statements
within seventy-five (75) days after the end of each fiscal year of the Landlord
prepared, in each case, in accordance with GAAP.
(ii) The Tenant shall have the right to request an audit from a
firm of independent certified public accountants reasonably acceptable to the
Tenant of any financial statements delivered by the Landlord to the Tenant;
PROVIDED, HOWEVER, that all costs and expenses associated with such audit shall
be the sole responsibility of the Tenant, and shall be payable by the Tenant as
Supplemental Rent hereunder.
Section 2.3. DISCLAIMER. NEITHER THE LANDLORD BY DELIVERY HEREOF, OTHER
THAN AS SET FORTH IN SECTION 2.2, NOR THE TRUSTEE, BY ITS ACCEPTANCE OF THE
DUTIES OF TRUSTEE UNDER THE INDENTURE, MAKES ANY WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, AS TO (A) THE LEASED PROPERTY, THE APPLICABLE PLANS
AND SPECIFICATIONS, THE
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APPLICABLE PROJECTS OR THE IMPROVEMENTS, (B) THE EXPERIENCE, QUALIFICATIONS OR
FINANCIAL CONDITION OF ANY CONTRACTOR OR ANY OTHER PERSONS WHICH MAY BE ENGAGED
TO CONSTRUCT THE APPLICABLE PROJECTS, (C) THE PRICE TO BE PAID UNDER ANY
ACQUISITION AGREEMENT OR CONSTRUCTION AGREEMENT, (D) THE SUITABILITY OR FITNESS
FOR ANY PURPOSE OF THE LEASED PROPERTY OR ANY PART THEREOF OR (E) ANY OTHER
MATTER PERTAINING TO OR RELATING TO THE LEASED PROPERTY.
Section 2.4. AMENDMENTS RELATING TO BONDS. Each Party hereby agrees and
covenants with the other that it will, from time to time hereafter, execute and
enter into any such amendments or restatements hereof as may be reasonably
required by the Trustee, the Agent, the Rating Agencies or the other Party to
enable or more effectively permit the refinancing of the Bonds and/or the
issuance of the Additional Bonds or Refunding Bonds, if any, so long as (x) all
consents required hereunder, under the other Transaction Documents or under any
other agreement to which the Landlord or the Tenant is a party have been
obtained and (y) any such amendment or restatement does not alter any
substantive right, privilege or protection contained in, or created by this
Lease in favor of such Party, except as contemplated herein.
Section 2.5. ACTIONS TAKEN BY TENANT. To the extent that the Reimbursement
Agreement permits or requires the Tenant to take or perform any action or step,
the Landlord hereby consents to the taking or performing of any such action or
step by the Tenant.
ARTICLE 3. DEMISE OF PREMISES; TERM; RENT; OTHER PAYMENTS
Section 3.1. DEMISE OF PREMISES. Subject to the terms and conditions of
this Lease, the Lease Supplements and the Security Documents, the Landlord, for
and in consideration of the covenants herein contained and made on the part of
the Tenant, hereby agrees to lease the Supplemental Properties to the Tenant for
the Term, and the Tenant hereby agrees to lease the Supplemental Properties from
the Landlord for the Term.
Section 3.2. RENT. Throughout the Term, the Tenant agrees to pay (i)
commencing on the Basic Rent Commencement Date, to the Landlord in immediately
available funds as Rent for the Leased Property, Basic Rent as set forth below
and in Section 3.5, and (ii) directly to the Person to whom payment is due and,
if such Person is the Agent, in immediately available funds, delivered to such
Person's office, from time to time as provided for herein, as Supplemental Rent
all other amounts, costs, liabilities and obligations which the Tenant assumes
or agrees to pay to the Landlord or to others hereunder.
Section 3.3. RENTAL PAYMENTS TO BE UNCONDITIONAL, NO ABATEMENT OR SET-OFF.
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(a) The obligation of the Tenant to make Rent Payments when due with
respect to the Leased Property or any other payments required hereunder shall be
absolute and unconditional in all events (including, without limitation, failure
of the Tenant to possess or have use of the Leased Property or any portion
thereof) and the Tenant hereby acknowledges that the terms of this Lease create
a valid and binding obligation of the Tenant to make Rent Payments and to pay
all other amounts which are required to be paid under the terms of this Lease.
(b) Notwithstanding any dispute between the Tenant and the Landlord or
any other Person, including, without limitation, the Agent, the Tenant shall
make all Rent Payments required hereunder when due and shall not withhold any
Rent Payment for any reason whatsoever, nor shall the Tenant assert against the
Landlord, the Trustee, the Agent, any LC Issuer, any LC Participant or any other
Person any right of set-off, recoupment, deduction, defense or counterclaim
against its obligation to make such Rent Payments required under this Lease or
claim any abatement, suspension, deferment, diminution or reduction for any
reason whatsoever including, without limitation, whether or not the Leased
Property is used or occupied by the Tenant or is available for use or occupancy
by the Tenant.
(c) The Tenant's obligation to make Rent Payments shall not be abated
through accident or unforeseen circumstances. No abatement, diminution or
reduction in Basic Rent or Supplemental Rent required to be paid by the Tenant
pursuant hereto shall be claimed by or allowed to the Tenant for any
inconvenience, interruption, cessation, or loss of business caused directly or
indirectly, by any present or future Legal Requirements, or by priorities,
rationing or curtailment of labor or materials, or by war, civil commotion,
strikes or riots, or any manner or thing resulting therefrom, or by any other
cause or causes beyond the control of the Landlord, the Tenant, the Agent or any
other Person, nor shall this Lease be affected by any such causes.
(d) This is an absolutely net lease to the Landlord and it is intended
that Tenant shall pay all costs and expenses of every character, whether
foreseen or unforeseen, ordinary or extraordinary or structural or
nonstructural, in connection with the construction, use, operation, maintenance,
repair and reconstruction of the Leased Property by Tenant including, without
limitation, the costs and expenses particularly set forth in this Lease. It is
the intent of the parties hereto that the Basic Rent payable under this Lease
shall be an absolutely net return to the Landlord and that the Tenant shall pay
all costs and expenses relating to the Leased Property and the business carried
on therein, including any obligations (specifically excluding federal income
taxes and state and local taxes imposed upon or measured by net income) imposed
upon the Landlord, as owner of the Leased Property unless otherwise expressly
provided in this Lease. Any obligation herein relating to the Leased Property
which is not expressly declared in this Lease to be that of the Landlord shall
be deemed to be an obligation of the Tenant and shall be
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performed by the Tenant at the Tenant's sole cost and expense and not an
obligation or cost and expense of the Landlord, the Trustee, the Agent, any LC
Issuer, any LC Participant or any other Person.
(e) The Tenant's obligations to make Rent Payments shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Lease under all circumstances, including, without limitation, the
following circumstances:
(i) any lack of validity or enforceability of this Lease, the
Letters of Credit or any Transaction Document;
(ii) any amendment, compromise, settlement or waiver of or any
consent to departure from all or any of the Transaction Documents;
(iii) the existence of any claim, set-off, defense or other right
which the Landlord may have at any time against the Trustee or the Tenant may
have against the Landlord, or either may have against any other beneficiary, or
any transferee, of the Letters of Credit (or any persons or entities for whom
the Trustee, any such beneficiary or any such transferee may be acting), the
Agent, or any other person or entity, whether in connection with this Lease, the
transactions contemplated herein or in the Transaction Documents, or any
unrelated transaction;
(iv) any statement or any other document presented under the
Letters of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
(v) payment by the LC Issuers under the Letters of Credit against
presentation of a draft or certificate which does not comply with the terms of
the Letters of Credit;
(vi) any failure, omission or delay on the part of the Landlord,
the Trustee, the Tenant or the Agent to enforce, assert or exercise any right,
power or remedy granted under this Lease or any Transaction Document;
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
(f) [INTENTIONALLY OMITTED]
(g) The Landlord shall have the rights and remedies for the collection
of Supplemental Rent as are available to the Landlord for the collection of the
Basic Rent.
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(h) Nothing in this Section 3.3 shall be deemed or construed as a
waiver by the Tenant of any rights or remedies which it may have against any
Person, it being understood and agreed that the Tenant may assert any such
rights in one or more separate proceedings.
Section 3.4. TERMINATION OF TERM/RENTAL PAYMENT OBLIGATION.
(a) The Tenant will not terminate this Lease nor be relieved of its
obligation to make Rent Payments or from any of its other Obligations hereunder
for any reason including, without limiting the generality of the foregoing, any
acts or circumstances that may constitute an eviction or constructive eviction,
failure of consideration, failure of title, or frustration of purpose, or any
damage to or destruction of the Leased Property or any portion thereof, or the
taking by eminent domain of title or the right of temporary use of all or any
part of the Leased Property, or the failure of the Landlord or any other Person
to perform and observe any agreement or covenant, whether expressed or implied,
or any duty, liability or obligation which arises out of or which is related to
this Lease by the terms hereof or under law or otherwise.
(b) Not earlier than three hundred sixty (360) days nor later than two
hundred seventy (270) days prior to the Expiration Date of the Initial Term, the
Tenant shall notify the Landlord and the Agent in writing of its election to
exercise one of the following options (it being understood and agreed that a
failure to so notify the Landlord and the Agent within such time period shall be
deemed to be an election by the Tenant to exercise the option set forth in
Section 3.4(b)(iii) below):
(i) to purchase all (but not less than all) of the Individual
Properties comprising the Leased Property on the terms and conditions set forth
in Article 15 of this Lease; or
(ii) to renew the Initial Term of this Lease with respect to all
(but not less than all) of the Individual Properties comprising the Leased
Property on the terms and conditions set forth in Article 8 of this Lease; or
(iii) to surrender the Leased Property in accordance with and
subject to the provisions of Article 13 of this Lease, in which event the Tenant
shall pay to the Landlord, on the Expiration Date and in immediately available
funds, the Deferred Maintenance Obligation.
Section 3.5. BASIC RENT.
(a) From and after the Basic Rent Commencement Date, the Tenant shall
pay Basic Rent Payments on each Basic Rent Payment Date in the amounts for the
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applicable month shown on Exhibit H annexed hereto and made a part hereof, as
such amounts are adjusted by the Rent Differential.
(b) During any Renewal Term, the applicable Renewal Rent determined in
accordance with Section 8.2 hereof.
(c) In the event the Bonds are redeemed in whole or in part (other
than any mandatory sinking fund redemption) from funds other than (I) drawings
under the Letters of Credit, or (ii) payments or prepayments of Basic Rent by or
at the direction of the Tenant hereunder, the Tenant shall continue to make
payments of Basic Rent hereunder during the Initial Term on each Basic Rent
Payment Date as provided in Section 3.5(a).
Section 3.6. [Intentionally Omitted].
Section 3.7. BASIC RENT; NO BONDS OUTSTANDING. Subject to Section 3.5(c),
no Basic Rent Payments shall be due or payable at any time during which no Bonds
are Outstanding and all Reimbursement Obligations payable under the
Reimbursement Agreement and the Reimbursement Notes have been paid in full.
Section 3.8. SUPPLEMENTAL RENT.
(a) COMPONENTS OF SUPPLEMENTAL RENT. Subject to the exclusions set
forth in Section 3.8(b) below, the Tenant hereby agrees to pay to Landlord (or
to whomever shall be entitled thereto as expressly provided herein or in any
other Transaction Document) the following amounts (such amounts, giving effect
to such exclusions, being herein referred to as "Supplemental Rent") as and when
the same shall become due and payable:
(i) ADMINISTRATIVE AND OTHER EXPENSES AND AMOUNTS. So long as
there shall be any amount of principal of, interest on, or other amounts due in
connection with the Bonds or the Reimbursement Agreement or Reimbursement Notes,
the following:
(A) for the account of the Landlord, the fees and charges of
the Agent for all services of the Agent and all its reasonable expenses
(including, without limitation, reasonable counsel fees), and all other
fees, interest, charges, payments, penalties, amounts owing, in each case,
in respect of indemnities and other amounts owing under the Reimbursement
Agreement and the Reimbursement Notes, including, without limitation,
interest in respect of the foregoing, incurred by the Landlord in
accordance with the Reimbursement Agreement and the Reimbursement Notes, as
and when the same become due;
(B) for the account of the Landlord, all out-of-pocket fees
and expenses incurred by the Agent and the LC Issuers, including without
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limitation the fees and expenses of counsel to the Agent (but not counsel
to the other LC Issuers) for the amendment of the Transaction Documents,
the fees and expenses of counsel to the Agent and the other LC Issuers in
connection with the occurrence of an event of default, or the enforcement
or preservation of rights, under the Transaction Documents in connection
with the transactions contemplated thereby, including the structuring and
implementation thereof, irrespective of whether such transactions are
consummated and the fees and costs in connection with any environmental
reports, plans, surveys, appraisals, title policies, recording charges,
excise, documentation and other taxes or other documents or certificates
prepared, or charges payable, in connection with the transactions
contemplated by the Transaction Documents;
(C) for the account of the Landlord, the fees and charges of
Trustee for all services of Trustee and all its reasonable expenses
(including, without limitation, reasonable counsel fees) incurred by
Trustee in accordance with the Indenture, as and when the same become due;
(D) for the account of the Landlord, to the extent the
Landlord is obligated therefor, the reasonable fees and charges of any
other paying agents for the Bonds, as and when the same become due;
(E) to or for the account of the Landlord, all reasonable
costs and expenses (including, without limitation, reasonable counsel fees)
incurred by the Landlord in connection with the issuance of the Bonds;
(F) for the account of the Landlord, (I) the fees payable to
the Agent pursuant to the Agent's Letter Agreement and the Letter of Credit
Fees, or (ii) if the Bonds and the Reimbursement Obligations are no longer
outstanding, and the Tenant is obligated to pay Basic Rent in accordance
with Section 3.5(c), an amount equal to the Letter of Credit Fees which
would have been payable under Section 2.03 of the Reimbursement Agreement
had the Bonds and the Letters of Credit remained outstanding, as shown on
Exhibit B hereof, provided, however, that the Tenant shall not be obligated
to pay any other fees or expenses of any refinancing (other than an
Indexing Agent fee) by Landlord which Tenant has not approved in advance;
(G) for the account of the Landlord, all reasonable
administrative costs and expenses (including, without limitation,
reasonable counsel fees) incurred by the Landlord in connection with the
administration, modification or enforcement of this Lease or any of the
other Transaction Documents or the administration of any Individual
Property or any matters relating thereto; and
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(H) for the account of the Landlord, (1) all amounts payable
to the Rating Agencies, (2) all fees and expenses payable to the
remarketing agent and indexing agent in connection with the Bonds, and all
fees and costs associated with the remarketing of the Bonds, (3) all fees
and expenses associated with draws under the Letters of Credit, (4) all
costs incurred by the Landlord in connection with the Landlord's compliance
with the terms of this Lease, the Reimbursement Agreement, the
Reimbursement Notes or any other Transaction Document, including without
limitation compliance with any financial reporting requirements (including
delivery of financial statements of Landlord) hereunder or thereunder, but
excluding any costs of compliance with financial reporting requirements
(including the cost of the preparation an delivery of financial statements)
to the extent such financial reporting relates to Persons other than the
Landlord, (5) all fees and expenses incurred in connection with qualifying,
or maintaining qualification, to do business in any Applicable State,
including without limitation any annual reports or annual filing fees, (5)
all Impositions with respect to each Applicable State, together with all
costs in connection therewith and (6) all costs and expenses relating to or
required in connection with the application for, or obtaining of, any
governmental consents or approvals;
PROVIDED, HOWEVER, that any payments made by Trustee pursuant to the Indenture
in respect of amounts referred to in clauses (A), (B), (C) or (D) above shall be
credited against the obligation of Tenant under this subsection (i);
(ii) ADDITIONAL RENT. From and after the Basic Rent Commencement Date,
the Return on Landlord's Equity Amount shall be due and payable on the first
Basic Rent Payment Date of each calendar quarter (the "ADDITIONAL RENT");
PROVIDED, HOWEVER, that no Additional Rent shall be payable by the Tenant for
any period (A) to the extent moneys are provided to or deposited with the
Trustee from proceeds derived from the sale of the Bonds and applied by the
Trustee for the payment of such Additional Rent or (B) to the extent of a
balance available for payment of such Additional Rent in the Bond Fund which is
applied by the Trustee for the payment of such Additional Rent; and PROVIDED
FURTHER that upon the expiration of the Initial Term, the Landlord shall refund
to the Tenant, or the Tenant shall pay to the Landlord, as the case may be, the
difference between the aggregate amounts paid by the Tenant pursuant to this
Section 3.8(a)(ii) and the amount of the Return on Landlord's Equity Amount as
finally determined as of the end of the Initial Term.
(iii) [INTENTIONALLY OMITTED];
(iv) AGGREGATE FAIR MARKET VALUE THRESHOLD. If applicable, the amount
set forth in Section 4.3(a); and
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(v) OTHER AMOUNTS. Any other amounts, other than Basic Rent and the
Rent Differential, (A) owing by the Tenant under this Lease or (B) owing by the
Landlord under the Reimbursement Agreement, the Indenture or the other
Transaction Documents, including, without limitation, all reasonable costs
incurred or to be incurred by the Landlord in connection with the Landlord's
compliance with the financial reporting requirements (including delivery of
financial statements) hereunder, under the Reimbursement Agreement or under any
of the other Transaction Documents.
(b) EXCLUSIONS FROM SUPPLEMENTAL RENT. Supplemental Rent shall not
include, and Tenant shall have no obligation to pay, notwithstanding any
provision in the foregoing Section 3.8(a), in any other section of this Lease or
in any other Transaction Document (but without impairing Tenant's obligation to
pay Basic Rent, as adjusted by the Rent Differential, Additional Rent or other
amounts described in Section 20.2), any of the following amounts:
(i) any amount payable by any Person in respect of federal income
tax or state or local taxes imposed upon or measured by net income, in each case
imposed or measured by the net income of any Person other than Tenant;
(ii) the principal amount of the Bonds, and interest payable with
respect thereto, or the principal amount of the Reimbursement Obligations or the
Reimbursement Notes and interest payable with respect thereto;
(iii) any distribution payable to, or return guaranteed or
payable to, any Person in its capacity as a member of Landlord;
(iv) any amount owing or payable to any Person as a result of any
default or event of default under the Indenture, the Reimbursement Agreement or
any other Transaction Document, to the extent that such default or event or
default is not also an Event of Default hereunder;
(v) any taxes or other cost or expenses incurred by any Person as
a result of any transfer by the Landlord of its interest in the Lease, by any
Person of any membership interest in the Landlord, or by any Lender of its
interest in the Reimbursement Agreement, any Reimbursement Note or any Letter of
Credit; or
(vi) any amount payable under any Transaction Document (other
than this Lease) resulting from, or payable in connection with, any amendment,
modification or supplement to or of such Transaction Document, to the extent
such amendment, modification or supplement has not been requested or approved by
the Tenant.
Section 3.9. SURPLUS MONEYS IN BOND FUND. In the event that the Aggregate
Fair Market Value of the Leased Property as of the Final Project Completion Date
shall be equal
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to or greater than $75,000,000, then the Trustee shall, in accordance with and
subject to the terms of the Indenture, redeem Bonds in an aggregate principal
amount equal to the aggregate amount of (a) moneys remaining in the Project Fund
(including investment earnings thereon) after the Final Project Completion Date
which are transferred to the Excess Bond Proceeds Account of the Bond Fund
pursuant to Section 5.03 of the Indenture; (b) moneys deposited in the
Capitalized Interest Account and Capitalized Interest Reserve Account (including
investment earnings thereon) which are transferred to the Excess Bond Proceeds
Account of the Bond Fund pursuant to Sections 5.02A and 5.02B, respectively, of
the Indenture; and (c) investment earnings on the Bond Fund which are applied as
provided in Section 5.04 of the Indenture. Upon any such redemption, the
Landlord and Tenant agree to amend the Basic Rent Schedule set forth in Exhibit
H annexed hereto and made a part hereof to appropriately reflect, on a pro rata
basis, the effect of such redemption.
ARTICLE 4. ACQUISITION AND CONSTRUCTION;
SUBSTITUTION OF PROPERTIES
Section 4.1. ACQUISITION AND CONSTRUCTION OF THE INDIVIDUAL PROPERTIES.
(a) Each Individual Property shall be acquired or ground leased, and
each Applicable Project shall be constructed and developed, pursuant to and in
accordance with the terms and provisions of the Agency and Development
Agreement.
(b) Concurrently with the acquisition or ground leasing of any
Individual Property by the Landlord, (i) the Landlord and the Tenant shall enter
into a Lease Supplement with respect thereto and (ii) the Landlord shall execute
and deliver the Applicable Mortgage, the Applicable Assignment of Rents and the
Memorandum of Lease.
Section 4.2. PROJECTS NOT COMPLETED. *[material omitted]
Section 4.3. AGGREGATE FAIR MARKET VALUE NOT ACHIEVED. *[material omitted]
Section 4.4. SUBSTITUTION OF PROPERTIES. * [material omitted}
Section 4.5. MONEYS REMAINING IN PROJECT FUND. Any moneys in the Project
Fund (including the investment earnings thereon) remaining after the Final
Project Completion Date and after payment, or provision for payment, in full of
the Costs of the Projects and receipt by the Landlord and the Trustee of the
certificate described in Section 7(e)(vi) of the Agency and Development
Agreement, shall be transferred to the Excess Bond Proceeds Account of the Bond
Fund and applied as provided in Section 3.9 and Section 5.03 of the
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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Indenture upon the prior consent of the Agent, which shall be given by the Agent
if at such time an Event of Default shall not have occurred and be continuing.
Section 4.6. INVESTMENT AND USE OF FUND MONEYS. Any moneys held as part of
the Bond Fund or the Project Fund shall be invested or reinvested by the Trustee
in accordance with the terms of the Indenture.
Section 4.7. OWNERSHIP OF LEASED PROPERTY.
(a) The Landlord, as between the Landlord and the Tenant, shall and
hereby does retain all of its rights to the Leased Property notwithstanding the
delivery thereof to and possession and use thereof by Tenant, the rights of
Tenant being only those of a tenant as set forth in this Lease and any Lease
Supplement.
(b) Notwithstanding anything to the contrary contained in this Lease,
any Costs of the Projects paid for by moneys of the Tenant and used to acquire
assets or property constituting a portion of any Applicable Project, other than
Equipment, shall be and become part of the Leased Property, owned by the
Landlord, subject to the Lien of the Applicable Mortgage, and the Tenant shall
have no legal or equitable ownership interest therein.
Section 4.8. CHANGE IN LOCATION OF RECORDS. The Tenant shall notify the
Landlord and the Agent at least 60 days prior to changing the place at which it
maintains its records with respect to this Lease and any other Transaction
Document, of the address to which such records are to be transferred.
ARTICLE 5. USE
Section 5.1. USE. The Individual Properties comprising the Leased Property
shall be used by the Tenant only as Movie Theaters and uses reasonably ancillary
thereto and for no other use or purpose.
Section 5.2. PROHIBITED USES. The Tenant shall not use, or suffer or permit
the use of, the Leased Property or any portion thereof in any manner or for any
purpose or do, bring or keep anything, or suffer or permit anything to be done,
brought or kept, therein or thereon which would (i) violate any covenant,
agreement, term, provision or condition of this Lease or be unlawful or in
contravention of the certificate of occupancy for any Individual Property, or
contravene any Legal Requirement or insurance requirement to which any
Individual Property is subject, except where such violation, contravention or
illegality would not have a material adverse effect on such Individual Property,
(ii) overload or could cause an overload of the electrical or mechanical systems
of any Individual Property or which would exceed the floor load per square foot
which any floor in an Individual Property was designed to carry and which is
allowed by law, (iii) invalidate or conflict with, the fire or
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public liability insurance on the Leased Property or (iv) result in any
liability on the part of the Landlord under any Environmental Requirement.
ARTICLE 6. COMPLIANCE WITH LEGAL REQUIREMENTS
Section 6.1. TENANT'S COMPLIANCE WITH LEGAL REQUIREMENTS. The Tenant shall,
throughout the Term and at the Tenant's sole cost and expense, promptly comply,
or cause compliance: (i) with all Legal Requirements applicable to the Leased
Property, including, without limitation, all Environmental Requirements, whether
present or future, foreseen or unforeseen, ordinary or extraordinary, and
whether or not the same shall be presently within the contemplation of the
Landlord and the Tenant or shall involve any change of governmental policy, or
require structural or extraordinary repairs, alterations, or additions, and
irrespective of the cost thereof, which may be applicable to the Leased Property
or any portion thereof and (ii) with any agreements, contracts, easements and
restrictions affecting the Leased Property or any part thereof or the ownership,
occupancy or use thereof existing on the date hereof or hereafter created by the
Tenant, or consented to or requested by the Tenant.
ARTICLE 7. IMPOSITIONS
Section 7.1. UTILITIES. The Tenant shall furnish or cause to be furnished,
at its own expense, all utilities of every type and nature required by it in its
use of the Leased Property and shall pay or cause to be paid, when due, all
bills for water, sewerage, heat, gas, electricity and other utilities, if any,
used on, in connection with, or chargeable against the Leased Property during
the Term and all bills for utility charges relating to the Leased Property or
the use thereof and the Tenant shall indemnify and save harmless the Landlord,
the Agent and the Trustee from and against any loss, cost and expense in
connection therewith. The Tenant shall cause all utilities to be placed in its
name and all bills to be sent directly to the Tenant. The Tenant shall pay all
such bills as and when the same shall be due and payable and upon request of the
Landlord, shall provide evidence of the payment thereof.
Section 7.2. PAYMENT OF IMPOSITIONS. The Tenant covenants to pay directly
to the Person entitled to such payment, before any fine, penalty, interest or
cost may be added thereto for the non-payment thereof, as Supplemental Rent
hereunder, all Impositions. The Tenant shall furnish to the Landlord, promptly
after payment of any Impositions, official receipts or other satisfactory proof
evidencing payment of such Impositions. Upon the Tenant's failure to pay such
Impositions or failure after written request to provide proof of such payment or
failure to deliver any such certificate, as above provided, the Landlord shall
have the right, at the Landlord's option, to require the Tenant to: (i) promptly
deposit with the Trustee, or, if no Bonds are Outstanding, with the Landlord,
funds for the payment of current Impositions required to be paid by the Tenant
hereunder; and (ii) also deposit one-twelfth (1/12th) of the current annual
Impositions or those of the preceding years if the
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current amounts thereof have not been fixed, on the first day of each month in
advance, except that all additional funds required for any payments thereof
shall also be deposited as aforesaid on the first day of the final month during
which or at the end of which a payment is due and payable without interest or
penalty.
Section 7.3. TAX CONTESTS. The Tenant shall have the right, at its own
expense, to contest the amount or validity, in whole or in part, of any
Imposition by appropriate proceedings diligently conducted in good faith,
without having to pay such Imposition as a condition to the institution of such
contest unless (i) such payment is required by any Legal Requirement of a
Governmental Authority or (ii) the failure to make such payment would, in the
reasonable judgment of the Landlord, cause any Individual Property to be in
danger of being forfeited, lost or materially affected. Upon the termination of
any proceedings, it shall be the obligation of the Tenant to pay the amount of
such Imposition or part thereof as finally determined in such proceedings, the
payment of which may have been deferred during the prosecution of such
proceedings, together with any costs, fees, interests, penalties or other
liabilities in connection therewith. Nothing herein contained, however, shall be
so construed as to allow such Imposition to remain unpaid for such length of
time as shall permit the Leased Property, or any part thereof, to be sold, taken
or otherwise adversely affected by any Governmental Authority for the
non-payment of the same. The Tenant shall promptly furnish the Landlord with
copies of all proceedings and documents with regard to any such contest, and the
Landlord shall have the right, at its expense, to participate therein. In any
event, the Landlord shall cooperate with the Tenant, at the Tenant's sole cost
and expense, in connection with any such contest.
Section 7.4. TAX REFUND. The Landlord shall direct the Agent to remit to
the Tenant any refund of Taxes (as defined in the Reimbursement Agreement) which
are the subject of Section 2.06(c) of the Reimbursement Agreement.
ARTICLE 8. EXTENSION OPTIONS
Section 8.1. EXTENSION OPTIONS. *[material omitted]
Section 8.2. RENEWAL RENT; PROCEDURE FOR DETERMINATION. *[material omitted]
Section 8.3. LEASE AMENDMENT. Upon final determination of the Renewal Rent
to be paid during any Renewal Term as hereinabove provided, the Landlord and the
Tenant shall enter into an amendment to this Lease to reflect the same as well
as such other modifications of this Lease as mutually shall be deemed
appropriate by the Landlord and the Tenant.
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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Section 8.4. NO ASSIGNMENT. The extension options contained in this Article
8 may not be severed from this Lease or separately sold, assigned or otherwise
transferred. Any sale, assignment or transfer or attempted sale, assignment or
transfer of such options separate from this Lease shall be null and void, ab
initio.
Section 8.5. INVALIDITY. No extension option contained herein shall be
valid unless all prior extension options have been properly exercised.
ARTICLE 9. LANDLORD'S RIGHT OF ENTRY
Section 9.1. LANDLORD'S AND AGENT'S RIGHT OF ENTRY. The Landlord, the
Agent, any Lender and their respective duly authorized representatives shall
have the right to enter any Individual Property at all reasonable times and upon
reasonable notice for the purposes of inspecting the condition of same, and
making such repairs and restorations thereto as may be necessary or desirable if
the Tenant fails to do so as required hereunder (but neither the Landlord nor
the Agent nor any Lender shall have any duty whatsoever to make any such
inspections, repairs, or restorations). Any such inspections, repairs or
restorations to the extent reasonably practicable, shall be conducted in such
manner so as to minimize the interference with the Tenant's business. The costs
so incurred by the Landlord, the Agent or any Lender shall be included within
and constitute part of the Supplemental Rent due by the Tenant and shall be
payable upon demand of the Landlord or the Agent.
ARTICLE 10. MAINTENANCE, REPAIR AND REPLACEMENT BY TENANT
Section 10.1. MAINTENANCE OF THE LEASED PROPERTY. The Tenant shall
throughout the Term at the Tenant's sole cost and expense, (a) take good care of
and maintain the Leased Property and all roadways, sidewalks and curbs on and
appurtenant thereto, in good order and repair, and shall promptly remove all
accumulated snow, ice and debris from any and all roadways, sidewalks and curbs
located upon or appurtenant to the Leased Property and (b) fully perform and
comply with all conditions and obligations to be performed and complied with by
the Landlord on and after the date hereof under the Applicable Acquisition
Agreement and the documents and instruments executed and delivered in connection
therewith.
Section 10.2. REPAIR AND REPLACEMENT OF THE LEASED PROPERTY. The Tenant
shall not commit or suffer to be committed any waste upon or about the Leased
Property, and shall promptly at its sole cost and expense, make all necessary
replacements, restorations and repairs to the Leased Property and appurtenances
thereto, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, and foreseen or unforeseen, ordinary wear and tear excepted.
Repairs, restorations and replacements shall be at least equivalent in quality
to the original work or the property replaced, as the case may be. The Tenant
shall not make any claim or demand upon or bring any action against the Landlord
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for any loss, cost, injury, damage or other expense caused by any failure or
defect, structural or non-structural, of the Leased Property or any part
thereof.
Section 10.3. MAINTENANCE OF LEASED PROPERTY. The Tenant shall, throughout
the Term, maintain the Leased Property in good operating condition, normal wear
and tear excepted, in a manner comparable to other first run theater facilities
of comparable size and age owned by the Tenant in the same or comparable
markets; PROVIDED, HOWEVER, that the Tenant's liability hereunder at the end of
the Term shall be subject to the terms of Section 3.4(b)(iii).
Section 10.4. LANDLORD NOT RESPONSIBLE. The Landlord shall not under any
circumstances be required to build any Improvements on any Individual Property,
or to make any repairs, replacements, alterations or renewals of any nature or
description to any Individual Property, whether interior or exterior, ordinary
or extraordinary, structural or non-structural, foreseen or unforeseen (unless
same are directly necessitated by the Landlord's entry onto such Individual
Property pursuant to Article 9), or to make any expenditure whatsoever in
connection with this Lease or to inspect or maintain the Leased Property or any
part thereof in any way. The Tenant hereby waives the right to require the
Landlord to make repairs, replacements, renewals or restorations pursuant to any
Legal Requirements including, without limitation, any Environmental
Requirements.
ARTICLE 11. ALTERATIONS BY TENANT
Section 11.1. TENANT ALTERATIONS. The Tenant agrees not to make or allow to
be made any alterations, improvements, additions or physical changes in or about
any Individual Property, other than those constituting part of an Applicable
Project as shown on the Applicable Plans and Specifications or modifications
thereto consented to by the Landlord and the Agent (the "ALTERATIONS"), without
first obtaining the written consent of the Landlord and the Agent in each
instance, which consent (A) may be withheld by either the Landlord or the Agent,
each in its sole discretion, if the proposed Alterations (i) adversely affect
the structural components of the Improvements on such Individual Property, or
(ii) reduce the value or utility of the Improvements on such Individual
Property, and (B) in all other cases, shall not be unreasonably withheld or
delayed, but may be given on such reasonable conditions as the Landlord and the
Agent may elect, including but not limited to receipt of evidence satisfactory
to the Landlord and the Agent that the Tenant has adequate funds to complete
such Alterations. Notwithstanding the foregoing, neither the Agent's nor the
Landlord's consent shall be required for any non-structural Alterations with
respect to any Individual Property unless and until the costs of Alterations at
or with respect to such Individual Property for any single Alteration or series
of related Alterations shall exceed $100,000. Any and all Alterations to any
Individual Property shall without further act become the property of the
Landlord and subject to the Lien of the Applicable Mortgage, except for trade
fixtures, movable equipment or furniture owned by the Tenant. Upon the
expiration or termination of this Lease, the Landlord or the Agent may require
the Tenant to
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remove any and all Alterations for which consent was required hereunder and
which were made without having obtained such consent of the Landlord and the
Agent as well as all fixtures, equipment and other improvements installed on
such Individual Property other than fixtures, equipment or other improvements
constituting a part of the Applicable Project. In the event the Landlord or the
Agent so elects, and the Tenant fails to remove such property, the Landlord or
the Agent may remove the same at the Tenant's cost, and the Tenant shall pay the
Landlord or the Agent, as the case may be, on demand all costs incurred in
connection therewith. The Tenant shall be responsible for the cost of repairing
all damage to such Individual Property resulting from the removal of such
property, except to the extent arising out of the gross negligence or willful
misconduct of the Landlord or the Agent. The Tenant's obligations pursuant to
this Section 11.1 shall constitute Supplemental Rent and shall survive the
expiration or sooner termination of this Lease and the Reimbursement Agreement.
Section 11.2. CONSTRUCTION OF ALTERATIONS. With respect to any Alterations
for which the consent of the Landlord and the Agent is required hereunder, the
Tenant shall submit to the Landlord and the Agent, at the time of its request
for the Landlord's and the Agent's consent to any proposed Alteration, plans and
specifications (including layout, architectural, mechanical and structural
drawings) for such proposed Alteration. All permits, approvals and certificates
required by all Governmental Authorities shall be timely obtained by the Tenant
at the Tenant's expense and submitted to the Landlord and the Agent (the
Landlord shall not unreasonably refuse to join in any application therefor
provided that such joinder shall be without expense to the Landlord and further
provided that the Landlord's joinder is required by such Governmental
Authority). Notwithstanding the Landlord's and the Agent's approval of plans and
specifications for any Alteration, all Alterations shall be designed by the
Tenant and shall be made to be in full compliance with all applicable Legal
Requirements; all construction shall be of good and workmanlike quality in
conformance with the plans and specifications therefor; all materials and
equipment to be incorporated into an Individual Property as a result of all
Alterations shall be of first class quality; and no such materials or equipment
shall be subject to any Lien, chattel mortgage or title retention or security
agreement. All Alterations shall be performed by the Tenant at the Tenant's sole
expense. Upon completion of any Alterations, the Tenant shall provide the
Landlord and the Agent with as-built plans depicting said Alterations.
ARTICLE 12. ASSIGNMENT AND SUBLETTING
Section 12.1. RESTRICTIONS ON ASSIGNMENT AND SUBLETTING.
(a) The Tenant expressly covenants and agrees that it shall not grant
or suffer to permit or exist by operation or law or otherwise a Lien with
respect to the Tenant's interest in this Lease. Further, the Tenant expressly
covenants that it will not by operation of law or otherwise assign this Lease,
in whole or in part, nor sublet or suffer or permit the Leased Property or any
part thereof to be used by others, without the prior written consent
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of the Landlord and the Agent in each instance, which consent may be granted or
withheld in the sole and absolute discretion of the Landlord and the Agent;
PROVIDED, HOWEVER, that the Tenant shall have the right, without the Agent's or
the Landlord's consent, to assign or sublet all or any portion of this Lease or
the Leased Property to any Subsidiary of the Tenant; PROVIDED FURTHER, HOWEVER,
that no such assignment or subletting shall release the Tenant from any of its
obligations under this Lease. Any attempt by the Tenant without the Landlord's
and the Agent's prior written consent to assign this Lease or to sublet the
Leased Property or a portion thereof shall be null and void. The Tenant shall
not assign this Lease or sublet all or any portion of the Leased Property to any
party with diplomatic immunity or otherwise not amenable to service of process
in any Applicable State.
(b) If the Tenant's interest in this Lease is assigned or if the
Leased Property or any part thereof is sublet to, or occupied by, or used by,
anyone other than the Tenant, whether or not in violation of this Article 12,
the Landlord may, after default by the Tenant, accept from any assignee,
sublessee or anyone who claims a right to the interest of the Tenant under this
Lease, or who occupies any part(s) or the whole of the Leased Property, the
payment of Basic Rent and Supplemental Rent or any portion thereof and/or the
performance of any of the other obligations of the Tenant under this Lease, but
such acceptance shall not be deemed to be a waiver by the Landlord of the breach
by the Tenant of the provisions of this Article 12, nor a recognition by the
Landlord that any such assignee, sublessee, claimant or occupant has succeeded
to the rights of the Tenant hereunder, nor a release by the Landlord of the
Tenant from further performance by the Tenant of the covenants on the Tenant's
part to be performed under this Lease; PROVIDED, HOWEVER, that the net amount of
Basic Rent and Supplemental Rent collected from any such assignee, sublessee,
claimant or occupant shall be applied by the Landlord to the Basic Rent and
Supplemental Rent to be paid hereunder.
(c) The Tenant agrees to pay as Supplemental Rent to the Landlord or
the Agent all fees, costs and expenses, including, but not limited to reasonable
attorneys' fees and disbursements, incurred by the Landlord or the Agent in
connection with any proposed assignment of this Lease and any proposed sublease
of the Leased Property or any part thereof.
(d) In the event that EastWynn shall become the Borrower under the
Credit Agreement at any time, the Tenant shall cause EastWynn to simultaneously
unconditionally guarantee the payment and performance by the Tenant of its
obligations under this Lease, such guarantee to be in form and substance
reasonably satisfactory to the Agent.
Section 12.2. PROCEDURE; REQUIREMENTS.
(a) If the Tenant requests the Landlord's and the Agent's consent to
an assignment of this Lease or a subletting of all or any part of the Leased
Property (for any
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assignment or subletting which is not otherwise permitted hereby), the Tenant
shall submit to each of them: (i) the name of the proposed assignee or
subtenant; (ii) the terms of the proposed assignment or subletting; (iii) the
nature of the proposed assignee or subtenant's business and its proposed use of
the Leased Property; (iv) such information as to the financial responsibility
and general reputation of the proposed assignee or subtenant as the Landlord or
the Agent may reasonably require; (v) a summary of plans and specifications, if
any, for revising the floor layout of the Leased Property; and (vi) such other
information deemed relevant by the Landlord or the Agent in its sole discretion.
(b) Upon the receipt of all requested information from the Tenant,
each of the Landlord and the Agent shall within thirty (30) days after such
receipt, advise the Tenant whether it approves or disapproves of such request to
assign or sublease. If the Landlord or the Agent shall fail to so advise the
Tenant prior to the expiration of the thirty (30) day period provided for in
this Section 12.2(b), the Landlord or the Agent, as the case may be, shall be
deemed to have approved the proposed assignment or subletting.
(c) If the consent to an assignment pursuant to a request from the
Tenant required hereunder and under the Transaction Documents has been obtained,
the Tenant shall cause to be executed by its assignee an agreement that such
assignee shall perform faithfully and assume and be bound by all of the terms,
covenants, conditions, provisions and agreements of this Lease and that this
Lease shall not be subject to further assignment or subletting except upon
compliance with the provisions of this Article 12. If consent to a sublease
shall have been obtained pursuant to the requirements hereof and of the
Transaction Documents, the sublease shall expressly provide that it is subject
to all of the terms and conditions of this Lease and the Security Documents,
that the subtenant shall not violate any of such terms or conditions and at the
option of the Landlord, in the event of the termination of this Lease, the
subtenant will attorn to the Landlord. The subtenant shall also execute an
agreement acknowledging that the portion of the Leased Property sublet shall not
be subject to further subletting without compliance with the provisions of this
Article 12. An executed counterpart of each sublease or assignment and
assumption of performance by the assignee, in form and substance approved by the
Landlord, shall be delivered to the Landlord and the Agent at least five (5)
days prior to the effective date set forth in such assignment or sublease. No
such assignment or sublease shall be binding on the Landlord until the Landlord
has received such counterpart as required herein.
(d) If consent to an assignment of this Lease or to any sublease shall
have been obtained, the Tenant shall in consideration therefor pay to the
Trustee, for the account of the Landlord, as Supplemental Rent, the following
amounts, less the actual expenses incurred by the Tenant in connection with such
assignment or subletting including reasonable legal fees, brokerage commissions
to persons not affiliated with the Tenant and costs of making alterations, as
the case may be:
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(i) in the case of an assignment, an amount equal to all sums and
other considerations paid to the Tenant by the assignee for or by reason of such
assignment; and
(ii) in the case of a sublease, all rents, additional charges or
other consideration payable under the sublease to the Tenant by the subtenant
which are in excess of the Basic Rent and Supplemental Rent accruing during the
term of the sublease in respect of the subleased space (at the rate per square
foot payable by the Tenant hereunder) pursuant to the terms hereof.
All sums described in clauses (i) and (ii) of this Section 12.2(d) shall be paid
to the Trustee as Supplemental Rent if, as and when paid by the assignee or
subtenant to the Tenant and applied equally on the earliest permissible date to
the redemption of the Bonds.
Section 12.3. NO RELEASE FROM LIABILITY. In no event shall any assignment
or subletting release or relieve the Tenant from its obligations to fully
observe or perform all of the terms, covenants and conditions of this Lease
(including the obligation to pay Rent) on its part to be observed or performed
and the fact that the Landlord and the Agent may consent to any assignment or
subletting or be deemed to have so consented shall not be construed as
constituting such a release of the Tenant. No assignment or sublease made as
permitted by this Article 12 shall affect or reduce any of the obligations
(including the obligation to pay Rent) of the Tenant hereunder, and all such
obligations shall continue as obligations (including the obligation to pay Rent)
of the Tenant in full force and effect as obligations of a principal and not as
obligations of a guarantor or surety, to the same extent as though no assignment
or subletting had been made; provided that performance by any such assignee or
sublessee of any of the obligations of the Tenant under this Lease shall be
deemed to be performance by the Tenant. No sublease or assignment made as
permitted by this Article 12 shall impose any obligations on the Landlord other
than those set forth herein or otherwise affect any of the rights of the
Landlord under this Lease.
Section 12.4. NO WAIVER. The consent by the Landlord or the Agent to any
one assignment or subletting shall not be deemed to be a consent to any further
or future assignment or subletting.
ARTICLE 13. SURRENDER
Section 13.1. SURRENDER OF PREMISES. Upon the Expiration Date, or sooner
termination of this Lease, the Tenant shall peaceably and quietly quit and
surrender to the Landlord the Leased Property, broom clean. Each Individual
Property comprising the Leased Property shall be in as good condition as on the
Applicable Completion Date, except for normal wear and tear, free and clear of
tenants and occupants and with all of the Tenant's Equipment and other personal
property removed and, to the extent required by the Landlord in accordance with
the terms of Article 11 of this Lease, with Alterations
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restored and deliver all drawings, schedules and similar papers relating to the
Applicable Project then in the possession of the Tenant or any Affiliate of the
Tenant and necessary or useful for the continued operation and maintenance of
the Leased Property, and the Tenant shall pay the Deferred Maintenance
Obligation pursuant to Section 3.4(b)(iii). Upon such surrender, the Leased
Property shall be in compliance with all Legal Requirements, including, without
limitation, all Environmental Requirements. The Tenant's obligation to observe
or perform this covenant shall survive the Expiration Date or sooner termination
of this Lease. Nothing in this Article 13 shall limit, negate or otherwise
affect the Tenant's right to purchase the Leased Property in accordance with the
terms of Article 15.
ARTICLE 14. HOLDING OVER
Section 14.1. HOLDING OVER. If the Tenant holds over possession of the
Leased Property or any part thereof beyond the Expiration Date or sooner
termination of this Lease, such holding over shall not be deemed to extend the
Term or renew this Lease but such holding over shall continue upon the terms,
covenants and conditions of this Lease as a tenant at will except that the
Tenant agrees that the charge for use and occupancy of the applicable portion of
the Leased Property for each calendar month or portion thereof that the Tenant
holds over shall be a liquidated amount equal to one-twelfth (1/12th) of 1.5
times the Basic Rent and Supplemental Rent required to be paid by the Tenant for
such portion of the Leased Property during the calendar year preceding the
Expiration Date or sooner termination of this Lease multiplied by a fraction,
the numerator of which shall be the number of days of such month during which
the Tenant was in possession of such portion of the Leased Property and the
denominator of which shall be the total number of days of such month. The
parties recognize and agree that the damage to the Landlord resulting from any
failure by the Tenant to timely surrender possession of the Leased Property will
be extremely substantial, will exceed the amount of the monthly Basic Rent and
Supplemental Rent payable hereunder and will be impossible to accurately
measure. If the Leased Property is not surrendered upon the Expiration Date or
sooner termination of this Lease, in addition to the use and occupancy charge
set forth above, the Tenant shall indemnify and hold harmless the Landlord
against any and all losses and liabilities resulting therefrom, including,
without limitation, any claims made by any succeeding tenant founded upon such
delay. Nothing contained in this Lease shall be construed as a consent by the
Landlord to the occupancy or possession by the Tenant of the Leased Property
beyond the Expiration Date or sooner termination of this Lease, and the
Landlord, upon said Expiration Date or sooner termination of this Lease, or at
any time thereafter (and notwithstanding that the Landlord may accept from the
Tenant one or more payments called for by this Section 14.1), shall be entitled
to the benefit of all legal remedies that now may be in force or may be
hereafter enacted relating to the immediate repossession of the Leased Property.
The provisions of this Article shall survive the Expiration Date or sooner
termination of this Lease. Nothing in this Article 14 shall limit, negate or
otherwise affect the Tenant's right to purchase the Leased Property in
accordance with the terms of Article 15.
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ARTICLE 15. PURCHASE OPTION
Section 15.1. PURCHASE OPTION. The Tenant is hereby granted an option to
purchase on the Expiration Date all, but not less than all, of the Individual
Properties comprising the Leased Property, upon the following terms and
conditions:
(a) The option may be exercised not earlier than three hundred sixty
(360) days nor later than two hundred seventy (270) days prior to the Expiration
Date of the Initial Term by notice, as defined herein, to the Landlord and the
Agent. Time shall be of the essence with respect to the exercise of this
purchase option. The option shall apply only to the Expiration Date of the
Initial Term, and not to the Expiration Date of any Renewal Term.
(b) The purchase price for the Leased Property in accordance with this
option, shall be determined as set forth in Section 15.2 below.
(c) This purchase option may not be severed from this Lease or
separately sold, assigned or otherwise transferred. Any such sale, assignment or
transfer or attempted sale, assignment or transfer in violation of the previous
sentence shall be null and void, ab initio.
(d) The Tenant's exercise of this purchase option shall have no effect
on any obligations of the Tenant hereunder nor grant the Tenant any equitable
interest in the Leased Property until the closing of the purchase pursuant to
Section 21.2.
(e) The Landlord shall be entitled to pay and satisfy any existing
liens and encumbrances out of the proceeds of sale received by the Landlord at
closing of title.
(f) The Leased Property shall be conveyed "as is" in its condition as
of closing of title. In addition, there shall be no abatement or diminution of
said purchase price by reason of any fire, casualty or other damage affecting
the Leased Property or any part thereof after the exercise of this purchase
option and prior to closing of title. The Landlord shall, on closing of title,
credit the Tenant with any insurance proceeds received and retained by the
Landlord under insurance policies covering such damage (and not attributable to
the Tenant's lease obligations) and assign to the Tenant all of the Landlord's
rights under any insurance policies covering damage to the Leased Property.
Section 15.2. PURCHASE PRICE; CALCULATION.
(a) The purchase price for the Leased Property if the purchase option
is exercised by the Tenant as provided herein shall be the Fair Market Value
*[material omitted]
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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Section 15.3. PROCEDURE. The procedure governing the purchase of the Leased
Property by the Tenant pursuant to this purchase option is set forth in Article
21 hereof.
Section 15.4. SUBPERFORMING THEATER PURCHASE OPTION. *[material omitted]
Section 15.5. PURCHASE UPON CASUALTY LOSS.
(a) Upon the occurrence of any of the following events, the Tenant
shall have the option, subject to the provisions of this Section 15.5, to
purchase the affected Individual Property at a price equal to the Stipulated
Loss Value:
(i) the Improvements on or with respect to any Individual
Property shall have been damaged or destroyed to such an extent that (A) they
cannot reasonably be expected by the Tenant to be restored, within a period of
six months, to the condition thereof immediately preceding such damage or
destruction or (B) their normal use and operation is reasonably expected by the
Tenant to be prevented for a period of six months or more; or
(ii) Title to, or the temporary use of, all or a significant part
of any Individual Property shall have been taken under the exercise of the power
of eminent domain (A) to such extent that such Individual Property cannot
reasonably be expected by the Tenant to be restored within a period of six
months to a condition of usefulness comparable to that existing prior to the
taking or (B) as a result of the taking, normal use and operation of such
Individual Property is reasonably expected by the Tenant to be prevented for a
period of six consecutive months or more.
(b) To exercise such purchase option, the Tenant shall, within 90 days
following the event giving rise to the exercise of the option, give notice to
the Landlord, the Agent and the Trustee specifying the date on which the Tenant
will deliver or cause to be delivered the Stipulated Loss Value, which date
shall be not more than 90 days from the date such notice is mailed.
(c) The proceeds of any purchase by the Tenant hereunder shall be
applied by the Landlord, as provided in Section 19.3(c).
Section 15.6. CONVEYANCE OF TITLE. Upon the payment of the Stipulated Loss
Value, the Landlord shall convey title to such Individual Property to the Tenant
in accordance with the provisions of Article 21.
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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Section 15.7. SPECIAL RIGHT OF TERMINATION AND PURCHASE. *[material
omitted]
ARTICLE 16. PREMISES SUBJECT TO SECURITY DOCUMENTS
QUIET ENJOYMENT
Section 16.1. QUIET ENJOYMENT. The Leased Property shall be subject to the
Liens of the Applicable Mortgages. This Lease shall be subject and subordinate
to the Liens of the Indenture and the Applicable Mortgages and the Applicable
Assignments of Rents, but neither the Landlord nor any Person deriving or
claiming rights through, under or from Landlord shall, so long as no Event of
Default shall have occurred and be continuing and subject to the terms of this
Section 16.1, take any action contrary to the Tenant's rights under this Lease
to the use, quiet enjoyment and possession of the Leased Property. So long as no
Event of Default shall have occurred and be continuing, if the Tenant pays the
Rent it is obligated hereunder to pay, and observes all other terms, covenants
and conditions thereof, it may peaceably and quietly have, hold and enjoy the
Leased Property during the Term, subject, however, to all the terms of this
Lease. No failure by the Landlord to comply with the foregoing covenant shall
give the Tenant any right to cancel or terminate this Lease or to abate, reduce
or make any deduction from or offset against any Rent or any other sum payable
under this Lease, or to fail to perform any other obligations of the Tenant
hereunder; PROVIDED, HOWEVER, that the Tenant shall retain all other remedies
available under this Lease or by law by reason of a breach of such covenant;
PROVIDED FURTHER, HOWEVER, that the rights of the Tenant hereinabove in this
Section 16.1 described shall be subject and subordinate in all respects to the
rights and remedies of the Agent in the Security Documents upon the occurrence
of an event of default under the Reimbursement Agreement. Each Individual
Property comprising the Leased Property is demised and let subject to (a) the
existing state of the title thereto as of the Individual Commencement Date, (b)
any state of facts which an accurate survey or physical inspection thereof might
show, (c) all zoning regulations, restrictions, rules and ordinances, building
restrictions and other laws and regulations now in effect or hereafter adopted
by any Governmental Authority, (d) the condition of any buildings, structures
and other improvements located thereon, as of the Individual Commencement Date,
without representation or warranty by the Landlord and (e) the Lien of the
Security Documents, subject only to the first sentence of this Section 16.1. By
its execution and delivery of each Lease Supplement, the Tenant shall be deemed
to have examined the title to and the condition of the Supplemental Property
which is the subject of such Lease Supplement and to have accepted same as
satisfactory to it.
ARTICLE 17. EVENTS OF DEFAULT, REMEDIES
Section 17.1. EVENTS OF DEFAULT. An Event of Default hereunder means the
occurrence of any one or more of the following events:
- --------
* Deleted per the Registrant's request for confidential treatment and filed
separately with the Commission pursuant to Rule 24b-2.
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(a) The Tenant fails to:
(i) make any Basic Rent Payment when due; or
(ii) [Intentionally Omitted]; or
(iii) make any Supplemental Rent Payment (other than any payment
pursuant to Section 4.3) when due and in accordance with the Payment Direction
Agreement and such failure continues for five (5) Business Days after the date
such payment is due; or
(iv) [Intentionally Omitted]; or
(v) subject to the provisions of Section 17.9 below, renew the
Letters of Credit, or provide Alternate Letters of Credit, in accordance with
the terms of this Lease; or
(b) Breach by the Tenant of any of the covenants contained in Sections
2.1(a)(iii), 2.1(s)(x), 2.1(t), 2.1(u), 2.1(v), 2.1(w), 2.1(x), 2.1(z), 4.3 or
the first sentence of Section 22.1(a); or
(c) Any Obligation of the Tenant other than those described in
Sections 17.1(a) and (b) is not performed and discharged as and when required,
and the failure, refusal or neglect to perform and discharge such Obligation
continues for a period of thirty (30) days after the Tenant has been given
notice thereof or such shorter period and without notice if so specified in any
other provision of this Lease; or
(d) Any representation or warranty made by the Tenant herein, in any
Transaction Document to which it is a party or any certificate, statement or
other instrument delivered by the Tenant hereunder or thereunder, shall prove to
be false or misleading in any material respect when made; or
(e) The Tenant becomes insolvent or fails, or admits in writing its
inability, to pay its debts as they mature or applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or custodian for the Tenant
or a substantial part of its property; or in the absence of such application,
consent or acquiescence, a trustee, receiver or custodian is appointed for the
Tenant or a substantial part of its property and is not discharged within sixty
(60) days; or any bankruptcy, reorganization, debt arrangement, moratorium or
any case or proceeding under bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is instituted by or, if permitted by law, against the
Tenant and, if instituted against the Tenant, is consented to or acquiesced in
by the Tenant or is not dismissed
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within sixty (60) days, or if an "order for relief" is entered at any time in
any such case under the Bankruptcy Code; or
(f) The entering of an order or decree appointing a receiver for the
Leased Property or for any part thereof or for the revenues thereof with the
consent or acquiescence of the Tenant or the entering of such order or decree
without the acquiescence or consent of the Tenant and such order or decree shall
not be vacated, discharged or stayed within sixty (60) days after the date of
such entry; or
(g) An Event of Default shall occur under the Credit Agreement; or
(h) [INTENTIONALLY OMITTED]; or
(i) Any performance bonds required to be delivered under any
Applicable Construction Agreement shall not have been so delivered when due and
such failure shall have continued for thirty (30) days.
(j) The Tenant or any Restricted Subsidiary shall fail to make any
payment in respect of Debt or Off-Balance Sheet Lease in an aggregate amount in
excess of $3,000,000 outstanding when due or within any applicable grace period;
or
(k) Any event or condition shall occur which results in the
acceleration of the maturity of Debt or any Off-Balance Sheet Lease in an
aggregate amount in excess of $3,000,000 outstanding of the Tenant or any
Restricted Subsidiary or the mandatory prepayment or purchase of such Debt or
any Off-Balance Sheet Lease by the Tenant (or its designee) or such Restricted
Subsidiary (or its designee) prior to the scheduled maturity thereof, or enables
the holders of such Debt or any Off-Balance Sheet Lease or any Person acting on
such holders' behalf to accelerate the maturity thereof or require the mandatory
prepayment or purchase thereof prior to the scheduled maturity thereof, without
regard to whether such holders or other Person shall have exercised their right
to do so; or
(l) One or more judgments or orders for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against the Tenant or
any Restricted Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days; or
(m) A federal tax lien shall be filed against the Tenant under Section
6323 of the Code or a lien of the PBGC shall be filed against the Tenant or any
Restricted Subsidiary under Section 4068 of ERISA and in either case such lien
shall remain undischarged for a period of 25 days after the date of filing; or
(n) There occurs a Change of Control.
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Upon the occurrence of an Event of Default hereunder, all obligations of the
Tenant under this Lease shall remain in full force and effect.
Section 17.2. TENANT OBLIGATIONS ON DEFAULT. Upon the occurrence of an
Event of Default as described in Section 17.1 hereof, the Tenant shall
immediately:
(a) prepay all Rent due and to become due hereunder in an amount equal
to one hundred ten (110%) percent of the Unamortized Total Project Cost; or
(b) cause one or more Persons to purchase, on terms which are
satisfactory to the Landlord in all respects, all, but not less than all, of the
Individual Properties comprising the Leased Property for an aggregate purchase
price of not less than one hundred ten (110%) percent of the Unamortized Total
Project Cost.
Section 17.3. LANDLORD REMEDIES. Upon the occurrence of an Event of Default
as described in Section 17.1 hereof, the Landlord shall have the right, without
any further demand or notice, to take one or any combination of the remedial
steps below:
(i) With or without terminating this Lease, re-enter and take
possession of the Leased Property or any part thereof and exclude the Tenant
from using it; provided that the Tenant shall continue to be responsible for the
Rent Payments due during the remainder of the Term; or
(ii) With or without terminating this Lease, re-enter and take
possession of the Leased Property or any part thereof and sell or lease its
interest in the Leased Property or any part thereof; or
(iii) With or without terminating this Lease, (A) transmit written
notice to the Trustee of the occurrence and continuance of an Event of Default
under this Lease and (B) declare all Rent Payments to be immediately due and
payable by the Tenant, whereupon such amounts shall, subject to Section 17.2
above, be immediately due and payable; or
(iv) Take whatever action at law or in equity may appear necessary or
desirable to collect the Rent Payments then due and thereafter to become due
with respect to the Leased Property or enforce performance and observance of any
obligation, agreement or covenant of the Tenant under this Lease; or
(v) Perform the Obligations of the Tenant which gave rise to the
existence of the Event of Default, in which event the Tenant shall be obligated
to reimburse to the Landlord or the Agent all expenses incurred by the Landlord
or the Agent as the result of the performance by the Landlord or the Agent of
the Obligations of the Tenant
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together with interest thereon at the rate then in effect for the applicable
Series of Bonds from the date of expenditure; or
(vi) Exercise the rights, powers and remedies described in Section
32.15(b)(v).
Section 17.4. ELECTION OF REMEDIES; NO WAIVER OF ELECTED REMEDIES. No
failure on the part of either Party to exercise, and no delay in exercising any
right or remedy so provided for herein, shall operate as a waiver thereof, nor
shall any single or partial exercise by either Party of any right or remedy so
provided hereunder preclude any other or further exercise of any other right or
remedy provided hereunder.
Section 17.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event any
agreement contained in this Lease should be breached by either Party and
thereafter waived by the other Party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder, and shall not be construed to be an implied term hereof or a course
of dealing between the parties hereto.
Section 17.6. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If a Default
shall exist under any of the provisions hereof and the Landlord or the Agent
should employ attorneys or incur other expenses for the collection of moneys or
the enforcement or performance or observance of any obligation or agreement on
the part of the Tenant herein contained, the Tenant agrees that it will on
demand therefor pay to the Landlord or the Agent the reasonable fee of such
attorneys and such other expenses so incurred by the Landlord or the Agent.
Section 17.7. LATE CHARGES. Whenever any payment of Rent is not made when
due, the Tenant promises to pay the Landlord, in addition to the amount due,
interest thereon at the rate then in effect for the applicable Series of Bonds;
PROVIDED, HOWEVER, that this Section 17.7 shall not be applicable if or to the
extent that the application thereof would affect the validity of this Lease.
Section 17.8. DELAY; NOTICE. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may be exercised
from time to time and as often as may be deemed expedient, and any one exercise
thereof shall not be deemed an exclusive exercise. To entitle the Landlord to
exercise any remedy reserved to it in this Lease, it shall not be necessary to
give any notice other than as may be specifically required in this Lease.
Section 17.9. CONVERSION TO FIXED RATE. Pursuant to the terms of the
Indenture, the Bonds are subject to conversion to a fixed rate of interest in
the event that the Tenant achieves an investment grade rating from the Rating
Agencies, all as more particularly
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described in the Indenture. Notwithstanding anything to the contrary contained
herein, the Tenant's failure to renew the Letters of Credit, or provide an
Alternate Letters of Credit, in accordance with the terms of this Lease shall
not constitute an Event of Default hereunder in the event that the interest rate
on the Bonds is converted to a fixed rate pursuant to the Indenture prior to the
expiration of the Letters of Credit or Alternate Letters of Credit, as the case
may be.
ARTICLE 18. SUBORDINATION AND ESTOPPEL
Section 18.1. SUBORDINATION OF LEASE. This Lease and all rights of the
Tenant hereunder are subject and subordinate at all times to all of the
Applicable Mortgages, whether existing on and as of the date hereof or hereafter
executed and delivered by the Landlord to the Agent, and all renewals,
modifications, consolidations, replacements and extensions thereof (collectively
and including the Security Documents, "SECURED INTERESTS"). Tenant acknowledges
that such assignments and security interests provide for the exercise by the
Agent of all rights, other than Reserved Rights, of Landlord hereunder to give
any consents, approvals, waivers, notices or the like, to make any elections,
demands or the like or to take any other discretionary action hereunder,
including the exercise of remedies, except as specifically set forth in the
Applicable Mortgages. To the extent, if any, that this Lease constitutes chattel
paper (as such term is defined in the Uniform Commercial Code as in effect in
any Applicable State), no security interest in this Lease may be created through
the transfer or possession of any counterpart of this Lease other than the
original counterpart, which shall be identified as the counterpart containing
the receipt therefor executed by Agent on or immediately following the signature
page thereof. This clause shall be self-operative and no further instrument or
subordination shall be required by the Agent. In confirmation of such
subordination, the Tenant shall execute promptly any reasonable instrument that
the Landlord may request. The Tenant further agrees at the option of the Agent
to attorn to the holder of any Secured Interest following the foreclosure of
such Secured Interest or the granting of a deed in lieu thereof.
Section 18.2. [Intentionally Omitted].
Section 18.3. ESTOPPEL CERTIFICATE. The Tenant shall at any time and from
time to time within ten (10) days of receipt of written request therefor by the
Landlord or the Agent, execute, acknowledge and deliver to the Landlord and the
Agent an estoppel certificate, in form reasonably satisfactory to the Landlord
and the Agent, certifying (i) that this Lease is unmodified and in full force
and effect (or, if there have been modifications, that the same is in full force
and effect as modified and stating the modifications), (ii) the dates to which
Basic Rent and Supplemental Rent have been paid in advance, if any, (iii)
whether any extension options granted to the Tenant pursuant to the provisions
of this Lease have been exercised, (iv) whether or not to the best knowledge of
the signer, the Landlord is in default in performance of any of its obligations
under this Lease, and if so, specifying each such default of which the Tenant
may have knowledge, (v) whether the Tenant has received
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notice that it is in default in performance of any of its obligations under this
Lease, and if so, specifying each such default and (vi) as to any other matters
reasonably requested by the Landlord, it being intended that any such
certificate delivered pursuant to this Section 18.3 may be relied upon by a
prospective purchaser of the Landlord's interest or a mortgagee of the
Landlord's interest or assignee of any Applicable Mortgage of the Landlord's
interest in the Leased Property or any other party which the Landlord wishes to
receive said estoppel certificate.
ARTICLE 19. DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF NET PROCEEDS
Section 19.1. DAMAGE AND DESTRUCTION.
(a) If any of the Improvements or any portion thereof located on or at
any Individual Property is destroyed or is damaged by fire or other casualty,
the Tenant shall have the option either (i) to promptly repair, restore, modify,
improve or replace the Improvements, in which event the Tenant shall be
obligated to continue to pay the Rent due hereunder; or (ii) if the damage or
destruction is of the extent described in Section 15.5, and the amount of Net
Proceeds is sufficient to pay the Allocable Costs with respect to such
Individual Property, to exercise its option set forth in Section 15.5.
(b) Any Net Proceeds shall be paid to the Trustee and deposited in the
Project Fund to be disbursed as set forth in the Indenture. In the event the
Tenant elects to repair, restore, modify, improve or replace the Improvements
pursuant to clause (a)(i) above, any Net Proceeds shall be applied to pay the
cost of such repair, restoration, modification or replacement. In the event the
Tenant elects to prepay the Rent and cause the optional redemption of the Bonds
in accordance with clause (a)(ii) above and Section 15.5, any Net Proceeds shall
be credited against the Tenant's Rent prepayment obligations and applied to the
redemption of the Bonds. To the extent that the amount of the Net Proceeds
deposited in the Project Fund exceed the amount required to be disbursed
therefrom by the Trustee pursuant to this Section, one hundred (100%) percent of
such excess amount shall be paid by the Trustee from the Project Fund to the
Agent to be held by the Agent in the Net Proceeds Collateral Reserve Account
pursuant to Section 5.15 of the Reimbursement Agreement. When all Reimbursement
Obligations payable under the Reimbursement Agreement and Reimbursement Notes
have been paid in full, the Letters of Credit are no longer outstanding and the
balance of the Preferred Member's Unrecovered Capital Account has been reduced
to zero, the Agent shall immediately pay any such amounts remaining in the Net
Proceeds Collateral Reserve Account to the Landlord to be held by the Landlord
in the Reserve Fund for disbursement in accordance with Section 19.7 hereof.
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Section 19.2. NET PROCEEDS.
(a) If the Net Proceeds are insufficient to pay in full the cost of
any repair, restoration, modification, improvement or replacement of the
Improvements and the damage or destruction is not of the extent or nature
described in Section 15.5, the Landlord shall make available to the Tenant any
amounts on deposit in the Reserve Fund and cause the Agent to make available any
amounts on deposit in the Net Proceeds Collateral Reserve Account in an amount
equal to the cost in excess of the Net Proceeds. If the Net Proceeds, together
with any amounts available from the Reserve Fund and/or the Net Proceeds Reserve
Account, are insufficient to pay in full the cost of any repair, restoration,
modification, improvement or replacement of the Improvements and the damage or
destruction is not of the extent or nature described in Section 15.5, the Tenant
shall complete the work and pay any cost in excess of the amount of the Net
Proceeds. If by reason of any such insufficiency of the Net Proceeds, the Tenant
shall make any payments pursuant to the provisions of this Section 19.2, the
Tenant shall not be entitled to any reimbursement therefor from the Landlord nor
shall the Tenant be entitled to any diminution of the Rent Payments due with
respect to the Leased Property nor shall Tenant have any legal or equitable
ownership interest in the property acquired with moneys provided Tenant and
utilized in such repair, restoration, modification or replacement.
(b) In the event that the Tenant exercises its option to pay
Stipulated Loss Value and cause the optional redemption of the Series A Bonds
pursuant to Section 15.5, one hundred (100%) percent of any surplus proceeds,
after payment of the Stipulated Loss Value and other amounts set forth in
Section 15.5, from any of the insurance policies, shall be paid by the Trustee
from the Project Fund to the Agent to be held by the Agent in the Agent Reserve
Fund created pursuant to the Reimbursement Agreement. When no Series A Bonds are
Outstanding and all Reimbursement Obligations payable under Section 2.01(e)(i)
of the Reimbursement Agreement have been paid in full, the Agent shall
immediately pay any amounts remaining in the Agent Reserve Fund (i) fifty (50%)
to the Landlord and (ii) fifty (50%) to be held by the Landlord in the Reserve
Fund.
Section 19.3. TOTAL AND PARTIAL TAKING.
(a) If at any time during the Term, the whole or substantially all of
any Individual Property shall be taken for or under threat of public or
quasi-public purposes by any lawful power or authority by the exercise or the
threatened exercise of the right of condemnation or eminent domain, or if a
portion of any Individual Property shall be so taken so as to render, in the
Tenant's reasonable opinion, the continued operation of the remaining part or
parts of such Individual Property for the purposes for which it was used
immediately prior to such taking uneconomical, then the Tenant shall prepay Rent
pursuant to Section 15.5.
(b) In the event of such a taking of only a portion of any Individual
Property which does not materially adversely affect the value of such Individual
Property and which, in the Tenant's reasonable opinion, does not render
uneconomical the
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continued operation of the remaining portion of such Individual Property for the
purpose for which same was used immediately prior to such taking or for any
other purpose desired by the Tenant, then this Lease shall terminate on the date
of such taking only as to the portion of such Individual Property so taken, and
shall continue as to balance of the Leased Property, including without
limitation the part of such Individual Property not so taken; Neither the
Landlord nor the Tenant shall instigate or encourage any condemnation or similar
proceeding affecting the Leased Property or any part thereof.
(c) All awards resulting from any taking as set forth in this Section
19.3 shall be distributed in the following order of priority: (i) first, to make
any necessary restorations of the remaining portion of the Individual Property,
(ii) second, to the Trustee to be applied pro rata to the interest accrued on
the Outstanding Series A Bonds and Series B Bonds and the Return on Landlord's
Equity Amount, (iii) third, to the Trustee to be applied pro rata to the
redemption of the Outstanding Series B Bonds, (iv) fourth, to the Trustee to be
applied pro rata to the redemption of the Series A Bonds, (v) fifth, to the
repayment of the Landlord's Equity Amount, (vi) sixth, to the Agent in payment
of all amounts due under the Reimbursement Agreement; and (vii) seventh, one
hundred (100%) percent of such excess amount shall be paid by the Trustee from
the Project Fund to the Agent to be held by the Agent in the Agent Reserve Fund
created pursuant to the Reimbursement Agreement. When no Bonds are Outstanding
and all Reimbursement Obligations payable under the Reimbursement Agreement and
the Reimbursement Notes have been paid in full, the Agent shall immediately pay
any amounts remaining in the Agent Reserve Fund (A) fifty (50%) to the Landlord
and (B) fifty (50%) to be held by the Landlord in the Reserve Fund for
disbursement as set forth in Section 19.7.
(d) The terms and provisions of this Section 19.3 shall survive the
termination of this Lease.
Section 19.4. TEMPORARY TAKING. If the whole or any portion of any
Individual Property shall be taken for temporary use or occupancy, the Term
shall not be reduced or affected and the Tenant shall continue to pay the Rent
in full. Except to the extent the Tenant is prevented from so doing pursuant to
the terms of the order of the condemning authority, the Tenant shall continue to
perform and observe all of the other covenants, agreements, terms, and
provisions of this Lease. In the event of any temporary taking, the Tenant shall
be entitled to receive the entire amount of any award therefor unless the period
of temporary use or occupancy shall extend beyond the Expiration Date, in which
case such award, after payment to the Landlord therefrom for the estimated cost
of restoration of such Individual Property to the extent that any such award is
intended to compensate for damage to such Individual Property, shall be
apportioned between the Tenant and the Landlord as of the day of Expiration Date
in the same ratio that the part of the entire period for such compensation is
made falling before the day of expiration and that part falling after, bear to
such entire period.
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Section 19.5. COOPERATION OF LANDLORD. The Landlord shall cooperate fully
with the Tenant at the sole expense of the Tenant in filing any proof of loss
with respect to any insurance policy covering the casualties described in
Section 19.1 and in the prosecution or defense of any prospective or pending
condemnation proceeding with respect to any Individual Property or any part
thereof. In no event will the Landlord voluntarily settle, or consent to the
settlement of, any proceeding arising out of any insurance claim or any
prospective or pending condemnation proceeding with respect to any Individual
Property or the Improvements or any part thereof without the prior written
consent of the Tenant (provided that no Event of Default shall have occurred and
be continuing) and, so long as any Bonds are Outstanding, the prior written
consent of the Agent.
Section 19.6. NO WAIVER. Nothing contained herein shall be construed as a
waiver by the Tenant of any claim which it may have against the condemnor for
taking all or any part of any Individual Property, and the Tenant, to the extent
permitted by the laws of the Applicable State, shall have the right to appear
and file its claim for damages in any such condemnation proceedings, to
participate in any and all hearings, trials and appeals thereon, to be
represented by counsel of its choice therein, and to receive the share of any
such awards so adjudicated to be due it.
Section 19.7 RESERVE FUND.
(a) Landlord shall hold all amounts required to be deposited in the
Reserve Fund in trust and shall maintain such funds in a separate account,
segregated from the Landlord's other assets. Prior to disbursement in accordance
with the terms hereof, amounts on deposit in the Reserve Fund shall be invested
in Qualified Investments.
(b) Amounts on deposit in the Reserve Fund shall be disbursed as
follows:
(i) to the Tenant in accordance with Section 19.2 hereof, to the
extent the Net Proceeds are insufficient to pay in full the cost of any repair,
restoration, modification, improvement or replacement of the Improvements;
(ii) upon the termination of the Lease and the surrender of the
Leased Property by the Tenant, an amount not in excess of the Deferred
Maintenance Obligation shall be disbursed to the Landlord in payment of the
Deferred Maintenance Obligation under Section 3.4(b)(iii) hereof, and any
remaining amounts shall be disbursed to the Tenant;
(iii) upon the exercise by Tenant of its first extension option,
all amounts on deposit shall be disbursed to the Trustee to be applied pro rata
to the redemption of the Outstanding Series B Bonds; and
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(iv) upon the purchase by the Tenant of any of the Leased
Properties in accordance with the terms hereof, the amounts on deposit shall be
disbursed to the Landlord to be credited against the purchase price payable
therefor.
ARTICLE 20. PREPAYMENT OF RENT
Section 20.1. NO OPTIONAL PREPAYMENT. Except as set forth in Sections 15.4
and 15.5, the Tenant shall have no right to prepay Rent during the Term of this
Lease.
Section 20.2. MANDATORY PREPAYMENT. Upon the occurrence of the event
described in Section 2.01(b) of the Reimbursement Agreement, an amount equal to
the amount payable pursuant to such Section 2.01(b), if required thereunder.
Upon any prepayment pursuant to this Section 20.2, the Landlord and the Tenant
agree to amend the Basic Rent schedule set forth in EXHIBIT H attached hereto
and made a part hereof to appropriately reflect, on a pro rata basis, the effect
of such prepayment.
ARTICLE 21. PROCEDURE UPON PURCHASE
Section 21.1. STATE OF TITLE. In the event of the purchase of the Leased
Property by the Tenant pursuant to the purchase option contained in Article 15
of this Lease, the Landlord need not transfer and convey to the Tenant or its
designee (or, in the case of any Individual Property which is ground leased by
the Landlord, there need not exist on the date such ground lease is assigned to
the Tenant) any better title to each Individual Property than existed on the
date the Landlord acquired title to such Individual Property, or entered into a
ground lease for such Individual Property, and the Tenant shall accept such
title, subject, however, to all Permitted Encumbrances, and to all applicable
Legal Requirements, but free of the Lien of and security interest created by any
Secured Interests and free of any Liens, encumbrances, charges, exceptions and
restrictions which have been created by or resulted from acts of the Landlord
during the Term which were not consented to or requested by the Tenant.
Section 21.2. CLOSING REQUIREMENTS. Upon the closing date of such purchase
by the Tenant of the Leased Property pursuant to the purchase option contained
in Article 15 of this Lease, such date being the Expiration Date, the Tenant
shall pay to the Trustee or, if no Bonds shall be Outstanding, to the Landlord,
or to any persons designated by the Landlord in a written notice delivered by
the Landlord to the Tenant not less than three (3) days prior to the closing
date, by certified check, bank check or in federal funds, as the Trustee or the
Landlord may designate, at the place within the continental United States
designated in such notice, the purchase price therefor specified in Section 15.2
herein, and the following shall then occur:
(a) The Landlord shall deliver to the Tenant such documents, including
without limitation deeds, assignments of leases and bills of sale, as shall be
necessary to
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convey and transfer the title to each Individual Property to the Tenant or, in
the case of any Individual Property which is ground leased by the Landlord, to
assign the Landlord's interest in such Individual Property to the Tenant;
PROVIDED, HOWEVER, that in the case of the assignment of any such ground lease,
the Landlord shall also provide to the Tenant evidence of the ground lessor's
consent to such assignment;
(b) The Tenant shall pay (or reimburse the Landlord for) all costs,
fees and charges incident to such conveyance and transfer, including, without
limitation, reasonable counsel fees, escrow fees, recording fees, title
insurance premiums, mortgage prepayment penalties and all applicable federal,
state and local taxes (other than federal income taxes and state and local taxes
imposed upon or measured by net income) which may be incurred or imposed by
reason of such conveyance and transfer and by reason of the delivery and/or
recording of such deed and such other instruments;
(c) The Tenant shall transmit written notice to the Landlord directing
the Landlord to cause the optional redemption of any and all Bonds Outstanding;
(d) Upon (i) receipt by the Landlord of the notice described in
Section 21.2(c) and (ii) the receipt by the Trustee of the purchase price of the
Leased Property, the Landlord shall promptly cause the Trustee to redeem any and
all Bonds Outstanding pursuant to the terms of the Indenture and to apply all or
a portion of the purchase price to the redemption of such Outstanding Bonds; and
(e) Upon (i) completion of the purchase of the Leased Property
pursuant to this Article 21, (ii) the payment of the purchase price therefor
specified herein, and (iii) the optional redemption of all Bonds Outstanding,
but not prior to the occurrence of (i), (ii) and (iii) herein, this Lease and
all obligations hereunder (including the obligations to pay the Basic Rent and
Supplemental Rent) shall terminate with respect to the Leased Property except
with respect to actual or contingent obligations and liabilities of the Tenant
under this Lease which arose on or prior to such closing date.
ARTICLE 22. INSURANCE
Section 22.1. GENERAL PROVISIONS.
(a) The Tenant shall, at its sole cost and expense, carry or cause to
be carried the insurance coverages set forth in this Article on each Individual
Property. Copies of certificates evidencing such coverages shall be delivered to
the Landlord and the Agent.
(b) The Tenant expressly understands and agrees that any insurance
protection required by this Lease shall in no way limit the Tenant's obligations
assumed under this Lease, and shall not be construed to relieve the Tenant from
liability with respect to the deductible and/or self retention provisions which
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may be contained therein and which may be applicable to any claim or loss for
which insurance is provided, nor from any other liability in excess of such
coverage, nor shall it preclude the Landlord or the Agent from taking such other
actions as are available to it under any provisions of this Lease or otherwise
in law.
(c) All insurance provided for in this Lease shall be effected under
valid and enforceable policies, in such forms and, from time to time after the
Commencement Date, issued by financially sound and responsible insurance
companies authorized to do business in the Applicable State which have been
approved by the Landlord and the Agent (which approvals shall not be
unreasonably withheld provided such companies have a Best policyholder rating of
not less than A- and a Best financial size rating of not less than VII). At
least 10 days before each Individual Commencement Date, and thereafter not less
than 15 days prior to the expiration dates of the policies theretofore furnished
pursuant to this Article, originals of the policies (or certificates of the
insurers in form reasonably satisfactory to the Landlord) for each Individual
Property, accompanied by evidence satisfactory to the Landlord and the Agent of
payment of the first installment of the premiums, shall be delivered by the
Tenant to the Landlord, it being understood that such insurance may be provided
under blanket policies maintained by the Tenant, in which event the Tenant shall
provide evidence that (x) such policy is in full force and effect, (y) the
Tenant has paid all amounts then due thereunder and (z) the Improvements are
included as insurance property under the terms of such policy.
(d) The Tenant, the Landlord and the Agent will review every two years
the amounts of coverage provided taking into account all material facts
including inflation and the full insurable value of the Improvements. The
Landlord or the Agent may require additional amounts of coverage provided such
additional amounts are consistent with the amounts of insurance customarily
provided by owners or tenants of similar properties.
(e) All policies of insurance provided for or contemplated by this
Article shall name the Landlord and the Tenant and, for so long as the Letters
of Credit, or any of them, or any Obligations, shall be outstanding, the Agent
as the insured, additional insured or loss payee, as their respective interests
may appear.
(f) All policies of insurance provided for in this Article shall, to
the extent reasonably obtainable, contain clauses or endorsements to the effect
that:
(i) No act of negligence of the Tenant, or anyone acting for
the Tenant, or of any space tenant which might otherwise result in a forfeiture
of such insurance or any part thereof shall in any way affect the validity or
enforceability of such insurance insofar as the Landlord or the Agent is
concerned; and
(ii) Such policies shall not be changed or canceled without
at least 30 days' notice (10 days' notice for nonpayment) to the Landlord and
the Agent; and
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(iii) The Landlord shall not be liable for any premiums
thereon or subject to any assessments thereunder.
(g) The Tenant shall not carry separate or additional insurance,
concurrent in form or contributing in the event of any loss with any insurance
required to be maintained by the Tenant under this Lease, unless such separate
or additional insurance shall comply with and conform to all the provisions and
conditions of this Article 22 and the Landlord and the Agent consent in writing
to such separate additional or concurrent insurance, which consent shall not be
unreasonably withheld. The Tenant shall promptly give notice to the Landlord and
the Agent of such separate or additional insurance and shall promptly deliver to
the Landlord and the Agent a certificate of insurance in form reasonably
satisfactory to each of them.
(h) In respect of any real, personal or other property located in, at
or upon the Leased Property, and in respect of the Leased Property, the Tenant
hereby releases the Landlord and the Agent and the Lenders from any and all
liability or responsibility to the Tenant or anyone claiming by, through or
under the Tenant, by way of subrogation or otherwise, for any loss or damage
caused by fire or any other casualty whether or not such fire or other casualty
shall have been caused by the fault or negligence of the Landlord, the Trustee
or anyone for whom the Landlord or the Trustee may be responsible. The Tenant
shall require its insurance carriers to include in the Tenant's policies a
clause or endorsement, if reasonably obtainable, whereby the Tenant shall be
permitted to release other persons without invalidating the insurance, or, if
not obtainable, the Tenant shall cause the Landlord and the Trustee to be named
as insureds under such policies.
Section 22.2. GENERAL LIABILITY.
(a) The Tenant shall, at its own cost and expense, provide
comprehensive general liability insurance written on a commercial liability
occurrence form against any liability of the Tenant, the Trustee, the Agent, the
Lenders and the Landlord with respect to each Individual Property and arising
from the maintenance, use, ownership and occupancy of such Individual Property.
Said insurance shall not be circumscribed by any endorsement limiting the
breadth of coverage. The insurance shall include the following coverages: (i)
Premises/Operations Liability; (ii) Contractor's Protective Liability/Products;
(iii) Products/ Completed Operations Liability; (iv) Broad Form Contractual
Liability applicable to the indemnity requirements of this Lease; (v) Extended
Bodily Injury Liability; (vi) Broad Form Property Damage Liability; and (vii)
Personal Injury Liability.
(b) The general liability policy shall include the Landlord, the Agent
and the Trustee as additional insureds. Said policy or policies shall provide
for indemnification of said parties against direct or contingent loss or
liability for damages for bodily and
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personal injury, death or property damage occasioned by the operation or
ownership of such Individual Property. The Tenant's general liability policy or
policies shall provide single limit coverage of at least $2,000,000 for each
Individual Property. The foregoing limits may be obtained through the General
Liability Policy or a combination of General Liability and Excess or Umbrella
Liability. The Net Proceeds of such liability insurance shall be applied toward
extinguishment or satisfaction of the liability with respect to which the Net
Proceeds of such insurance shall have been paid.
Section 22.3. AUTO LIABILITY INSURANCE. The Tenant shall, at its sole cost
and expense, keep Business Automobile Liability insurance covering all owned,
non-owned and hired vehicles used in connection with the Tenant's operations at
each Individual Property in protection of the Tenant, the Landlord, the Agent
and the Trustee. Said policy or policies shall be written in a comprehensive
form and shall comply with all local regulations and case law and shall provide
for indemnification of said parties against direct or contingent loss or
liability for damages for bodily and personal injury, death or property damage
arising from the maintenance, use or operation of any owned or non-owned vehicle
used, in or in connection with, such Individual Property. Said policy or
policies shall provide single limit coverage of at least $1,000,000 for bodily
injury or death of each person and for damage to property. Such auto liability
insurance may be maintained as part of or in conjunction with any other
liability insurance coverage carried or required to be carried by the Tenant.
The Net Proceeds of such liability insurance shall be applied toward
extinguishment or satisfaction of the liability with respect to which the Net
Proceeds of such insurance shall have been paid.
Section 22.4. BUILDERS' RISK INSURANCE. During construction of the
Improvements at or on any Individual Property, the Tenant shall, at the Tenant's
sole cost and expense, keep, or cause to be kept, Builders' Risk Insurance
(standard "all risk") written on a completed value (nonreporting) basis.
Coverage will include collapse and insure against the peril of fire with
extended coverage including vandalism and malicious mischief. In addition, if
commercially available at a reasonable cost, such policy of insurance shall
cover perils caused by earthquake and flood and shall be endorsed to cover
materials in transit. The policy shall name the Tenant as the insured and the
Landlord, the Trustee, the Agent and all subcontractors employed by the Tenant
as additional insureds as their interests may appear. Such insurance policy: (a)
shall contain a written acknowledgment (annexed to the policy) by the insurance
company that its rights of subrogation have been waived with respect to all of
the insureds and any mortgagees in such policy, and an endorsement stating that
"permission is granted to complete and occupy"; and (b) if any off-site storage
location is used, shall cover, for their insurable value, all materials and
equipment at any off-site storage location used with respect to the Improvements
and such Individual Property and such locations shall be identified.
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Section 22.5. WORKER'S COMPENSATION AND EMPLOYER'S LIABILITY.
The Tenant shall, at its own cost and expense, provide Workers'
Compensation insurance and Employer's Liability Insurance covering all employees
on, in, or about the Leased Property in accordance with all Legal Requirements,
to be endorsed to include coverage for any federal or other state laws that may
be found to have legal jurisdiction.
Section 22.6. PROPERTY INSURANCE.
(a) The Tenant shall, at its sole cost and expense keep and maintain
in force Comprehensive All Risk Property Insurance on the Improvements and
Equipment situated at each Individual Property, including coverage against loss
or damage by fire, collapse, lightning, water damage, windstorm, tornado, hail,
flood (if required by any Legal Requirement), vandalism and malicious mischief,
sprinkler breakage, earthquake (if required by any Legal Requirement)
subsidence, debris removal, demolition and against loss or damage by such other,
further and additional risks as now are or hereafter may be embraced by the
standard all risk coverage forms of endorsements, in each case: (i) in an amount
equal to the greater of (x) 100% of their "Replacement Value," which for
purposes of this Lease shall mean actual replacement value or (y) an amount at
least equal to the sum of the principal amount of all Outstanding Bonds and the
Landlord's Equity Amount, together with interest thereon for a period of not
less than six months calculated at the Maximum Rate; (ii) containing an agreed
amount endorsement with respect to such Improvements and Equipment waiving all
co-insurance provisions; and (iii) containing an endorsement that all covered
losses will be paid on a replacement cost basis.
(b) [Intentionally Omitted]
(c) Any insurance required to be provided by the Tenant under this
Section 22.6 may be provided by blanket insurance covering all of the Individual
Properties comprising the Leased Property, provided that (i) such blanket
insurance complies with all of the other requirements of this Lease, (ii) the
amounts payable to the Landlord, the Agent and the Trustee under such blanket
insurance shall be payable whether or not the Tenant, as an additional insured,
may be otherwise entitled to any proceeds of the policy and (iii) the insurance
protection to be provided hereunder for the Landlord, the Agent and the Trustee
is not impaired or diminished by such blanket insurance or inclusion of the
Tenant as an insured thereunder.
(d) The Tenant shall also, at its sole cost and expense, keep boiler
and machinery insurance, if applicable, on an extended comprehensive basis with
a joint agreement if there are two separate policies.
Section 22.7. [Intentionally Omitted].
Section 22.8. [Intentionally Omitted].
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Section 22.9. UMBRELLA OR EXCESS LIABILITY. If reasonably available,
standard clause must be attached to any umbrella or excess liability policy
providing that the self insured retention will "drop down" and be considered
primary in the event the aggregate primary limits become impaired.
Section 22.10. NET PROCEEDS OF INSURANCE; FORM OF POLICIES. Each policy of
insurance obtained pursuant to or required by this Article 22 shall provide that
all proceeds thereunder (excluding proceeds of liability or workers'
compensation insurance) shall be payable to the Landlord and to the Agent, as
their interests may appear. The Tenant shall pay or cause to be paid when due
the premiums for all insurance policies required by this Lease, and shall
promptly furnish or cause to be furnished to the Landlord and the Agent evidence
of such payments. All such policies shall provide that the Agent and the
Landlord shall be given not less than thirty (30) days' notice (10 days' notice
for nonpayment) of each expiration, any intended cancellation and any intended
reduction of the coverage provided thereby. The Landlord and the Agent shall not
be responsible for the sufficiency of any insurance herein required and shall be
fully protected in accepting payment on account of such insurance or any
adjustment, compromise or settlement of any loss agreed to by the Landlord and
the Agent; PROVIDED, HOWEVER that, so long as no Event of Default is in
existence hereunder, neither the Landlord nor the Agent shall adjust, compromise
or settle any loss without the prior consent of the Tenant. The Tenant shall
cause to be delivered to the Agent and the Landlord on each anniversary of the
Commencement Date until the Expiration Date a certificate of an Authorized
Representative of the Tenant in form reasonably satisfactory to the Agent and
the Landlord that the insurance policies required by this Lease are in full
force and effect. The Agent and the Landlord may rely on said certificate in
making a determination that the insurance policies required by this Lease are in
full force and effect unless they have actual notice to the contrary.
ARTICLE 23. NO WAIVER
Section 23.1. WRITTEN WAIVER. No waiver by either Party of any breach by
the other Party of any of the terms, covenants, agreements or conditions of this
Lease shall be effective unless such waiver is contained in a writing subscribed
by such Party and the Agent and no such waiver shall be deemed to constitute a
waiver of any succeeding breach thereof, or a waiver of any breach of any of the
other terms, covenants, agreements and conditions herein contained.
Section 23.2. NO ACCEPTANCE OF SURRENDER. No act or thing done by the
Landlord or the Landlord's agents during the Term shall be deemed an acceptance
of surrender of the Leased Property or any part thereof, and no agreement to
accept such surrender shall be valid unless in writing and signed by the
Landlord.
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Section 23.3. NO ACCORD AND SATISFACTION. The receipt by the Landlord of
the Basic Rent and Supplemental Rent with knowledge of the breach of any
covenant of this Lease on the part of the Tenant shall not be deemed a waiver of
such breach. No payment by the Tenant or receipt by the Landlord of a lesser
amount than the Basic Rent or a lesser amount of the Supplemental Rent then due
shall be deemed to be other than a payment on account of the earliest stipulated
amount then due, nor shall any endorsement or statement on any check or payment
as Basic Rent or Supplemental Rent be deemed an accord and satisfaction and the
Landlord may accept such check or payment without prejudice to the Landlord's
right to recover the balance of such Basic Rent or Supplemental Rent or pursuant
to any other remedy provided in this Lease.
Section 23.4. PAYMENT OF RENT NOT WAIVER. The payment by the Tenant of any
Basic Rent or Supplemental Rent with knowledge of the breach of any covenant of
this Lease on the part of the Landlord or the Agent shall not be deemed a waiver
of such breach.
ARTICLE 24. NON-LIABILITY OF LANDLORD
Section 24.1. NON-LIABILITY OF LANDLORD. Neither the Landlord nor its
agents, employees, officers, directors and representatives shall be liable to
the Tenant or the Tenant's Visitors for any damage, injury, loss, compensation
or claim based on, arising out of, or resulting from any causes (other than a
breach of the covenant of quiet enjoyment pursuant to Section 16.1) including,
but not limited to, the following: repairs to any portion of the Leased
Property; interruption in the use of the Leased Property; any accident or damage
resulting from the use or operation (by the Tenant or any other person or
persons) of heating, cooling, electrical or plumbing equipment or apparatus; any
fire, robbery, theft, mysterious disappearance and/or any other casualty; the
actions of any other Person or Persons; any leakage in any part or portion of
the Leased Property, or from water, rain or snow that may leak into, or flow
from, any part of the Leased Property, or from drains, pipes or plumbing
fixtures in any part of the Leased Property; or any act, omission, or any
neglect of the Tenant or Tenant's Visitors in the use of any part of the Leased
Property by the Tenant or Tenant's Visitors; PROVIDED, HOWEVER, that the
Landlord shall remain liable to the Tenant for the Landlord's gross negligence
or willful misconduct.
Section 24.2. LANDLORD NOT RESPONSIBLE FOR TENANT'S PROPERTY. As an express
inducement to the Landlord to enter into this Lease, and notwithstanding any
provisions of this Lease to the contrary, the Tenant agrees that any goods,
personal property or personal effects, including removable trade fixtures used
or placed by the Tenant or its employees in or about the Leased Property shall
be at the sole risk of the Tenant, and the Landlord shall not in any manner be
held responsible or liable therefor; nor shall the Landlord or its agents,
employees, officers, directors and representatives have any liability to the
Tenant for any claims based on the interruption of, or loss to, the Tenant's
business.
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ARTICLE 25. INDEMNIFICATION
Section 25.1. INDEMNIFICATION. Subject to the provisions of Section 25.2
below, the Tenant shall indemnify, defend, protect and save harmless the
Landlord, the Agent, the Lenders, the Trustee and their respective Affiliates,
agents, employees, officers, directors, members, principals and other
representatives (each, an "INDEMNIFIED PARTY" and collectively, the "INDEMNIFIED
PARTIES") from and against any and all liabilities, penalties, fines, damages,
claims, losses, costs, charges and expenses, including without limitation court
costs and reasonable attorneys' fees, which may be imposed upon, incurred by or
asserted against the Indemnified Parties, or any of them, in connection with,
arising out of or resulting from:
(a) any Indemnified Party's interest in the Leased Property or any
part thereof;
(b) any Applicable Project, including without limitation (i) the
construction of the Improvements or Off-Site Improvements at or with respect to
any Individual Property; (ii) any matter arising out of or relating to the
Applicable Construction Agreement and (iii) the failure to construct the
Applicable Project in accordance with the Applicable Construction Agreement, the
Applicable Approvals and the Applicable Plans and Specifications;
(c) the possession and occupancy of the Leased Property or any part
thereof, or the uses, operations or businesses conducted on the Leased Property
or any part thereof, including without limitation any failure to use or operate
any Individual Property in accordance with applicable Legal Requirements and
Environmental Requirements;
(d) any matter relating to title to any Individual Property, including
without limitation any matter arising out of or relating to the Applicable
Acquisition Agreement;
(e) any Default or Event of Default hereunder;
(f) any matter relating to the physical condition of any Individual
Property;
(g) any matter relating to the environmental condition of any
Individual Property, including without limitation (i) the failure of such
Individual Property to comply with all applicable Environmental Requirements,
(ii) any violation or notice of violation of or with respect to any
Environmental Requirement applicable to such Individual Property, (iii) any
action, suit, proceeding, hearing, investigation or inquiry before or by any
Governmental Authority and (iv) the existence or discharge of any Hazardous
Substances at or on such Individual Property;
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(h) the failure of any Individual Property to comply with all
applicable Legal Requirements, including without limitation Legal Requirements
relating to zoning and building code enforcement;
(i) any tax on gross rental payments, including, without limitation,
any sales or use tax, gross receipts tax, rental or occupancy tax, transfer tax,
license or permit fee, franchise fee or tax, documentary or stamp tax,
intangible tax or other tax resulting from or relating to the ownership, use,
occupancy, or rental of the Leased Property, or any part thereof, or this Lease
(other than federal income taxes and state and local taxes imposed upon or
measured by net income);
(j) the failure of Tenant to make timely payment of any Impositions
payable on account of or with respect to the Leased Property or any part
thereof; and
(k) with respect to the Offering Statement, any amendment or
supplement thereto, any actual or alleged misstatement or omission of material
fact, including any omission to state a material fact necessary to make any
statements contained therein, in light of the circumstances under which they
were made, not misleading, relating to the Tenant, any Applicable Project or
Individual Property excluding, however, material appearing under the headings,
"THE ISSUER", "THE LC ISSUERS", "THE LETTERS OF CREDIT" and "THE BONDS", but
including, without limitation "THE COMPANY", "PURPOSE OF THE BOND ISSUE" and
"APPLICATION OF BOND PROCEEDS".
Section 25.2. EXCEPTIONS TO INDEMNIFICATION.
(a) Notwithstanding any provision herein to the contrary, the Tenant
shall not be liable for indemnification or reimbursement to, any Indemnified
Party to the extent that such Indemnified Party has acted in a manner
constituting gross negligence or willful misconduct in connection with the
matter for which such Indemnified Party is seeking indemnification or
reimbursement.
(b) All amounts which may become due from the Tenant to any
Indemnified Party under this Article 25 shall be reduced by any amounts actually
received by such Indemnified Party from the proceeds of insurance provided by
the Tenant and by tax benefits, refunds, savings or credits resulting from
indemnification.
(c) Notwithstanding any provision herein to the contrary, the Tenant's
indemnification responsibilities hereunder shall not include liability for
amounts due, or expenses incurred by or on behalf of the Landlord, solely by
reason of its status as landlord of the Individual Properties under applicable
laws and regulations relating to federal income taxes and state and local taxes
imposed upon or measured by net income.
(d) All amounts described in Section 3.8(b) hereof.
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Section 25.3. RIGHT OF SET-OFF. In addition to any rights now or hereafter
granted under applicable law, upon the occurrence and during the continuance of
any Event of Default, each Indemnified Party is hereby authorized by the Tenant
at any time or from time to time, without notice to any Person (any such notice
being hereby expressly waived) to set off, to appropriate and to apply any and
all deposits (general or special, including, but not limited to, indebtedness
evidenced by certificates of deposit, whether matured or unmatured (but not
including trust accounts)) and any other Debt at any time held or owing by such
Indemnified Party to or for the credit or the account of the Tenant against and
on account of the obligations of the Tenant owing to such Indemnified Party
under this Article 25, irrespective of whether or not (i) such Indemnified Party
shall have made any demand therefor hereunder, (ii) the Rent shall have been
accelerated and be due and payable or (iii) such obligations are contingent or
unmatured.
Section 25.4. MISCELLANEOUS; SURVIVAL.
(a) All amounts which may become due from the Tenant to any
Indemnified Party under this Article 25 shall be payable by the Tenant within 5
Business Days after demand therefor by the Indemnified Party. All such amounts
shall be included as part of, and shall be deemed to be, Supplemental Rent under
this Lease.
(b) Nothing contained in this Article 25 shall impair or otherwise
derogate the Tenant's rights with respect to any Person not expressly entitled
to the benefits of the provisions of this Article 25.
(c) The provisions of this Article 25 and of any other indemnification
provisions elsewhere contained in this Lease shall survive the expiration or
earlier termination of the Term of this Lease with respect to acts, occurrences
or omissions occurring prior to the expiration or earlier termination of the
Term of this Lease.
ARTICLE 26. NOTICES
Section 26.1. NOTICES. All notices, offers, approvals, elections, consents,
acceptances, waivers, reports, requests and other communications required or
permitted to be given hereunder (all of the foregoing hereinafter collectively
referred to as "COMMUNICATIONS") shall be in writing and shall be deemed to have
been duly given if delivered personally with receipt acknowledged or sent by
facsimile (which shall be confirmed by a writing sent by registered or certified
mail or equivalent on the same date that such facsimile is sent), or by
recognized overnight courier for next Business Day delivery, addressed or sent
to the parties at the following addresses and facsimile numbers or to such other
additional address or facsimile number as any party shall hereafter specify by
Communication to the other parties:
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If to the Landlord: Movieplex Realty Leasing, L.L.C.
2 World Trade Center
Suite 2112
New York, New York 10048
ATTN: Mr. Roger J. Burns, Vice President
Facsimile: (212) 775-0901
with a copy to: Wolff & Samson
5 Becker Farm Road
Roseland, New Jersey 07068
ATTN: Martin L. Wiener, Esq.
Facsimile: (973) 740-1407
If to the Tenant: Carmike Cinemas, Inc.
1301 First Avenue
Columbus, Georgia 31901-2109
ATTN: Mr. John Barwick
Facsimile: (706) 576-3419
with a copy to: Carmike Cinemas, Inc.
1301 First Avenue
Columbus, Georgia 31901-2109
ATTN: Mr. Lamar Fields
Facsimile: (706) 576-3441
with a copy to: Troutman Sanders LLP
600 Peachtree Street
Suite 5200
Atlanta, Georgia 30308-2216
ATTN: Hazen Dempster, Esq.
Facsimile: (404) 885-3995
If to the Agent: Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
ATTN: Syndications Group
Facsimile: (404) 332-4005
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with a copy to: Wachovia Bank, N.A.
191 Peachtree Street, N.E.
30th Floor
Atlanta, Georgia 30303-1757
ATTN: Mr. Doug Strickland
Facsimile: (404) 332-6920
with a copy to: Jones, Day, Reavis & Pogue
3500 One Peachtree Center
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
ATTN: Christopher L. Carson, Esq.
Facsimile: (404) 581-8868
ARTICLE 27. MECHANICS' LIENS
Section 27.1. MECHANICS' LIENS. If any mechanics' or other lien, charge or
order for the payment of money or otherwise shall be filed against the Leased
Property or any part thereof (whether or not such lien, charge or order is valid
or enforceable as such), arising out of any act or omission by the Tenant, the
Tenant shall promptly notify the Landlord and the Agent thereof and, at the
Tenant's expense, shall cause it to be canceled or discharged of record by
bonding or otherwise within ten (10) days after notice of such filing, and the
Tenant shall, in any event indemnify and save the Landlord, the Agent and the
Trustee harmless against and shall pay all costs, expenses, losses, fines and
penalties, including, without limitation, attorneys' fees and disbursements,
related thereto or resulting therefrom.
ARTICLE 28. DEFINITION OF LANDLORD
Section 28.1. DEFINITION OF LANDLORD. The term "Landlord" as used in this
Lease shall mean only (i) the owner of the Leased Property, which is currently
Movieplex Realty Leasing, L.L.C and (ii) the Agent, as assignee for the benefit
of the Lenders pursuant to the Security Documents. Upon the transfer of title to
the Leased Property or any part thereof, Movieplex Realty Leasing, L.L.C. shall
be and hereby is entirely freed and relieved of all covenants and obligations of
the Landlord hereunder except for liabilities which arose prior to such transfer
and this Lease shall be deemed and construed as a covenant running with the land
without further agreement between the parties or their successors in interest.
Notwithstanding anything to the contrary herein contained, for so long as any
amounts shall be due and owing the Agent under the Reimbursement Agreement or
the Reimbursement Notes, the Landlord and Tenant agree that the exercise by the
Landlord of remedies to enforce its Reserved Rights may be pursued whether or
not an Event of Default shall have occurred and be continuing hereunder or under
any other Transaction Document. Further, the Landlord agrees that the Landlord,
without the prior written consent of the Agent, shall not take any action to
accelerate the payment of Rent or seek to terminate this Lease, it
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being expressly acknowledged by the Landlord that any injunctive or other
equitable relief shall not seek to dispossess the Tenant from the Leased
Property. Any exercise by the Landlord shall be upon notice to the Tenant. The
Landlord's rights with respect to its exercise of remedies concerning the
Reserved Rights shall not be limited to equitable relief provided that the
Landlord shall give the Tenant and the Agent five days' prior notice of the
institution of any action with respect to such Reserved Rights.
ARTICLE 29. DEFINITION OF TENANT
Section 29.1. DEFINITION OF TENANT. The term "Tenant" as used in this Lease
includes the Tenant, its successors and permitted assigns and any person or
entity claiming by, through or under the Tenant. The Tenant shall be as fully
responsible to the Landlord for all acts and omissions of its subtenants and
occupants as it is for its own acts and omissions.
ARTICLE 30. PERSONAL LIABILITY
Section 30.1. NO PERSONAL LIABILITY OR ACCOUNTABILITY. Anything in this
Lease to the contrary notwithstanding, the liability, if any, of the Landlord to
the Tenant in the performance by the Landlord of its obligations under this
Lease or any Transaction Document to which it is a party, any default by the
Landlord hereunder or thereunder or the Landlord's gross negligence or willful
misconduct in connection herewith or therewith, shall be limited to the interest
of the Landlord in the Leased Property and the Tenant agrees to look solely to
the Landlord's interest in the Leased Property for the recovery of any judgment
from the Landlord or its agents, employees, officers, directors and
representatives. No covenant or agreement contained in this Lease shall be
deemed to be the covenant or agreement of any present, past or future officer,
director, or agent or employee of the Tenant or the Landlord, in his or her
individual capacity, and neither the officers, directors, agents or employees of
the Tenant or the Landlord nor any official executing this Lease shall be liable
personally on this Lease or be subject to any personal liability or
accountability by reason of any transaction or activity relating to this Lease.
ARTICLE 31. ENVIRONMENTAL COMPLIANCE
Section 31.1. ENVIRONMENTAL COMPLIANCE. The Tenant agrees to comply in all
material respects at its sole cost and expense with all Environmental
Requirements. To the extent any Environmental Requirements hold Landlord and
Tenant jointly and severally liable for compliance, Tenant shall be solely
responsible for compliance with such Environmental Requirements. If on the
Expiration Date or sooner termination of this Lease, any Individual Property is
not in compliance with all Environmental Requirements, the provisions of Section
14.1 shall apply to such Individual Property until compliance with all
Environmental Requirements is completed.
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Section 31.2. EXISTENCE OF HAZARDOUS SUBSTANCES. The Tenant shall:
(a) not cause, suffer or permit any Hazardous Substance to exist on,
about or beneath any Individual Property or discharge from any Individual
Property (whether originating thereon or migrating to such Individual Property
from other property), and shall promptly: (i) pay any claim against the Tenant,
the Landlord, the Trustee or any Individual Property, (ii) remove any Lien upon
any Individual Property and (iii) defend, indemnify and hold the Landlord and
its agents, employees, officers and representatives and the Trustee harmless
from any and all claims, expenses, liability, loss or damage, in each case
resulting from any Hazardous Substance that exists on, about or beneath any
Individual Property or is discharged from any Individual Property;
(b) not cause, suffer or permit any Hazardous Substance to exist on or
discharge from any property owned or used by the Tenant which would result in
any Lien upon any Individual Property and shall promptly: (i) pay any claim
against the Tenant, the Landlord, the Trustee or any Individual Property; (ii)
remove any charge or lien upon any Individual Property and (iii) defend,
indemnify and hold the Landlord and the Trustee harmless from any and all
claims, expenses, liability, loss or damage, resulting from the existence of any
such Hazardous Substance; or
(c) notify the Landlord and the Trustee in writing of any Hazardous
Substance that exists on, about or beneath any Individual Property or is
discharged from or onto any Individual Property (whether originating thereon or
migrating to such Individual Property from other property) within ten (10) days
after the Tenant first has knowledge of such existence or discharge.
Section 31.3. ENVIRONMENTAL INSPECTION. If during the Term the Landlord has
reason to believe that any Individual Property fails to comply with
Environmental Requirements, the Landlord shall have the right to require the
Tenant, at the Tenant's sole cost and expense, to retain an environmental
consultant, reasonably acceptable to the Landlord, to conduct a complete and
thorough on-site inspection of such Individual Property, including but not
limited to a geohydrological survey of soil and subsurface conditions as well as
other tests, to determine whether such Individual Property and the Tenant and
any subtenants's use and occupancy thereof is in full compliance with all
Environmental Requirements. The consultant shall certify to the Landlord
whether, in the consultant's professional judgment, such Individual Property and
such use and occupancy are in full compliance with all Environmental
Requirements and, if such is not the case, the consultant shall recommend
appropriate cost-effective remedial actions with respect thereto, which actions
will be performed by the Tenant at its sole cost and expense, as well as the
costs of all investigations, tests and consulting fees.
Section 31.4. DE MINIMIS QUANTITIES. Notwithstanding the foregoing, the
Tenant shall be permitted to bring upon any Individual Property and use such
quantities of certain
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Hazardous Substances which are necessary to the proper operation of the Tenant's
business provided that such activities shall be done in compliance with all
Legal Requirements. The Tenant shall comply with all Environmental Requirements
in connection with transportation, storage, use and disposition of said
permitted Hazardous Substances. This provision shall not include any Hazardous
Substance either currently or in the future classified as an "Extremely
Hazardous Substance" under the Federal Emergency Planning and Community Right to
Know Act (42 U.S.C. 11001 ET SEQ.).
ARTICLE 32. MISCELLANEOUS
Section 32.1. ENTIRETIES; EXHIBITS; CONFLICTS; MODIFICATIONS.
(a) Except for the Transaction Documents, this Lease constitutes the
entire agreement of the Parties hereto with respect to its subject matter, and
all prior agreements with respect thereto are merged herein.
(b) All Exhibits attached to this Lease are incorporated into this
Lease and shall be deemed to be made a part of this Lease for all purposes.
(c) If any conflict or inconsistency exists between any term or
provision contained in the body of the Lease and any term or provision contained
in any Lease Supplement, then the term or provision contained in the Lease
Supplement shall control and prevail in all respects.
(d) Any attempt hereafter made to change, modify, waive, discharge or
effect an abandonment of this Lease in whole or in part shall be void and
ineffective unless in writing and signed by the Party against whom enforcement
of the change, modification, waiver, discharge or abandonment is sought.
Section 32.2. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. The Landlord
and the Tenant agree that they will, if necessary, execute, acknowledge and
deliver, such supplements hereto and such further instruments as may reasonably
be required for correcting any inadequate or incorrect description of the Leased
Property or any part thereof hereby leased or intended so to be or for carrying
out the expressed intention of this Lease including, without limitation the
provisions of Sections 32.15(b) and (c).
Section 32.3. JURY TRIAL WAIVER. To the extent permitted by law, the
Landlord and the Tenant do hereby waive trial by jury in any action, proceeding
or counterclaim brought by either of the Parties hereto against the other on any
matter whatsoever arising out of or in connection with this Lease, the
relationship of any of the Landlord, the Agent and the Tenant, the Tenant's use
or occupancy of the Leased Property and/or any claim, injury or damage, or any
emergency or statutory remedy.
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Section 32.4. SEVERABILITY. If any term or provision of this Lease or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby and all other
terms and provisions of this Lease shall be valid and enforced to the fullest
extent permitted by Legal Requirements.
Section 32.5. INTERPRETATION.
(a) Whenever in this Lease any words of obligation or duty are used,
such words or expressions shall have the same force and effect as though made in
the form of covenants.
(b) Words of any gender used in this Lease shall be held to include
any other gender, and words in the singular number shall be held to include the
plural, when the sense requires.
(c) This Lease shall not be strictly construed either against the
Landlord or the Tenant, regardless of whether any provision thereof has been
drafted by the Landlord or the Tenant (or their respective attorneys).
(d) The headings and captions contained in this Lease are inserted for
convenience of reference only, and are not to be deemed part of or to be used in
construing this Lease.
(e) The covenants and agreements herein contained shall, subject to
the provisions of this Lease, bind and inure to the benefit of the Landlord, its
successors and assigns, and the Tenant, its successors and permitted assigns
except as otherwise provided herein.
(f) This Lease has been executed and delivered in the State of New
York and shall be governed by and construed in accordance with the internal laws
of the State of New York, except to the extent that the internal laws of any
Applicable State shall mandatorily govern matters relating to real property
located in such Applicable State.
(g) The Landlord has made no representations or promises with respect
to the Leased Property, except as expressly contained herein.
Section 32.6. NO OFFER; NO OPTION, ETC. The submission of this Lease to the
Tenant for examination does not constitute by the Landlord a reservation of, or
an option to the Tenant for, the Leased Property or any part thereof, or an
offer to lease on the terms set forth herein, and this Lease shall become
effective as a lease agreement only upon execution and delivery thereof by the
Landlord and the Tenant.
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Section 32.7. RECORDING. This Lease or (if permitted by law in the
Applicable State) a short form memorandum of this Lease in recordable form,
provided that such memorandum shall not contain any of the specific rental terms
set forth herein, shall be recorded in the appropriate land records of any
Applicable State and the Tenant shall pay all recording fees. Upon the
expiration or earlier termination of this Lease, the Tenant shall execute and
deliver to the Landlord, in recordable form, an instrument which terminates of
record this Lease or any memorandum of Lease, as applicable. The Tenant hereby
appoints the Landlord its attorney-in-fact to execute such instrument on the
Tenant's behalf. The provisions of this Section 32.7 shall survive the
expiration or sooner termination of this Lease.
Section 32.8. CONSENT BY LANDLORD. Wherever in this Lease the Landlord
agrees not to unreasonably withhold its consent or approval, or words of like
import, the Tenant agrees that it shall not be unreasonable for the Landlord to
withhold such consent or approval (i) if by granting such consent or approval
the Landlord shall be in violation of any Secured Interests or any Legal
Requirement, or (ii) the Trustee or the Agent shall not give its consent or
approval thereto where its consent or approval is required by the terms of its
Secured Interest. The foregoing are illustrative, and not the sole instances, in
which the Landlord's withholding of consent shall be deemed to be not
unreasonable. The Tenant agrees that if it is determined that the Landlord
unreasonably withheld its consent under any provisions of this Lease, the Tenant
shall have no action for damages against the Landlord but shall be limited to an
action for specific performance or the like.
Section 32.9. NO MERGER. There shall be no merger of this Lease, or the
leasehold estate created by this Lease, with any other estate or interest in the
Leased Property or any part thereof, by reason of the fact that the same person,
firm, corporation or other entity may acquire or own or hold, directly or
indirectly, (i) this Lease or the leasehold estate created by this Lease, or any
interest in this Lease or in any such leasehold estate, and (ii) any such other
estate or interest in the Leased Property or any part thereof; and no such
merger shall occur unless and until all persons, corporations, firms and other
entities having an interest (including a Security Interest) in (i) this Lease or
the leasehold estate created by this Lease; and (ii) any such other estate or
interest in the Leased Property or any part thereof shall join in a written
instrument effecting such merger and shall duly record same.
Section 32.10. LANDLORD, AGENT AND TENANT REPRESENTATIVES. Whenever under
the provisions of this Lease the approval of the Landlord, the Agent or the
Tenant is required or the Landlord, the Agent or the Tenant is required to take
some action at the request of the other, such approval of such request shall be
given for the Landlord, by an Authorized Representative of the Landlord, for the
Agent by an Authorized Representative of the Agent, and for the Tenant, by an
Authorized Representative of the Tenant. The
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Landlord, the Agent and the Tenant, as the case may be, shall be authorized to
rely upon any such approval or request.
Section 32.11. BINDING; COUNTERPARTS. This Lease shall be binding upon the
parties hereto only when duly executed on behalf of both the Tenant and the
Landlord together; PROVIDED, HOWEVER, that each set of counterparts taken
together shall constitute an original.
Section 32.12. TIME IS OF THE ESSENCE. Time is of the essence with respect
to this Lease and no covenant or obligation hereunder to be performed by the
Tenant may be waived except by the written consent of the Landlord and the Agent
and waiver of any such covenant or obligation or a forbearance to invoke any
remedy on any occasion shall not constitute or be treated as a waiver of such
covenant or obligation or any other covenant or obligation as to any other
occasion and shall not preclude the Landlord from invoking such remedy at any
later time prior to the Tenant's cure of the condition giving rise to such
remedy. Each of the Landlord's rights hereunder is cumulative to its other
rights hereunder and not alternative thereto.
Section 32.13. RECEIPT OF LEASE. The Parties hereto each acknowledge
receipt of a signed, true and exact copy of this Lease.
Section 32.14. UNAVOIDABLE DELAY. If either Party shall be delayed or
prevented from the performance of any act required by this Lease by reason of
acts of God, strikes, lockouts, labor troubles, inability to procure materials,
or where the Tenant is barred or prevented, directly or indirectly, from
proceeding with the development otherwise permitted by a legal action instituted
by any Applicable State agency, political subdivision or other party to protect
the public health and welfare or by a directive or Order issued by any
Applicable State agency, political subdivision or Court of competent
jurisdiction to protect the public health or welfare, acts of war or other cause
without fault and beyond the reasonable control of the Party obligated,
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; PROVIDED, HOWEVER, nothing in this
Section 32.14 shall excuse the Tenant from the prompt payment of any Rent or
Impositions payable pursuant to the provisions of this Lease.
Section 32.15. RELATION OF PARTIES.
(a) Nothing in this Lease shall be construed to make the Parties
hereto partner or joint venturers or to render either party hereto liable for
any obligation of the other.
(b) The Landlord and the Tenant acknowledge and agree that solely for
purposes of property law and the Bankruptcy Code (i) this Lease shall not
constitute a "true
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<PAGE> 98
lease" but shall instead constitute a financing and shall not be deemed an
"executory contract" or "unexpired lease" under Section 365 of the Bankruptcy
Code or any similar provisions of the Bankruptcy Code, (ii) in the event that
the Tenant shall seek relief under the Bankruptcy Code, neither it nor the
Landlord shall seek to have the Lease classified as a "true lease" nor shall
either raise an objection to or seek to limit the claim of Landlord and the
Agent and Lenders under Section 502(b)(6) of the Bankruptcy Code or any similar
provision of the Bankruptcy Code, (iii) the obligations of the Tenant to the
Landlord and the Agent and Lenders under this Lease are obligations of the
Tenant ranking pari passu as to debt priority with the Tenant's obligations to
its other senior lenders, (iv) this Lease be treated as a mortgage or deed of
trust (whichever is applicable in the Applicable State in which the Individual
Properties are located) and security agreement, encumbering each Individual
Property, and that Tenant, as grantor, hereby grants to Landlord, as mortgagee
or beneficiary and secured party, or any successor thereto, a first and
paramount Lien on each Individual Property, (v) that Landlord shall have, as a
result of such determination, all of the rights, powers and remedies of a
mortgagee or deed of trust beneficiary available under the law of the Applicable
State to take possession of and sell (whether by foreclosure or otherwise) any
Individual Property, (vi) that the effective date of such mortgage or deed of
trust shall be the effective date of this Lease, (vii) that the recording of
this Lease or a memorandum of Lease shall be deemed to be the recording of such
mortgage or deed of trust, and (viii) that the obligations secured by such
mortgage or deed of trust shall include the Obligations and all other
obligations of and amounts due from Tenant hereunder and under the Transaction
Documents. The Tenant shall not enter into any other financings, leases, or
other similar arrangements pursuant to which the Tenant's obligations thereunder
shall be senior as to debt priority to its obligations to the Landlord and the
Agent and Lenders under this Lease.
(c) The Landlord and Tenant acknowledge and agree that for all
purposes other than property and bankruptcy law purposes (including, but not
limited to, for purposes of applicable federal, state and local tax laws), this
Lease shall be deemed to be a "true lease" with Tenant as the lessee of the
Leased Property and the Landlord and the Tenant agree not to take any action or
position, or make any filing, inconsistent with such treatment, including, but
not limited to, on or with respect to their federal, state and local tax returns
or any other filing.
(d) The Tenant acknowledges that the Landlord, the Agent and the
Lenders are relying on the provisions of Section 32.15(b) and that if the Tenant
violates any provision of or threatens to violate any provision of this Section
it will cause the Agent irreparable harm and agrees that the Agent may pursue
both injunctive relief and any and all other remedies available at law or in
equity for such violation or threatened violation, including the recovery of
damages and reasonable attorneys' fees and costs.
(e) Landlord acknowledges that the Tenant is relying on the provisions
of Section 32.15(c) and that if the Landlord violates any provision of or
threatens to violate
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<PAGE> 99
any provision of such Section it will cause the Tenant irreparable harm and
agrees that the Tenant may pursue both injunctive relief and any and all other
remedies available at law or in equity for such violation or threatened
violation, including the recovery of damages and reasonably attorneys' fees and
costs.
Section 32.16. SURVIVAL OF INDEMNIFICATION AND OTHER OBLIGATIONS.
Regardless of whether explicitly stated in any other provision of this Lease,
any obligation of the Tenant to indemnify the Landlord, the Trustee, the Agent
or any other Person shall constitute Supplemental Rent, the payment of which
shall survive the expiration or earlier termination of this Lease. Further, the
Tenant hereby expressly acknowledges that the Agent is a third party beneficiary
of all obligations to make payments of Supplemental Rent in amounts provided
herein in respect of indemnification obligations hereunder of the Tenant to or
for the benefit of the Agent.
Section 32.17. BROKERAGE INDEMNITY. Each Party represents to the other that
neither has utilized the services of a broker or other person and is not
obligated with respect to any claims for brokerage, commission, finder's or
other fees relative to this Lease and the transaction set forth herein based in
any way on agreement, arrangements or understandings made by such party with any
other party or parties.
Section 32.18. REFERENCE TO TRUSTEE AND AGENT. This Lease shall be deemed
to be amended (a) to delete all references to the Trustee from and after the
time all Bonds are redeemed pursuant to the provisions of the Indenture and (b)
to delete all references to the Agent from and after the time all Obligations
and other amounts due and owing to the Agent and the Lenders under the
Reimbursement Agreement shall have been paid in full and all Letters of Credit
and commitments thereunder have been terminated; PROVIDED, HOWEVER, that nothing
contained in this Section 32.18 shall in any manner limit the indemnification
obligations of the Tenant to the Trustee or the Agent which survive the
expiration or sooner termination of this Lease.
Section 32.19. DATE FOR IDENTIFICATION PURPOSES. This Lease has been dated
as of September 1, 1997 as a matter of convenience of reference only. This Lease
shall not be effective and binding upon the Parties until the actual execution
and delivery hereof by the Landlord and the Tenant, which shall occur on the
Commencement Date. Each Lease Supplement shall not be effective and binding upon
the Parties until the actual execution and delivery thereof by the Landlord and
the Tenant.
Section 32.20. NEGOTIATION OF THIS LEASE. This Lease has been willingly
entered into by sophisticated commercial parties, each represented by
independent legal counsel.
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<PAGE> 100
IN WITNESS WHEREOF, the Parties have executed this Lease on the date first
above written.
WITNESS: LANDLORD:
MOVIEPLEX REALTY LEASING, L.L.C.
By: RANDOLPH, HUDSON & CO.,
INC., Manager
By:
- ------------------------------ ----------------------------
Name: Roger J. Burns
Title: Vice President
TENANT:
ATTEST: CARMIKE CINEMAS, INC.
By:
- ------------------------------ ----------------------------
Name:
Title:
[Signature Page to Master Lease]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q OF
CARMIKE CINEMAS, INC. FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,366
<SECURITIES> 956
<RECEIVABLES> 2,039
<ALLOWANCES> 0
<INVENTORY> 4,088
<CURRENT-ASSETS> 21,334
<PP&E> 709,783
<DEPRECIATION> 164,162
<TOTAL-ASSETS> 655,105
<CURRENT-LIABILITIES> 68,199
<BONDS> 0
0
0
<COMMON> 341
<OTHER-SE> 207,096
<TOTAL-LIABILITY-AND-EQUITY> 655,105
<SALES> 71,189
<TOTAL-REVENUES> 227,840
<CGS> 9,611
<TOTAL-COSTS> 186,769
<OTHER-EXPENSES> 21,573
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,794
<INCOME-PRETAX> 6,704
<INCOME-TAX> 2,548
<INCOME-CONTINUING> 4,156
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,156
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CARMIKE CINEMAS, INC. FOR THE 6 MONTHS ENDED JUNE 30,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,636
<SECURITIES> 3,177
<RECEIVABLES> 3,811
<ALLOWANCES> 0
<INVENTORY> 3,614
<CURRENT-ASSETS> 26,610
<PP&E> 589,236
<DEPRECIATION> 133,252
<TOTAL-ASSETS> 573,779
<CURRENT-LIABILITIES> 75,997
<BONDS> 0
0
0
<COMMON> 340
<OTHER-SE> 192,209
<TOTAL-LIABILITY-AND-EQUITY> 573,779
<SALES> 65,684
<TOTAL-REVENUES> 218,531
<CGS> 8,381
<TOTAL-COSTS> 172,846
<OTHER-EXPENSES> 19,065
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,643
<INCOME-PRETAX> 15,977
<INCOME-TAX> 6,071
<INCOME-CONTINUING> 9,906
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,906
<EPS-PRIMARY> .88
<EPS-DILUTED> .87
</TABLE>
