<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 MARCH 31, 1999
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 1-11604
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CARMIKE CINEMAS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 58-1469127
<S> <C>
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901-2109
(Address of principal Executive Offices) (Zip Code)
</TABLE>
(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 -- 9,986,387 shares outstanding as of May
1, 1999
Class B Common Stock, $.03 par value -- 1,420,700 shares outstanding as of May
1, 1999
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- -----------
(Unaudited)
(000's omitted)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,877 $ 17,771
Short-term investments 822 801
Accounts and notes receivable 4,517 522
Inventories 3,654 3,851
Prepaid expenses 8,570 5,886
Recoverable construction allowances
under capital leases 1,000 -0-
-------- --------
TOTAL CURRENT ASSETS 21,440 28,831
OTHER ASSETS 50,237 38,146
PROPERTY AND EQUIPMENT - Net of accumulated
depreciation and amortization 616,631 573,612
EXCESS OF COST OVER FAIR
VALUE OF TANGIBLE ASSETS
ACQUIRED 56,529 56,954
-------- --------
$744,837 $697,543
======== ========
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- -----------
(Unaudited)
(000's omitted)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 52,114 $ 45,533
Accrued expenses 33,861 37,842
Current maturities of long-term debt
and capital lease obligations 2,097 1,290
-------- --------
TOTAL CURRENT LIABILITIES 88,072 84,665
LONG-TERM DEBT
Long-term debt - less current maturities - Note B 360,469 232,013
Senior notes -0- 79,870
Capital lease obligations - less current maturities 45,179 38,587
Restructuring reserve - less current portion 29,088 30,099
Other 5,111 6,000
-------- --------
TOTAL LONG-TERM DEBT 439,847 386,569
SHAREHOLDERS' EQUITY
5.5% Series A Senior Cumulative Convertible Exchangeable
Preferred Stock, $1.00 par value, four votes per share, authorized
1,000,000 shares, issued and outstanding 550,000
shares; involuntary liquidation value of $55,000,000 550 550
Class A Common Stock, $.03 par value, one vote per
share, authorized 22,500,000 shares, issued and
outstanding 9,942,487 shares 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 158,543 158,543
Retained earnings 57,484 66,875
-------- --------
216,918 226,309
-------- --------
$744,837 $697,543
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1999 1998
--------- -------
(000's omitted except
per share data)
<S> <C> <C>
REVENUES
Admissions $ 67,022 $ 80,625
Concessions and other 30,694 36,517
--------- --------
97,716 117,142
COSTS AND EXPENSES
Film exhibition costs 35,218 42,666
Concession costs 3,719 4,674
Other theatre operating costs 43,883 46,650
General and administrative 1,865 1,731
Depreciation and amortization 9,506 8,986
--------- --------
94,191 104,707
--------- --------
OPERATING INCOME 3,525 12,435
Interest expense 7,306 6,317
--------- --------
INCOME (LOSS) BEFORE INCOME TAXES (3,781) 6,118
Income tax expense (benefit) (1,437) 2,324
--------- --------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM (2,344) 3,794
Extraordinary item (net of income tax benefit
of $3,856) - Note C (6,291) -0-
--------- --------
NET INCOME (LOSS) (8,635) 3,794
Preferred stock dividends (756) -0-
--------- --------
NET INCOME (LOSS) AVAILABLE
FOR COMMON SHARES $ (9,391) $ 3,794
========= ========
NET INCOME (LOSS) PER BASIC AND DILUTED
SHARE BEFORE EXTRAORDINARY ITEM $ (.27) $ .33
========= ========
NET INCOME (LOSS) PER BASIC AND DILUTED SHARE $ (.83) $ .33
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
CARMIKE CINEMAS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
------- -------
(000's omitted)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (8,635) $ 3,794
Items which did not use cash:
Depreciation and amortization 9,506 8,986
Deferred income taxes (5,293) 1,000
Gain on sale of assets -0- (424)
Changes in other assets and liabilities (838) -0-
Changes in operating assets and liabilities:
Accounts and notes receivable and inventories (3,798) (2,082)
Prepaid expenses (2,684) (363)
Accounts payable 5,825 3,432
Accrued expenses (3,981) 876
Other (1,000) -0-
--------- ---------
NET CASH PROVIDED BY(USED IN)
OPERATING ACTIVITIES (10,898) 15,219
INVESTING ACTIVITIES
Purchases of property and equipment (52,100) (24,261)
Decrease (increase) in:
Short-term investments (21) (5,284)
Other 1,045 2,788
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (51,076) (26,757)
FINANCING ACTIVITIES
Debt and other liabilities:
Borrowings under revolving credit line 88,800 692,500
Repayments of revolving credit line (234,500) (685,000)
Borrowings under other long-term agreements 281,645 -0-
Payments of other long term borrowings (79,960) (7,377)
Debt issuance cost (8,905) -0-
Issuance of Class A Common Stock -0- 134
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 47,080 257
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS (14,894) (11,281)
Cash and cash equivalents at beginning of period 17,771 16,545
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,877 $ 5,264
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
CARMIKE CINEMAS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1999
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Carmike Cinemas, Inc.("Carmike" or the "Company") 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
only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three-month period ended March 31,
1999 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. 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, 1998.
NOTE B - INDEBTEDNESS
Long-term debt and senior notes consists of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- -----------
<S> <C> <C>
Revolving credit facility $ 84,300 $230,000
9 3/8% Senior Subordinated Notes due 2009 200,000 -0-
Term Loan B which matures March 31, 2005 75,000 -0-
Industrial Revenue Bonds; payable in equal
installments through May 2006, with
interest rates ranging from 3.90% to 5.98% 2,195 2,285
Senior notes -0- 79,870
-------- --------
361,495 312,155
Less current maturities (1,026) (272)
-------- --------
$360,469 $311,883
======== ========
</TABLE>
RESTRUCTURING OF INDEBTEDNESS: During February 1999, the Company completed a
private placement offering of $200.0 million of 9 3/8% Senior Subordinated Notes
due 2009 (the "Subordinated Notes"). The Company's wholly-owned subsidiaries
have fully, unconditionally, jointly and severally guaranteed the Subordinated
Notes. Additionally, on January 29, 1999, the Company amended and restated its
1997 credit agreement (as amended, the "Revolving Credit Facility"). The
Revolving Credit Facility provides for revolving credit availability of $200.0
million, matures November 10, 2002 and bears interest at LIBOR plus 2.25%. The
Company will pay a commitment fee of .5% on the unused portion of the facility
of which approximately $115.7 million was unused as of March 31, 1999. On
February 25, 1999, the Company entered into a $75.0 million Term Loan B Facility
(the "Term Loan B"). The Term Loan B requires scheduled payments of $187,500 on
a quarterly basis graduating to a final payment of $17.2 million on March 31,
2005 and bears interest at LIBOR plus 2.75%.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - CONTINUED
CARMIKE CINEMAS, INC. AND SUBSIDIARIES
NOTE B - INDEBTEDNESS (CONTINUED)
The initial interest rate on the Revolving Credit Facility was LIBOR plus 2.25%.
The interest rate and commitment fees of the Revolving Credit Facility are
adjusted based on certain financial ratios set forth in the agreement. The
aggregate effective interest rate on the Revolving Credit Facility was 8.2% at
March 31, 1999.
Interest accrues on the Term Loan B at a floating rate per annum initially equal
to, at Carmike's option, either: (1) the Base Rate, as defined, plus 1.75%, or
(2) the Adjusted LIBOR Rate plus 2.75%. The applicable margins over the index
used to determine the interest rate are adjustable from time to time following
the fiscal quarter ended March 31, 1999 based upon certain financial ratios as
set forth in the agreement. The aggregate effective interest rate on the Term
Loan B was 8.1% at March 31, 1999.
The net proceeds from the issuance of the Subordinated Notes and the Term Loan
B, which aggregated approximately $267.7 million, were used to redeem
outstanding senior notes (see Note C - Extraordinary Charge) and reduce the
amounts outstanding under the Revolving Credit Facility.
Concurrent with the amendment and restatement of the Revolving Credit Facility,
Carmike also amended and restated its master lease with Movieplex Realty
Leasing, L.L.C. to provide for security interests and guarantees and to amend
certain covenants contained therein. The obligations under the Revolving Credit
Facility, Term Loan B and the master lease are secured by:
- a first priority lien upon all of the personal property of Carmike and
Eastwynn Theatres, Inc. ("Eastwynn"), including without limitation, a
first priority lien on all equipment, inventory, intellectual
property, accounts receivable and other intangibles;
- a negative pledge on all other assets, including all real estate of
Carmike and its subsidiaries;
- a pledge of all of the capital stock Carmike owns in Eastwynn; and
- guarantees by substantially all of Carmike's current and future
subsidiaries.
The parties to each agreement have entered into an intercreditor agreement under
which Wachovia Bank, N.A. acts as collateral agent.
In addition, the Revolving Credit Facility and Term Loan B contain certain
restrictive provisions which, among other things, limit additional indebtedness
of the Company, limit dividends and other restricted payments, require that
certain debt to capitalization ratios be maintained and require minimum levels
of cash flows.
Carmike is required to make prepayments of the Revolving Credit Facility and
Term Loan B, on a pro rata basis, with the net cash proceeds of asset sales,
excess cash flows, as defined, or the sale of any new equity securities. The
maximum available borrowings under the Revolving Credit Facility will be reduced
by the amount of any such prepayments, but in no event below $150.0 million. The
Revolving Credit Facility and the Term Loan B rank pari passu.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - - CONTINUED
CARMIKE CINEMAS, INC. AND SUBSIDIARIES
NOTE B - INDEBTEDNESS (CONTINUED)
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
Company specifically designates interest rate swaps as hedges of debt
instruments and recognizes interest differentials as adjustments to interest
expense in the period they occur. The differential to be paid or received as
interest rates change is accrued and recognized as an adjustment of interest
expense related to the debt (the accrual accounting method). The related amount
payable to, or receivable from, counter-parties is included in other liabilities
or assets. The fair value of the swap agreements is not recognized in the
financial statements. If, in the future, an interest rate swap agreement were
terminated, any resulting gain or loss would be deferred and amortized to
interest expense over the remaining life of the hedge debt instrument. In the
event of early extinguishment of a designated debt obligation, any realized or
unrealized gain or loss from the swap would be recognized in income coincident
with the extinguishment.
The interest rate swap agreements changed floating interest rate expense on
amounts outstanding under the Revolving Credit Facility. 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 March 31, 1999 was 7.95%, equal
to a fixed rate of 5.7% plus the margin of 2.25% the Company presently pays over
LIBOR. 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 (2.25% at March 31, 1999) for
a total effective rate of 7.76%.
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 - EXTRAORDINARY CHARGE
In connection with the restructuring of indebtedness discussed in Note B -
Indebtedness, the Company retired its then outstanding senior notes totaling
$79.9 million. The Company recognized an extraordinary charge of $6.3 million
($10.1 million less applicable income taxes) for (a) a prepayment premium ($9.2
million) paid in connection with the redemption of the senior notes, and (b) the
elimination of deferred debt costs ($.9 million) on retired indebtedness.
8
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
CARMIKE CINEMAS, INC. AND SUBSIDIARIES
NOTE D -- EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------
1999 1998
-------- --------
<S> <C> <C>
Weighted average shares outstanding:
Basic 11,363 11,341
Effect of dilutive securities - Employee stock options -0- 84
-------- --------
Diluted 11,363 11,425
======== ========
Basic and diluted earnings(loss) per share:
Before extraordinary item $ (.27) $ .33
Extraordinary item (.55) -0-
-------- --------
Net income(loss) $ (.83) $ .33
======== ========
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
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, 1998 (the "1998 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 1998 Form 10-K.
RESULTS OF OPERATIONS
Total revenues for the quarter ended March 31, 1999 decreased 16.6% to $97.7
million from $117.1 million for the quarter ended March 31, 1998. This decrease
consists of a $13.6 million decrease in admissions and a $5.8 million decrease
in concessions and other. These decreases are attributed to a reduction in
attendance (16.0 million patrons for the quarter ended March 31, 1999 versus
18.7 million patrons during the same period in 1998) due to the absence in 1999
of a blockbuster film such as TITANIC which favorably impacted the quarter ended
March 31, 1998. The reduction in attendance impacted both admissions revenue and
concessions sales. These decreases were partially offset by price increases made
effective in July, 1998. For the quarter ended March 31, 1999, the average
admission price was $4.20 while the average concession sale per patron was $1.70
and revenue per average screen was $36,150. For the quarter ended March 31,
1998, the average admission price was $4.30, the average concession sale per
patron was $1.78 and the revenue per average screen was $43,210.
Cost of operations (film exhibition costs, concession costs and other theatre
operating costs) decreased 11.9% to $82.8 million in the quarter ended March 31,
1999 from $94.0 million in the quarter ended March 31, 1998. Film exhibition
costs decreased $7.4 million in the first quarter of 1999 as compared to the
same period of 1998 as a result of the decrease in attendance and related
decrease in admissions revenue of $13.6 million. Concession costs decreased $1.0
million during the same period. This decrease also resulted from the reduction
in attendance. Other theatre costs for the first quarter of 1999 decreased $2.8
million as compared to the first quarter of 1998. This decrease was the result
of individually immaterial decreases in salaries, supplies and utilities, net of
an increase in expenses due to the increased number of screens in operation. As
a percentage of total revenues, cost of operations increased to 84.8% of total
revenues from 80.2% of total revenues for the same period in the prior year.
This percentage increase is due primarily to the level of fixed costs, such as
occupancy costs and managers' salaries that do not vary with changes in revenues
and attendance levels.
Depreciation and amortization increased 5.8% from $9.0 million for the quarter
ended March 31, 1998 to $9.5 million for the quarter ended March 31, 1999 due to
the increased screens in operation, partially offset by the reduced depreciation
expense from the reduction in asset values as a result of the impairment charge
recognized in 1998.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Interest expense for the quarter ended March 31, 1999 increased 15.7% to $7.3
million from $6.3 million in the comparable quarter of 1998, due to the increase
in the average amount of outstanding debt and an increase in the effective
interest rates as a result of the restructuring of the Company's indebtedness
(See Note B of the accompanying Notes to Condensed Consolidated Financial
Statements (Unaudited)).
During the period ended March 31, 1999, the Company recognized an extraordinary
charge of $10.1 million ($6.3 million net of income tax benefit, or $.55 per
diluted share) for the prepayment premiums paid in connection with the
redemption of senior notes and the elimination of certain deferred debt costs
related to indebtedness which was retired in February 1999.
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. The Company had working capital
deficits of $66.6 million and $55.8 million at March 31, 1999 and 1998,
respectively. These deficits are financed through the operating "float" and
through borrowing availability under the Revolving Credit Facility. At March 31,
1999, the Company had approximately $3.7 million in cash and short term
investments on hand and approximately $115.7 million was available under the
Company's Revolving Credit Facility.
The Company completed a restructuring of its indebtedness during the first
quarter of 1999. On January 29, 1999, Carmike amended and restated its Revolving
Credit Facility. On February 3, 1999, the Company completed a private placement
offering of $200.0 million of 9 3/8% Senior Subordinated Notes due 2009 and
redeemed its outstanding senior notes. On February 25, 1999, the Company entered
into a $75.0 million Term Loan B Facility. See Note B of the accompanying Notes
to Condensed Consolidated Financial Statements (Unaudited) for further
explanation of the debt restructuring. Upon completion of this restructuring,
the total availability under the Revolving Credit Facility was reduced from $275
million to $200 million. Under the Revolving Credit Facility and Term Loan B,
the Company has the option to borrow at interest rates on either the bank base
rate or LIBOR plus an interest spread, as defined, subject to certain financial
covenants and ratios. As of May 1, 1999, the applicable interest rates for the
Revolving Credit Facility and Term Loan B were 8.2% and 8.1%, respectively.
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.
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company's capital expenditures arise principally in connection with the
development of new theatres, renovation and expansion of existing theatres and
theatre acquisitions. During the first three months of 1999, such capital
expenditures totaled $52.1 million. The Company estimates that total capital
expenditures for 1999 will be approximately $145.0 million. The Company's
expansion plans for 1999 continue to focus on small to mid-sized communities
ranging in population size from 75,000 to 250,000, which can support the
development of multiplex theatres. The Company's prototype multiplex theatre can
be adapted and sized to fit varying populations and is designed to support a
community base of 40,000 people per screen.
Cash used in operating activities was $10.9 million for the three months ended
March 31, 1999, compared to cash provided by operating activities of $15.2
million for the three months ended March 31, 1998. The decrease in cash flow
from operating activities was primarily due to the loss from operations, an
increase in accounts receivable and prepaid expenses and accrued expenses which
was partially offset by an increase in accounts payable. Net cash used in
investing activities was $51.1 million for the three months ended March 31, 1999
as compared to $26.8 million in the prior year period. This increase in cash
used in investing activities was primarily due to the increased level of capital
expenditures. For the three month periods ended March 31, 1999 and 1998, cash
provided by financing activities was $47.1 million and $.3 million,
respectively. The increase in cash provided by financing activities was
primarily due to the sale of $200.0 million aggregate principal amount of the
Company's 9 3/8% Senior Subordinated Notes and borrowings of $75.0 million under
the new Term Loan B facility, net of repayments of the Revolving Credit
Facility.
The Company believes that its presently anticipated capital needs for theatre
construction, expansion and renovation and possible acquisitions will be
satisfied by the cash and cash equivalents and short-term investments on hand,
borrowing under the revolving credit line (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. No assurance can be given, however, that the Company's
business will generate sufficient cash flows from operations, that currently
anticipated revenue growth and operating improvements will be realized or that
future capital will be available to the Company in an amount sufficient to
enable the Company to pay its indebtedness or to fund its other liquidity needs.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
YEAR 2000
The Year 2000 issue refers generally to the data structure problem that may
prevent systems from properly recognizing dates after the year 1999. The Year
2000 issue affects information technology ("IT") systems, such as computer
programs and various types of electronic equipment that process date information
by using only two digits rather than four digits to define the applicable year,
and thus may recognize a date using "00" as the year 1900 rather than the year
2000. The issue also affects some non-IT systems, such as devices which rely on
a microcontroller to process the date information. The Year 2000 issue could
result in system failures or miscalculations, causing disruptions of a company's
operations. Moreover, even if a company's systems are Year 2000 compliant, a
problem may exist to the extent that the data that such systems process is not.
Carmike has implemented a Year 2000 compliance program designed to ensure that
Carmike's computer systems and applications will function properly beyond 1999.
Carmike's Year 2000 compliance program has three phases: (1) identification, (2)
remediation (including modification, upgrading and replacement) and (3) testing.
Carmike's Year 2000 compliance program is an ongoing process involving continual
evaluation and may be subject to a change in response to new developments.
Carmike has three material internal IT systems: (1) its accounting system, (2)
its proprietary IQ-Zero point-of-sale system and (3) a film system through which
Carmike manages the booking of the films shown in its theatres. Carmike has
completed the identification, remediation and testing phases with respect to its
accounting system. Although Carmike has completed the identification and
remediation phases with respect to its IQ-Zero and film systems, the testing
phase will not be completed until after the first quarter of 1999. Carmike has
conducted a survey of its theatres and has not identified any non-IT systems the
failure of which to be Year 2000 compliant would have a material adverse effect
on Carmike's business, operating results or financial condition. Carmike has
surveyed its material vendors and suppliers (including concession, technical and
film suppliers) and the financial institutions with whom it has material
relationships. Based on such survey, Carmike is not aware of any material
third-party Year 2000 risks.
Carmike estimates that the cost of remediation of problems related to Year 2000
issues will be less than $50,000. This cost includes the cost of upgrading its
film system.
If Carmike's internal IT systems are not Year 2000 compliant on a timely basis,
Carmike plans to operate such systems manually until any Year 2000 issues are
remediated. Such remediation may result in loss of data and information and
increased costs of operations. In addition, if the IQ-Zero system failed to
operate properly due to Year 2000 problems, local management staff may not be
able to focus their attention on their customers and theatre needs. Carmike
expects to maintain close contact with the third parties with whom Carmike has
material relationships, such as vendors, suppliers and financial institutions,
to ensure that such third parties' Year 2000 issues do not affect Carmike's
operations.
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In light of its compliance efforts, Carmike does not believe that the Year 2000
issue will materially adversely affect operations or results of operations, and
does not expect implementation to have a material impact on Carmike's financial
statements. However, there can be no assurance that Carmike's systems will be
Year 2000 compliant prior to December 31, 1999, or that the failure of any such
system will not have a material adverse effect on Carmike's business, operating
results and financial condition. To the extent the Year 2000 problem has a
material adverse effect on the business, operations or financial condition of
third parties with whom Carmike has material relationships, such as vendors,
suppliers and financial institutions, the Year 2000 problem could also have a
material adverse effect on Carmike's business, results of operations and
financial condition.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's fixed interest rate risk for long-term debt is limited to the
Company's $200 million 9 3/8% senior subordinated notes. There has been no
material change in the market value of these notes since their date of issuance.
There has been no material changes in the interest rates for the Company's
floating rate debt from those rates effective when the Company restructured its
outstanding indebtedness (See Note B of the Condensed Consolidated Financial
Statements (Unaudited)).
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10 - Amended and Restated Master Lease dated January 29, 1999
between Movieplex Realty Leasing, L.L.C. and Carmike (Portions of
this exhibit have been redacted and are subject to a confidential
treatment request filed with the Secretary of the SEC pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934. The redacted
material was filed separately with the SEC.).
27 - Financial Data Schedule (for SEC purposes only).
(b) Reports on Form 8-K
On January 7, 1999, the Company filed a report on Form 8-K,
reporting under Item 5 thereof the issuance of a press release
regarding certain financial matters.
On January 13, 1999, the Company filed a report on Form 8-K,
reporting under Item 5 thereof certain updating information
regarding the Company.
On February 8, 1999, the Company filed a report on Form 8-K/A,
reporting under Item 5 thereof certain updating information
regarding the Company which had previously been reflected in the
Company's Form 8-K filed on January 13, 1999.
On March 22, 1999, the Company filed a report on Form 8-K,
reporting under Item 5 thereof the resignation of its Chief
Financial Officer.
15
<PAGE> 16
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: May 12, 1999 By: /s/ Michael W. Patrick
--------------------------
Michael W. Patrick - President
(Chief Executive Officer)
Date: May 12, 1999 By: /s/ Philip A. Smitley
--------------------------
Philip A. Smitley - Assistant Vice President
(Principal Financial Officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10 Amended and Restated Master Lease dated January 29, 1999
between Movieplex Realty Leasing, L.L.C. and Carmike (Portions
of this exhibit have been redacted and are subject to a
confidential treatment request filed with the Secretary of the
SEC pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934. The redacted material was filed separately with the
SEC.).
27 Financial Data Schedule (for SEC purposes only).
</TABLE>
17
<PAGE> 1
EXHIBIT 10
[PORTIONS OF THIS EXHIBIT HAVE BEEN REDACTED AND ARE SUBJECT TO A
CONFIDENTIAL TREATMENT REQUEST FILED WITH THE SECRETARY OF THE COMMISSION
PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
THE REDACTED MATERIAL IS INDICATED BY AN "{*MATERIAL OMITTED}" AND WAS FILED
SEPARATELY WITH THE COMMISSION.]
AMENDED AND RESTATED MASTER LEASE
BETWEEN
MOVIEPLEX REALTY LEASING, L.L.C.,
AS LANDLORD
AND
CARMIKE CINEMAS, INC.,
AS TENANT
DATED: JANUARY 29, 1999
<PAGE> 2
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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS AND USAGE..................................................................................1
Section 1.1. Definitions.......................................................................................1
Section 1.2. Number and Gender; Captions; References; Capitalized Terms.......................................26
Section 1.3. Accounting Terms and Determinations..............................................................26
ARTICLE 2 REPRESENTATIONS, COVENANTS AND WARRANTIES; DISCLAIMERS................................................27
Section 2.1. Representations, Covenants and Warranties of Tenant..............................................27
Section 2.2. Representations, Covenants and Warranties of Landlord............................................39
Section 2.3. Disclaimer.......................................................................................41
Section 2.4. Amendments Relating to Bonds.....................................................................42
Section 2.5. Actions Taken by Tenant..........................................................................42
ARTICLE 3 DEMISE OF PREMISES; TERM; RENT; OTHER PAYMENTS........................................................42
Section 3.1. Demise of Premises...............................................................................42
Section 3.2. Rent.............................................................................................42
Section 3.3. Rental Payments to be Unconditional, No Abatement or Set-off.....................................42
Section 3.4. Termination of Term/Rental Payment Obligation....................................................44
Section 3.5. Basic Rent.......................................................................................45
Section 3.6. [Intentionally Omitted]..........................................................................45
Section 3.7. Basic Rent; No Bonds Outstanding.................................................................46
Section 3.8. Supplemental Rent................................................................................46
Section 3.9. Surplus Moneys in Bond Fund......................................................................50
ARTICLE 4 ACQUISITION AND CONSTRUCTION; SUBSTITUTION OF PROPERTIES..............................................50
Section 4.1. Acquisition and Construction of the Individual Properties........................................50
Section 4.2. Projects Not Completed...........................................................................50
Section 4.3. Aggregate Fair Market Value Not Achieved.........................................................51
Section 4.4. Substitution of Properties.......................................................................51
Section 4.5. Moneys Remaining in Project Fund.................................................................53
Section 4.6. Investment and Use of Fund Moneys................................................................53
Section 4.7. Ownership of Leased Property.....................................................................53
Section 4.8. Change in Location of Records....................................................................53
ARTICLE 5 USE...................................................................................................53
Section 5.1. Use..............................................................................................53
Section 5.2. Prohibited Uses..................................................................................54
ARTICLE 6 COMPLIANCE WITH LEGAL REQUIREMENTS....................................................................54
Section 6.1. Tenant's Compliance with Legal Requirements......................................................54
ARTICLE 7 IMPOSITIONS...........................................................................................54
Section 7.1. Utilities........................................................................................54
Section 7.2. Payment of Impositions...........................................................................54
Section 7.3. Tax Contests.....................................................................................55
Section 7.4. Tax Refund.......................................................................................55
ARTICLE 8 EXTENSION OPTIONS.....................................................................................55
Section 8.1. Extension Options................................................................................55
Section 8.2. Renewal Rent; Procedure for Determination........................................................55
Section 8.3. Lease Amendment..................................................................................55
Section 8.4. No Assignment....................................................................................56
Section 8.5. Invalidity.......................................................................................56
ARTICLE 9 LANDLORD'S RIGHT OF ENTRY.............................................................................56
Section 9.1. Landlord's and Agent's Right of Entry............................................................56
ARTICLE 10 MAINTENANCE, REPAIR AND REPLACEMENT BY TENANT........................................................56
Section 10.1. Maintenance of the Leased Property..............................................................56
</TABLE>
i
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<TABLE>
<S> <C>
Section 10.2. Repair and Replacement of the Leased Property...................................................56
Section 10.3. Maintenance of Leased Property..................................................................57
Section 10.4. Landlord Not Responsible........................................................................57
ARTICLE 11 ALTERATIONS BY TENANT................................................................................57
Section 11.1. Tenant Alterations..............................................................................57
Section 11.2. Construction of Alterations.....................................................................58
ARTICLE 12 ASSIGNMENT AND SUBLETTING............................................................................58
Section 12.1. Restrictions on Assignment and Subletting.......................................................58
Section 12.2. Procedure; Requirements.........................................................................59
Section 12.3. No Release from Liability.......................................................................61
Section 12.4. No Waiver.......................................................................................61
ARTICLE 13 SURRENDER............................................................................................61
Section 13.1. Surrender of Premises...........................................................................61
ARTICLE 14 HOLDING OVER.........................................................................................62
Section 14.1. Holding Over....................................................................................62
ARTICLE 15 PURCHASE OPTION......................................................................................62
Section 15.1. Purchase Option.................................................................................62
Section 15.2. Purchase Price; Calculation.....................................................................63
Section 15.3. Procedure.......................................................................................63
Section 15.4. Subperforming Theater Purchase Option...........................................................63
Section 15.5. Purchase Upon Casualty Loss.....................................................................64
Section 15.6. Conveyance of Title.............................................................................65
Section 15.7. Special Right of Termination and Purchase.......................................................65
ARTICLE 16 PREMISES SUBJECT TO SECURITY DOCUMENTS QUIET ENJOYMENT...............................................65
Section 16.1. Quiet Enjoyment.................................................................................65
ARTICLE 17 EVENTS OF DEFAULT, REMEDIES..........................................................................66
Section 17.1. Events of Default...............................................................................66
Section 17.2. Tenant Obligations on Default...................................................................68
Section 17.3. Landlord Remedies...............................................................................68
Section 17.4. Election of Remedies; No Waiver of Elected Remedies.............................................69
Section 17.5. No Additional Waiver Implied by One Waiver......................................................69
Section 17.6. Agreement to Pay Attorneys' Fees and Expenses...................................................69
Section 17.7. Late Charges....................................................................................70
Section 17.8. Delay; Notice...................................................................................70
Section 17.9. Conversion to Fixed Rate........................................................................70
ARTICLE 18 SUBORDINATION AND ESTOPPEL...........................................................................70
Section 18.1. Subordination of Lease..........................................................................70
Section 18.2. [Intentionally Omitted].........................................................................71
Section 18.3. Estoppel Certificate............................................................................71
ARTICLE 19 DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF NET PROCEEDS............................................71
Section 19.1. Damage and Destruction..........................................................................71
Section 19.2. Net Proceeds....................................................................................72
Section 19.3. Total and Partial Taking........................................................................72
Section 19.4. Temporary Taking................................................................................73
Section 19.5. Cooperation of Landlord.........................................................................74
Section 19.6. No Waiver.......................................................................................74
Section 19.7. Reserve Fund....................................................................................74
ARTICLE 20 PREPAYMENT OF RENT...................................................................................75
Section 20.1. No Optional Prepayment..........................................................................75
Section 20.2. Mandatory Prepayment............................................................................75
ARTICLE 21 PROCEDURE UPON PURCHASE..............................................................................75
Section 21.1. State of Title..................................................................................75
Section 21.2. Closing Requirements............................................................................75
ARTICLE 22 INSURANCE............................................................................................76
Section 22.1. General Provisions..............................................................................76
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C>
Section 22.2. General Liability...............................................................................78
Section 22.3. Auto Liability Insurance........................................................................79
Section 22.4. Builders' Risk Insurance........................................................................79
Section 22.5. Worker's Compensation and Employer's Liability..................................................80
Section 22.6. Property Insurance..............................................................................80
Section 22.7. [Intentionally Omitted].........................................................................80
Section 22.8. [Intentionally Omitted].........................................................................81
Section 22.9. Umbrella or Excess Liability....................................................................81
Section 22.10. Net Proceeds of Insurance; Form of Policies....................................................81
ARTICLE 23 NO WAIVER............................................................................................81
Section 23.1. Written Waiver..................................................................................81
Section 23.2. No Acceptance of Surrender......................................................................81
Section 23.3. No Accord and Satisfaction......................................................................81
Section 23.4. Payment of Rent Not Waiver......................................................................82
ARTICLE 24 NON-LIABILITY OF LANDLORD............................................................................82
Section 24.1. Non-Liability of Landlord.......................................................................82
Section 24.2. Landlord Not Responsible for Tenant's Property..................................................82
ARTICLE 25 INDEMNIFICATION......................................................................................82
Section 25.1. Indemnification.................................................................................82
Section 25.2. Exceptions to Indemnification...................................................................84
Section 25.3. Right of Set-Off................................................................................84
Section 25.4. Miscellaneous; Survival.........................................................................85
ARTICLE 26 NOTICES..............................................................................................85
Section 26.1. Notices.........................................................................................85
ARTICLE 27 MECHANICS' LIENS.....................................................................................87
Section 27.1. Mechanics' Liens................................................................................87
ARTICLE 28 DEFINITION OF LANDLORD...............................................................................87
Section 28.1. Definition of Landlord..........................................................................87
ARTICLE 29 DEFINITION OF TENANT.................................................................................87
Section 29.1. Definition of Tenant............................................................................87
ARTICLE 30 PERSONAL LIABILITY...................................................................................88
Section 30.1. No Personal Liability or Accountability.........................................................88
ARTICLE 31 ENVIRONMENTAL COMPLIANCE.............................................................................88
Section 31.1. Environmental Compliance........................................................................88
Section 31.2. Existence of Hazardous Substances...............................................................88
Section 31.3. Environmental Inspection........................................................................89
Section 31.4. De Minimus Quantities...........................................................................89
ARTICLE 32 MISCELLANEOUS........................................................................................89
Section 32.1. Entireties; Exhibits; Conflicts; Modifications..................................................89
Section 32.2. Further Assurances and Corrective Instruments...................................................90
Section 32.3. Jury Trial Waiver...............................................................................90
Section 32.4. Severability....................................................................................90
Section 32.5. Interpretation..................................................................................90
Section 32.6. No Offer; No Option, etc........................................................................91
Section 32.7. Recording.......................................................................................91
Section 32.8. Consent by Landlord.............................................................................91
Section 32.9. No Merger.......................................................................................92
Section 32.10. Landlord, Agent and Tenant Representatives.....................................................92
Section 32.11. Binding; Counterparts..........................................................................92
Section 32.12. Time is of the Essence.........................................................................92
Section 32.13. Receipt of Lease...............................................................................92
Section 32.14. Unavoidable Delay..............................................................................92
Section 32.15. Relation of Parties............................................................................93
Section 32.16. Survival of Indemnification and Other Obligations..............................................94
Section 32.17. Brokerage Indemnity............................................................................94
</TABLE>
iii
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<TABLE>
<S> <C>
Section 32.18. Reference to Trustee and Agent.................................................................94
Section 32.19. Date for Identification Purposes...............................................................94
Section 32.20. Negotiation of this Lease......................................................................95
Section 32.21. Conditions to Effectiveness....................................................................95
</TABLE>
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
Exhibit K - Contribution Agreement
Exhibit L - Guaranty
Exhibit M - Compliance Certificate
iv
<PAGE> 7
AMENDED AND RESTATED MASTER LEASE
This Amended and Restated Master Lease is dated January 29, 1999,
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.
This Amended and Restated Master Lease is an amendment and restatement
of the Master Lease dated November 20, 1997 between MOVIEPLEX REALTY LEASING,
L.L.C., as Landlord, and CARMIKE CINEMAS, INC., as Tenant, as amended prior to
the date hereof by First Amendment to Master Lease dated as of September 29,
1998 (as so amended, the "Original Agreement"), which is superseded hereby.
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, provided further,
<PAGE> 8
however, that, in calculating Adjusted 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; and
(iv) with respect to any Off-Balance Sheet Property which was acquired or
ground-leased by any entity acting in the capacity of landlord (or in any
functionally similar capacity to a landlord) under any Off-Balance Sheet Lease
within the 12-month period ending on the date of determination of Consolidated
Cash Flow, Adjusted Cash Flow shall include Theatre-Level EBITDA for such
Off-Balance Sheet Property and shall be determined with respect to such
Off-Balance Sheet Property on the basis of actual Theatre-Level EBITDA within
such period and projected Theatre-Level EBITDA for the remainder of such period
(with such projections being based on the average Theatre-Level EBITDA of
comparable theater properties of the Tenant which were operated during the
entire 12-month period).
"Adjusted Fixed Charges" means, for any period, without duplication,
the sum for such period of (i) Fixed Charges, plus (ii) all dividends paid by
the Tenant, plus (iii) the aggregate amount paid, or required to be paid, in
cash by the Tenant and its Subsidiaries in respect of income taxes (including
deferred taxes), plus (iv) all scheduled payments of principal made by the
Tenant or any Subsidiary with respect to Consolidated Funded Debt (excluding
principal payments on the Senior Notes and payments on the Loans under the
Credit Agreement).
"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 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
2
<PAGE> 9
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 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.
3
<PAGE> 10
"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.
"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. 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 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) any regularly scheduled payment date for Basic Rent as
set forth on Exhibit H annexed hereto and made a part hereof, 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
4
<PAGE> 11
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.
"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 Subsidiary, any such lease under which the Tenant or a
Wholly Owned 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.
"Capital Stock" means any capital stock (other than capital stock
which is either (i) mandatorily redeemable or (ii) redeemable at the option of
the holder thereof) of the Tenant or any Subsidiary (to the extent issued to a
Person other than the Tenant), whether common or preferred.
"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
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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.
"Code" means the Internal Revenue Code of 1986, as amended.
"Coke Advance" means an advance in the amount of $10,000,000 made by
The Coca Cola Company on certain advertising, promotional and incentive fees
anticipated to be earned by the Tenant pursuant to the Amended and Restated
Agreement between them dated December 20, 1998.
"Collateral" means the property of the Tenant and EastWynn,
respectively, in which the Collateral Agent is granted a security interest
pursuant to the Security Agreement and the Pledge Agreement, to secure the
Secured Obligations, for the ratable benefit of the Secured Parties.
"Collateral Agent" means Wachovia Bank, N.A., in its capacity as
collateral agent under the Collateral Documents.
"Collateral Documents" means the Intercreditor Agreement, the Pledge
Agreement, the Security Agreement and such financing statements as the
Collateral Agent may require to perfect its security interest in the
Collateral.
"Collateralization Date" means the date which is the earlier of (x)
the closing of the Term Loan, or (y) February 26, 1999 (or such later date as
the LC Agent, acting at the direction of the Required LC Lenders, may agree
upon in writing).
"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 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
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such period; provided further, however, that (x) for purposes of determining
the ratio of Consolidated Funded Debt to Consolidated Cash Flow and the ratio
of Consolidated Senior 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 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 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 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
Subsidiaries taken as a whole during the fiscal year ended December 31, 1998,
(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 Subsidiary
which is unavailable for the payment of dividends to the Tenant or a
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(cc), any earnings, of such successor or
transferee prior to the consolidation, merger or transfer of assets,
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(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 and (m) the Restructuring and
Impairment Charges for 1998.
"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 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 amount at which
the consolidated liabilities of the Tenant and its 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 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 Subsidiaries in respect of income taxes (including
deferred taxes) during such period plus (ii) Interest Expense.
"Consolidated Senior Funded Debt" means at any date the sum of: (i)
Consolidated Funded Debt, minus (ii) the Subordinated Debt.
"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
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such Applicable Project.
"Contribution Agreement" means the Contribution Agreement of even date
herewith in substantially the form of Exhibit K to be executed by the Tenant
and by the Guarantors which are Subsidiaries on the date hereof and by each of
the Guarantors which becomes a Subsidiary after the date hereof pursuant to
Section 2.1 (hh)(A).
"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 Amended and Restated Credit Agreement
dated as of the date hereof among Tenant, each of the banks listed therein and
Wachovia Bank, N.A., as agent, as amended, modified and supplemented from time
to time.
"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
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to the Tenant or to any 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.
"Debt Rating" means the rating of the Subordinated Debt by Moody's and
S&P.
"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}.
"EastWynn" means EastWynn Theaters, Inc., an Alabama corporation and a
wholly owned subsidiary of the Tenant.
"EastWynn Guaranty Obligations" means the obligations of EastWynn
under (i) the Guaranty, (ii) the "Guaranty", as defined in the Credit
Agreement, and (iii) from and after the closing of the Term Loan, the
"Guaranty", as defined in the Term Loan Credit Agreement.
"Effective Date " has the meaning specified in Section 32.21.
"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
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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 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
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of the Outstanding 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), (y) the Landlord's Equity Amount, and (z) the
Subordinated Debt, but with respect to the Tenant, the term "Funded Debt" shall
not include the Coke Advance.
"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.
"Guaranty" means the Guaranty Agreement of even date herewith in
substantially the form of Exhibit L to be executed by the Guarantors.
"Guarantors" means each Person which is a Subsidiary as of the
Effective Date and each Person that becomes a Subsidiary after the Effective
Date.
"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)
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[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 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;
(iv) all actual, reasonable costs, fees and expenses incurred by
or on behalf of the
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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).
"Intercreditor Agreement" means an intercreditor agreement acceptable
to the Collateral Agent and the Secured Parties, setting forth, among other
things, the appointment of the Collateral Agent and its rights, duties and
obligations, indemnification provisions for the Collateral Agent, provisions
for the administration and sharing of the Collateral, provisions for the giving
of certain notices, as to voting rights and as to enforcement actions with
respect to the Collateral, as it may hereafter be amended or supplemented from
time to time.
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"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 Subsidiaries during such period in respect of Debt of the
Tenant and its 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.
"Interest Rate Protection Agreement" means an interest rate hedging or
protection agreement entered into by and between the Tenant and a Revolver Bank
or a Term Lender, or an Affiliate of either,, together with all exhibits,
schedules, extensions, renewals, amendments, substitutions and replacements
thereto and thereof.
"Investment" means any investment in any Person, whether by means of
purchase or acquisition of assets, Debt or securities of such Person, capital
contribution to such Person, loan or advance to such Person, making of a time
deposit with such Person, Guarantee or assumption of any Debt of such Person or
otherwise; excluding, however, the acquisition of (i) Leased Property, (ii)
leases and/or real property acquired by the Tenant or any of its Subsidiaries
for the purpose of developing movie theatres and (iii) equipment or inventory
in the ordinary course of business.
"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}.
"LC Agent" means the "Agent", as that term is defined in the
Reimbursement Agreement.
"LC Issuers" shall have the meaning given to such term in the
Reimbursement Agreement.
"LC Lenders" means the "Lenders", as that term is defined in the
Reimbursement
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Agreement.
"LC Participants" shall have the meaning given to such term in the
Reimbursement Agreement.
"Lease" means this Amended and Restated 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.
"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
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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.
"Maintenance Capital Expenditures" means expenditures of the Tenant
and its Subsidiaries which are (i) capitalized on the books of the Tenant and
its Subsidiaries in accordance with GAAP and (ii) incurred for the purpose of
maintaining existing Property (but not for major renovations of or new
improvements to existing Properties or acquisition of new Property).
"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 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 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.
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"Moody's" means Moody's Investor Service, Inc.
"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.
"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 (including an Off-Balance Sheet Lease)
of real or personal property other than, in the case of the Tenant or a
Subsidiary, (a) any such lease under which the Tenant or a Wholly Owned
Subsidiary is the lessor and (b) any Capital Lease.
"Original Agreement" has the meaning set forth in the preamble.
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"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.
"Pledge Agreement" means a Pledge Agreement in form and substance
satisfactory to the Agent and the Collateral Agent pursuant to which the Tenant
pledges and grants a first priority perfected security interest in the capital
stock of all Subsidiaries to the Collateral Agent, for the ratable benefit of
the Secured Parties, to secure the Secured Obligations, as it may hereafter be
amended or supplemented from time to time.
"Preferred Member" {*MATERIAL OMITTED}.
"Preferred Membership Interest" {*MATERIAL OMITTED}.
"Preferred Member's Unrecovered Capital Account" {*MATERIAL OMITTED}.
"Preferred Return Rate" shall have the meaning given to such term in
the Operating Agreement.
"Preferred Stock" means, as applied to any corporation, shares of such
corporation which
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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, if the Bonds are rated by such Person
at the time, S & P, if the Bonds are rated by such 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.
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"Reimbursement Agreement" means, initially, the reimbursement and
credit agreement dated November 20, 1997, among the Agent, as agent for the LC
Issuers, the LC Issuers, the LC Participants and the Landlord, as amended by
First Amendment to Reimbursement Agreement dated as of even date herewith, 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.
"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 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 LC Lenders" means the "Required Lenders", as that term is
defined 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
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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 Payment" means (i) any dividend or other distribution on
any shares of the Tenant's Capital Stock or the Capital Stock of any Subsidiary
which is not a Wholly-Owned Subsidiary (except (x) dividends payable solely in
shares of such Capital Stock, (y) dividends payable on Capital Stock of such
Subsidiaries which are payable pro rata to all of the owners of such Capital
Stock and (z) dividends payable solely to the Tenant or a Guarantor) or (ii)
any payment on account of the purchase, redemption, retirement or acquisition
of (a) any shares of the Tenant's or any such Subsidiary's Capital Stock
(except shares acquired upon the conversion thereof into other shares of its
Capital Stock) or (b) any option, warrant or other right to acquire shares of
the Tenant's or any such Subsidiary's Capital Stock.
"Restructuring and Impairment Charges for 1998" means the following
charges to be taken by the Tenant for the fourth Fiscal Quarter of its 1998
fiscal year: (i) a restructuring charge in the amount of approximately
$33,000,000 and (ii) impairment of asset value charge in the amount of
approximately $37,000,000 to $41,000,000.
"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 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.
"Revolver Agent" means the "Agent", as that term is defined in the
Credit Agreement.
"Revolver Banks" means the "Banks", as that term is defined in the
Credit Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc.
"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.
"Secured Obligations" means: (i) the obligations of the Tenant under
(x) the Credit Agreement, (y) this Lease and the Lessee Undertaking and (z)
from and after the closing of the Term Loan, the Term Loan Credit Agreement;
and (ii) the EastWynn Guaranty Obligations; and (iii) the actual (as
distinguished from notional) liability of the Tenant to any Revolver Bank or
Term Lender or Affiliate of either under any Interest Rate Protection Agreement
with any such
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Revolver Bank or Term Lender, or any Affiliate of either.
"Secured Parties" means (i) the Revolver Agent and the Revolver Banks,
and, with respect to any Interest Rate Protection with an Affiliate of a
Revolver Bank, such Affiliate, (ii) the LC Agent (as assignee of the Landlord,
for the ratable benefit of the LC Lenders) and the LC Lenders and (iii) from
and after the closing of the Term Loan, the Term Administrative Agent and the
Term Lenders and, with respect to any Interest Rate Protection with an
Affiliate of a Term Lender, such Affiliate.
"Security Agreement" means a Security Agreement in form and substance
satisfactory to the Agent and the Collateral Agent pursuant to which each of
the Tenant and EastWynn grants a first priority, perfected security interest in
all personal property owned by it, including, without limitation, all
equipment, fixtures, accounts, chattel paper, instruments, inventory and
general intangibles, to the Collateral Agent, for the ratable benefit of the
Secured Parties, to secure the Secured Obligations, as it may hereafter be
amended or supplemented from time to time.
"Security Documents" means, collectively, the Mortgages, the
Assignments of Rents and the Master Assignment.
"Senior Notes" means, collectively, the 10.53% Senior Notes due 2005
in the outstanding principal amount of approximately $47,700,000, the 7.90%
Senior Notes due 2002 in the outstanding principal amount of approximately
$14,300,000 and the 7.52% Senior Notes due 2003 in the outstanding principal
amount of approximately $17,900,000.
"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.
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"Subordinated Debt" means up to $350,000,000 in Debt of the Tenant
evidenced by Subordinated Notes.
"Subordinated Debt Documents" means the Subordinated Notes, the
Subordinated Debt Indenture and the Subsidiary Guarantees described in the
Subordinated Debt Offering Circular.
"Subordinated Debt Indenture" means the Indenture described in the
Subordinated Debt Offering Circular among the Tenant, the Guarantors parties
thereto described in the Subordinated Debt Offering Circular and The Bank of
New York, as Trustee.
"Subordinated Debt Offering Circular" means the Offering Circular
dated January 27, 1999 pertaining to the issuance of $200,000,000 of
Subordinated Notes and contemplating the subsequent issuance of up to an
additional $150,000,000 of Subordinated Notes, pursuant to the Subordinated
Debt Indenture.
"Subordinated Notes" means the 9.375% Senior Subordinated Notes having
a maturity not earlier than June 1, 2009 which are described in the
Subordinated Debt Offering Circular (including any "Exchange Notes" issued
under the Subordinated Debt Indenture) and which are subordinated in right of
payment to the payment of the obligations of the Tenant under the Credit
Agreement and the Term Loan Credit Agreement pursuant to the subordination
provisions described in the Subordinated Debt Offering Circular.
"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 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.
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"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.
"Term Administrative Agent" means the "Administrative Agent", as
defined in the Term Loan Credit Agreement.
"Term Agents" means Wachovia Bank, N.A., as Administrative Agent,
Goldman, Sachs Credit Partners L.P., as Syndication Agent and First Union
National Bank, as Documentation Agent, under the Term Loan Credit Agreement.
"Term Lenders" means the "Lenders", as defined in the Term Loan Credit
Agreement.
"Term Loan" means, collectively, the term loans in the aggregate
amount of $75,000,000 having a maturity not later than June 1, 2005, to be made
by the Term Lenders pursuant to the Term Loan Credit Agreement in accordance
with the terms of the letter agreement dated January 12, 1999, among the Term
Agents and the Tenant.
"Term Loan Credit Agreement" means the Term Loan Credit Agreement to
be executed by the Tenant, the Term Agents and the Term Lenders on or about
February 16, 1999, pertaining to the Term Loans, as it may hereafter be amended
or supplemented from time to time.
"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.
"Transaction Documents" means this Lease, the Guaranty, the
Contribution Agreement, the Collateral Documents, 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
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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" means, as of any date of calculation,
an amount equal to (i) the aggregate principal balance of the Outstanding
Bonds, together with all interest accrued thereon, plus (ii) the balance of the
Preferred Member's Unrecovered Capital Account, plus (iii) all accrued and
unpaid Supplemental Rent, plus (iv) all amounts payable pursuant to Section
2.05(b) of the Reimbursement Agreement.
"Uncompleted Project Purchase Price" means, with respect to each
Applicable Project that has not been completed and accepted for occupancy on or
before the Final Project Completion Date or the first anniversary of the Final
Project Completion Date in accordance with Section 4.2, as the case may be, an
amount equal to the aggregate amount of funds advanced by the Trustee from the
Project Fund for or with respect to such Applicable Project.
"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 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 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
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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 LC 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 LC 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 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.
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<PAGE> 34
(c) Binding Effect. This Lease and the other
Transaction Documents to which the Tenant is a party 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. Each existing Subsidiary has executed and
delivered the Guaranty and the Contribution Agreement and the Guaranty
and the Contribution Agreement constitute valid and binding agreements
of the Guarantors enforceable in accordance with their respective
terms, provided that the enforceability 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 Subsidiaries as of December 31, 1997 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 Subsidiaries for
the interim period ended September 30, 1998, fairly present,
in conformity with GAAP, the consolidated financial position
of the Tenant and its Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such
periods stated.
(ii) Since December 31, 1997, there has
been no event, act, condition or occurrence having a Material
Adverse Effect (and the Landlord acknowledges that the
Restructuring and Impairment Charges for 1998 do not have
such an effect).
(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 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.
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<PAGE> 35
(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 have been examined and closed through the Fiscal Year
ended December 31, 19__.
(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 each such Subsidiary's
complete name and jurisdiction of incorporation.
(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.
(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
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<PAGE> 36
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 LC 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 LC 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.
(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,
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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
Subsidiaries which are subject to the provisions of Section 5.08 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:
(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 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 Subsidiaries as of the
end of such
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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 of
Exhibit M or in such other 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(z), inclusive, 2.1(cc) and
2.1(gg) 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;
(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
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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 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 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 Senior Funded Debt to
Consolidated Cash Flow. At the end of each Fiscal Quarter, commencing
with the Fiscal Quarter ending March 31, 1999, the ratio of
Consolidated Senior Funded Debt to Consolidated Cash Flow for the
period of 4 consecutive Fiscal Quarters ending on such date shall not
be greater than the applicable ratio provided in the following table:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Applicable Ratio
--------------------- ----------------
<S> <C>
On or before June 30, 2000 4.00 to 1.0
September 30, 2000, and thereafter 3.75 to 1.0
</TABLE>
(v) Ratio of Consolidated Funded Debt to
Consolidated Cash Flow. At the end of each Fiscal Quarter ending as
provided in the following table, the ratio of
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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 shall not be greater than the applicable ratio
provided in the following table:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Applicable Ratio
--------------------- ----------------
<S> <C>
On or before June 30, 2000 6.00 to 1.0
September 30, 2000, and thereafter 5.75 to 1.0.
</TABLE>
(w) Restricted Payments. The Tenant will not
declare or make any, or permit any Subsidiary which is not a
Wholly-Owned Subsidiary to make any, Restricted Payment after the
Effective Date, if the aggregate amount of such Restricted Payments
made in any consecutive 4 Fiscal Quarter period would exceed
$4,000,000; provided that after giving effect to the payment of any
such Restricted Payments, no Default shall be in existence or be
created thereby.
(x) Fixed Charge Coverage. At the end of each
Fiscal Quarter, commencing with the Fiscal Quarter ending December 31,
1998, the ratio of (a) Adjusted Cash Flow to (b) Fixed Charges, in
each case for the current Fiscal Quarter and the immediately preceding
3 Fiscal Quarters, shall not be less than 1.40 to 1.00.
(y) Adjusted Fixed Charge Coverage. At the end
of each Fiscal Quarter, commencing with the Fiscal Quarter ending
March 31, 1999, the ratio of (a) Adjusted Cash Flow minus Maintenance
Capital Expenditures to (b) Adjusted Fixed Charges, in each case for
the current Fiscal Quarter and the immediately preceding 3 Fiscal
Quarters, shall not be less than 1.25 to 1.00.
(z) Negative Pledge. Neither the Tenant nor any
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 Effective Date in an
aggregate principal amount not exceeding $43,000,000;
(ii) any Lien in favor of the Collateral
Agent pursuant to the Collateral Documents;
(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) Liens securing Debt owing by any
Guarantor to the Tenant;
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<PAGE> 41
(v) 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
(i) or (iii) 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;
(vi) any Lien on Margin Stock;
(vii) Liens for taxes, assessments or
governmental charges or levies either not yet due or the
payment of which is not at the time required by Section
2.1(dd);
(viii) Liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar
Persons incurred in the ordinary course of business for sums
either not yet due or the payment of which is not at the time
required by Section 2.1(dd);
(ix) Liens (other than any Lien created
or imposed under ERISA and Liens on the Collateral) 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);
(x) 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 Subsidiary's title to or right to use any of its
property is impaired in any material respect by reason of
such contest;
(xi) 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 Subsidiary or
materially detract from the value of the properties subject
to any such Liens;
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(xii) Liens on fixed assets (1) of any
Person at the time such Person becomes a Subsidiary and not
created in contemplation of such event, (2) of any Person
existing at the time such Person is merged or consolidated
with or into the Tenant or a Subsidiary and not created in
contemplation of such event and (3) existing prior to the
acquisition of such fixed assets by the Tenant or a
Subsidiary and not created in contemplation of such
acquisition, provided that the aggregate principal amount
outstanding of Debt secured by Liens permitted under this
clause (xii) may not exceed at any time 5% of Consolidated
Total Capitalization;
(xiii) Liens on assets other than the
Collateral not otherwise permitted by the foregoing clauses
of this Section securing Debt in an aggregate principal
amount at any time outstanding not to exceed 5% of
Consolidated Total Capitalization; and
(xii) any Lien created by or arising as a
result of any of the Transaction Documents.
(aa) Maintenance of Existence.
(i) The Tenant shall, and shall cause
each 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
Subsidiaries may engage in any transaction permitted by
Section 2.1(cc) and (B) dissolution of any Subsidiary shall
not be prohibited by this Section if all of the assets of
such Subsidiary are transferred to the Tenant or any other
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.
(bb) 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(cc), and (ii)
through Restricted Payments permitted by Section 2.1(w).
(cc) Consolidations, Mergers and Sales of Assets.
The Tenant will not, nor will it permit any 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) Subsidiaries of the Tenant may merge
or consolidate with one another or with the Tenant, (c) any Subsidiary
of the Tenant may be merged or
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<PAGE> 43
consolidated with or into another Person to consummate an acquisition
of such other Person permitted by Section 2.1(gg), provided that the
surviving Person shall be a Subsidiary of the Tenant, (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 Subsidiary to any other Subsidiary (other than of
Collateral by Eastwynn) or to the Tenant, or (ii) subject to the
mandatory prepayment provisions of Section 2.10(b) of the Credit
Agreement and any comparable provision of the Term Loan Credit
Agreement, during any Fiscal Quarter, a transfer of assets in an arm's
length transaction for fair market value 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
three Fiscal Quarters (excluding, however, transfers of assets
permitted by clause (i) of this Section) contributed more than 10% of
Consolidated Operating Income during the 4 consecutive Fiscal Quarters
immediately preceding such Fiscal Quarter, and (e) subject to the
mandatory prepayment provisions of Section 2.10(b) of the Credit
Agreement and any comparable provision of the Term Loan Credit
Agreement and presentation to the Agent and the Banks of a certificate
showing compliance with the limitations contained in this clause (e)
after giving effect thereto, the Tenant may enter into sale/leaseback
transactions after the Effective Date in an amount not to exceed in
the aggregate $150,000,000, provided in each of the foregoing such
cases no Default shall be in existence or be created thereby. At the
request of the Tenant, the Collateral Agent shall release any
Collateral sold by the Tenant or Eastwynn in conformity with the
foregoing provisions, so long as any prepayments required by Section
2.10(b) of the Credit Agreement and any comparable provision of the
Term Loan Credit Agreement have been made.
(dd) Compliance with Laws; Payment of Taxes. The
Tenant will, and will cause each of its 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 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 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.
(ee) Change in Fiscal Year. The Tenant will not
change its Fiscal Year.
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(ff) Maintenance of Property. The Tenant shall,
and shall cause each Subsidiary to, maintain all of its material
properties and assets in good condition, repair and working order,
ordinary wear and tear excepted.
(gg) Investments. Neither the Tenant nor any of
its Subsidiaries shall make Investments in any Person except: (a)
Investments in (i) direct obligations of the United States Government
maturing within one year, (ii) certificates of deposit issued by a
commercial bank whose credit is satisfactory to the Agent, (iii)
commercial paper rated A1 or the equivalent thereof by S&P or P1 or
the equivalent thereof by Moody's and in either case maturing within 6
months after the date of acquisition, (iv) tender bonds the payment of
the principal of and interest on which is fully supported by a letter
of credit issued by a United States bank whose long-term certificates
of deposit are rated at least AA or the equivalent thereof by S&P and
Aa or the equivalent thereof by Moody's, (v) loans or advances to
employees not exceeding $1,000,000 in the aggregate principal amount
outstanding at any time, in each case made in the ordinary course of
business and consistent with practices existing on December 31, 1998,
(vi) deposits required by government agencies or public utilities, and
(vii) loans, advances or other Investments to or in Guarantors; and
(b) other Investments which, in the aggregate, do not exceed 20% of
Consolidated Net Worth; provided, however, immediately after giving
effect to the making of any Investment, no Default shall have occurred
and be continuing.
(hh) Guaranties of Subsidiaries.
(A) The Tenant shall deliver to the Landlord notice that
a Person has become a Subsidiary within 10 days after the day on which
such Person became a Subsidiary. The Tenant shall cause any Person
which is or becomes a Subsidiary to become a party to, and agree to be
bound by the terms of, the Guaranty and the Contribution Agreement
pursuant to an instrument in form and substance satisfactory to the
Agent executed and delivered to the Agent within 30 days after the day
on which such Person became a Subsidiary.
(B) Together with the instrument referred to in Section
2.1(hh)(A), the Tenant shall deliver to the Landlord an opinion of
counsel to such Subsidiary substantially in the form of the opinion
delivered pursuant to Section 3.01(c) of the Credit Agreement (to the
extent such opinion includes opinions applicable to the Guarantors),
modified appropriately to refer to such Subsidiary, and the items
specified in Section 3.01(f) of the Credit Agreement (to the extent
such items relate to the Guarantors) for such Subsidiary.
(C) Once any Person becomes a Subsidiary and therefore
becomes a party to the Guaranty Agreement in accordance with Section
2.1(hh)(A), such Person thereafter shall remain a party to the
Guaranty Agreement without regard to whether it thereafter ceases to
be a Subsidiary.
(D) If (i) the Tenant and/or any Subsidiary sells all of
the equity interests owned by the Tenant and its Subsidiaries in any
Guarantor, (ii) immediately before and after
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giving effect to such sale no Default or Event of Default shall have
occurred, and (iii) the Tenant shall have delivered to the Landlord
notice of such sale, then the Landlord shall release such Guarantor
from the Guaranty.
(ii) Limitation on Consolidated Funded Debt.
Neither the Tenant nor any Subsidiary will incur, create, assume or
suffer to exist any Consolidated Funded Debt, other than (i)
Consolidated Funded Debt set forth or reflected on the consolidated
balance sheet of the Tenant and its Subsidiaries for the Fiscal
Quarter ending September 30, 1998 delivered to the Banks pursuant to
Section 2.1(d), (ii) any extension, renewal or refinancing of
Consolidated Funded Debt described in clause (i) of this Section made
on terms no less favorable to the Tenant or such Subsidiary than the
terms of the Consolidated Funded Debt being so extended, renewed or
refinanced immediately prior to such extension, renewal or
refinancing, (iii) the Term Loan, (iv) Subordinated Debt, (v) Debt
securing Liens permitted by Section 2.1(z) and (vi) additional
Consolidated Funded Debt not exceeding at any time an aggregate amount
outstanding of $5,000,000.
(jj) Delivery of Collateral Documents. The Tenant
will execute and deliver, and will cause EastWynn to execute and
deliver, to the Collateral Agent the Collateral Documents, together
with a favorable opinion of counsel to the Tenant and Eastwynn (as to
corporate authority, power, no violation of other material agreements,
validity, binding effect and enforceability) with respect to the
Collateral Documents, on or before the Collateralization Date;
provided, that if the Term Loan has not been made by the Term Lenders
on or before the Collateralization Date, the Tenant and all Secured
Parties other than the Term Agent and the Term Lenders shall execute
and deliver the Intercreditor Agreement on the Collateralization Date,
and the Intercreditor Agreement shall be executed by the Term Agent
and the Term Lenders (and the other Secured Parties, if any amendments
thereto have been requested by the Term Agent and agreed to by the
other Secured Parties) on the date the Term Loan is made.
(kk) Subordinated Debt.
(a) The Tenant will issue Subordinated Notes on the terms
(including the subordination provisions) described in the Subordinated
Debt Offering Circular, on or before February 5, 1999, in an aggregate
amount not less than $200,000,000, and use proceeds thereof to pay in
full the Senior Notes.
(b) The Tenant shall not (i) amend the terms of any of
the Subordinated Debt Documents, or (ii) make any voluntary or
mandatory redemptions or prepayment (whether upon a change of control
or otherwise) with respect to, or any legal or covenant defeasance of,
the Subordinated Debt, without the consent of the Agent and the
Required LC Lenders or (iii) make any payments whatsoever in violation
of the subordination provisions pertaining to the Subordinated Notes.
Section 2.2. Representations, Covenants and Warranties of
Landlord. The Landlord
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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 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
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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 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
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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.
(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.
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(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 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
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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.
(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
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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 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].
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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
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,
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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
(H) for the account of the Landlord,
(1) all amounts payable to
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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 due and payable on such Basic Rent Payment Date (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];
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(iv) Aggregate Fair Market Value
Threshold. If applicable, the amount set forth in Section
4.3(a); and
(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 LC 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
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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 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. If, on or before the Final
Project Completion Date, any Applicable Project has not been completed and
accepted for occupancy, the Tenant shall either:
(a) purchase such Applicable Project on the
Final Project Completion Date from the Landlord for an amount equal to
the Uncompleted Project Purchase Price. Upon receipt of the
Uncompleted Project Purchase Price, the Landlord shall apply such
amounts to the redemption of Bonds in accordance with the terms of the
Indenture, and the principal amount available under the Letters of
Credit shall be reduced ratably by the
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amount of the Uncompleted Project Purchase Price; or
(b) accept such uncompleted Applicable Project
and commence Rent Payments with respect thereto as if such Applicable
Project had been completed and accepted for occupancy; provided,
however, that in the event that such Applicable Project shall not have
been completed and accepted for occupancy on or before the first
anniversary of the Final Project Completion Date, the Tenant shall
purchase such Applicable Project on the first anniversary of the Final
Project Completion Date on the terms and conditions set forth in
Section 4.2(a) above.
Section 4.3. Aggregate Fair Market Value Not Achieved. In the
event that the Aggregate Fair Market Value of the Leased Property shall be less
than $75,000,000 as of the Final Project Completion Date, the Tenant shall
either:
(a) On the Final Project Completion Date, make a
payment to the Landlord, as Supplemental Rent, in an amount equal to
the amount by which the Aggregate Fair Market Value of the Leased
Property is less than $75,000,000; or
(b) On the Final Project Completion Date,
purchase from the Landlord each Individual Property the fair market
value of which (as determined by the appraisals delivered by the
Tenant to the Landlord and the Agent pursuant to Section 6(b) of the
Agency and Development Agreement and as confirmed pursuant to Section
7(e)(v) of the Agency and Development Agreement) is less than the
Allocable Costs for such Individual Property. In such event, the
purchase price to be paid by the Tenant to the Landlord for each such
Individual Property shall be an amount equal to the Allocable Costs
for such Individual Property. Upon receipt of such purchase prices,
the Landlord shall apply such amounts to the redemption of Bonds in
accordance with the terms of the Indenture, and the principal amount
available under the Letters of Credit shall be reduced ratably by the
aggregate amount of such purchase prices.
Section 4.4. Substitution of Properties.
(a) During the Term, the Tenant shall have the
right, with the prior written consent of the Landlord (not to be
unreasonably withheld or delayed) and the Agent (in accordance with
Section 9.06(a)(vii) of the Reimbursement Agreement), and on the terms
and conditions set forth in this Section 4.4, and subject to the
limitations set forth in paragraph (d) of this Section 4.4, to
substitute a Substitute Property for any Individual Property which is
subject to the terms of this Lease at the time of such substitution.
(b) As a condition precedent to the
effectiveness of any substitution of a Substitute Property for an
Individual Property, the Tenant shall deliver to the Landlord, the
Agent and the Trustee:
(i) A certificate from an independent
certified public
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accountant reasonably acceptable to the Landlord and the
Agent stating that the consummation of such substitution will
not have a material adverse effect on the treatment or status
of this Lease for tax purposes;
(ii) A certificate, signed by an
Authorized Representative of the Tenant, stating that the
fair market value of the Substitute Property on and as of the
effective date of the substitution is greater than or equal
to the fair market value of the Individual Property being
replaced thereby (as determined by the appraisal delivered to
the Landlord and the Agent pursuant to Section 6(b) of the
Agency and Development Agreement and as confirmed pursuant to
Section 7(e)(v) of the Agency and Development Agreement),
accompanied by an appraisal of the Substitute Property,
prepared (in accordance with FIRREA and all other regulatory
requirements applicable to the Agent) and certified by an
independent MAI appraiser acceptable to the Landlord and the
Agent, setting forth the estimated fair market value of the
Substitute Property on and as of the effective date of such
substitution (on an "as-completed" basis);
(iii) (A) All of the documents and other
items required to be delivered by the Tenant as a condition
to each Land Acquisition Disbursement pursuant to Section
7(c) of the Agency and Development Agreement as if the Tenant
were requesting a Land Acquisition Disbursement with respect
to the Substitute Property, and (B) all of the documents and
other items required to be delivered by the Tenant as a
condition to each Final Disbursement pursuant to Section 7(e)
of the Agency and Development Agreement as if the Tenant were
requesting a Final Disbursement with respect to the
Substitute Property; and
(iv) An opinion of counsel reasonably
acceptable to the Landlord and the Agent stating that the
substitution of the Substitute Property for the Individual
Property being replaced qualifies as a tax-free like kind
exchange pursuant to Section 1031 of the Internal Revenue
Code, and that such substitution will have no adverse tax
consequences for the Landlord.
(c) On the effective date of the substitution:
(i) The Landlord shall acquire, and the
Tenant shall convey, the Substitute Property in the same
manner as if such Substitute Property were acquired by the
Landlord prior to the Final Project Completion Date;
(ii) The Landlord and the Tenant shall
enter into a Lease Supplement with respect to the Substitute
Property;
(iii) The Landlord shall convey its
interest in and to the Individual Property being replaced by
the Substitute Property to the Tenant; and
(iv) The Landlord shall execute and
deliver to the Agent an
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Applicable Mortgage and an Applicable Assignment of Rents
with respect to the Substitute Property.
(d) Notwithstanding anything to the contrary
contained in this Section 4.4, the Tenant shall have no right to
substitute more than two (2) Substitute Properties during any five (5)
year period.
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 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.
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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 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
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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 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
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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.
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 LC 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 LC 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 LC 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
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or demand upon or bring any action against the Landlord 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 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,
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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 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
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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 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)
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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:
(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
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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 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.
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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.
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
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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}.
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.
(a) The Tenant shall have the right, subject to
the provisions of this Section 15.4, to purchase from the Landlord at
any time any Subperforming Theater Property. Such right may be
exercised by the Tenant upon at least 90 days' prior written notice to
the Landlord and the Agent. Such notice shall be accompanied by a
certificate of the chief financial officer of the Tenant, certified to
the Landlord and the Agent, stating that such Subperforming Theater
Property meets the definition of "Subperforming Theater Property" as
set forth herein, together with such financial statements and other
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documentation supporting or substantiating same as shall be reasonably
acceptable to the Landlord and the Agent.
(b) The purchase price payable by the Tenant for
any Subperforming Theater Property shall be the greater of (i) the
unamortized Allocable Costs attributed to such Subperforming Theater
Property and (ii) the fair market value of such Subperforming Theater
Property as of the date of such purchase, as such fair market value
shall be determined by an appraisal (dated not earlier than 120 days
prior to such purchase date) prepared and certified by an independent
MAI appraiser acceptable to the Landlord and the Agent and submitted
to the Landlord and the Agent together with the notice referred to in
Section 15.4(a) above.
(c) In no event shall the Tenant have the right
to exercise the purchase option in this Section 15.4 unless no Event
of Default shall have occurred and be continuing either at the time of
the notice set forth in Section 15.4(a) or at the time of the closing
of such purchase.
(d) The provisions of Sections 15.1(c), (d)
(provided, however, that it is understood and agreed that the exercise
by the Tenant of its purchase option pursuant to this Section 15.4 may
result in a reduction of the amount of Rent payable by the Tenant
hereunder), (e) and (f) above shall apply with respect to the option
granted by this Section 15.4.
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.
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(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.
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,
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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:
(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(s)(v), 2.1(s)(x), 2.1(t)(iii), 2.1(u) to
2.1(y), inclusive, 2.1(aa) (as to the Tenant), 2.1(bb) (as to the
Tenant), 2.1(cc), 2.1(ee), 2.1(gg), or 2.1(ii) to 2.1(kk), inclusive,
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
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(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 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 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 (other
than (i) any voluntary notice of purchase, payment or prepayment
delivered by the Tenant hereunder which results in any amount which is
the subject of such notice becoming due prior to its scheduled due
date, and (ii) any damage, destruction, other casualty or condemnation
which under Article 19 hereof results in any amount payable hereunder
becoming due prior to its scheduled due date) which results in the
termination of any commitment regarding Debt or acceleration of the
maturity of Debt or Off-Balance Sheet Lease Indebtedness in an
aggregate amount in excess of $3,000,000 outstanding of the Tenant or
any Subsidiary or the mandatory prepayment or purchase of such Debt or
Off-Balance Sheet Lease Indebtedness by the Tenant (or its designee)
or such Subsidiary (or its designee) prior to the scheduled maturity
thereof, or enables (with any requirement for the giving of notice or
lapse of time or both, having been satisfied) the holders of such
commitment or Debt or Off-Balance Sheet Lease Indebtedness or any
Person acting on such holders' behalf to terminate such commitment or
accelerate the maturity thereof or require the mandatory prepayment or
purchase thereof prior to the scheduled maturity
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thereof (including, without limitation, any required mandatory
prepayment or "put" of such Debt to the Tenant or any Subsidiary); 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 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 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; or
(o) any Transaction Document, Collateral
Document or Guaranty shall cease to be in full force and effect or the
Tenant or EastWynn or any Guarantor, as applicable, shall deny or
disaffirm its obligations thereunder; or
(p) any of the subordination provisions of the
Subordinated Notes shall cease to be in full force and effect or any
of the holders of Subordinated Debt or the Borrower shall deny or
disaffirm its obligations thereunder.
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
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(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
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.
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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 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.
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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 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
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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.
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.
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(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 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
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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.
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;
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(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
(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
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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 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.
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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 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:
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(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
(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 LC 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 LC 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
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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 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
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Individual Property and such locations shall be identified.
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].
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Section 22.8. [Intentionally Omitted].
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.
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
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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.
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 LC Lenders, the Trustee and their respective
Affiliates, agents, employees, officers, directors,
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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;
(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
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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.
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
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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:
If to the Landlord: Movieplex Realty Leasing, L.L.C.
2 World Trade Center
Suite 2112
New York, New York 10048
ATTN: Mr. Gilbert Sandler
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
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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
with a copy to: Wachovia Bank, N.A.
191 Peachtree Street, N.E.
30th Floor
Atlanta, Georgia 30303-1757
ATTN: Mr. Reginald Dawson
Facsimile: (404) 332-6920
with a copy to: Jones, Day, Reavis & Pogue
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
ATTN: Christopher L. Carson, Esq.
Facsimile: (404) 581-8868
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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 LC 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 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.
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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.
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
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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 Minimus Quantities. Notwithstanding the foregoing, the
Tenant shall be permitted to bring upon any Individual Property and use such
quantities of certain 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.
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(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.
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).
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(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.
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
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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 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,
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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 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 LC 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 LC
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 LC 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
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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 LC 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 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 LC 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
94
<PAGE> 101
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.
Section 32.21. Conditions to Effectiveness. This Agreement shall become
effective on and as of the first date on which the following conditions
precedent have been satisfied (the "Effective Date"):
(a) receipt by the Agent from each of the
parties hereto of either (i) a duly executed counterpart of this Lease
signed by such party or (ii) a facsimile transmission stating that such
party has duly executed a counterpart of this Agreement and sent such
counterpart to the Agent;
(b) receipt by the Agent of an opinion of
Troutman Sanders, counsel for the Tenant and the Guarantors, dated as
of the Effective Date, in form and substance reasonably satisfactory to
the Agent and its counsel, as to the corporate authority, existence and
good standing of the Tenant and the Guarantors and the binding effect
and enforceability of this Lease, the First Amendment to Reimbursement
Agreement and the Guaranty and covering such additional matters
relating to the transactions contemplated hereby as the Agent or any
Bank may reasonably request;
(c) receipt by the Agent of a certificate (the
"Closing Certificate"), dated the Effective Date, signed by a principal
financial officer of the Tenant, to the effect that (i) no Default has
occurred and is continuing on the Effective Date and (ii) the
representations and warranties of the Tenant contained in Section 2.1
are true on and as of the Effective Date;
(d) receipt by the Agent of all documents which the
Agent or any LC Lender may reasonably request relating to the existence
of the Tenant and each Guarantor, the corporate authority for and the
validity of this Lease, the Guaranty and any other matters relevant
hereto, all in form and substance satisfactory to the Agent, including
without limitation a certificate of incumbency of the Tenant and each
Guarantor (the "Officer's Certificate"), signed by the Secretary or an
Assistant Secretary of the Tenant or each Guarantor, certifying as to
the names, true signatures and incumbency of the officer or officers of
the Tenant or each Guarantor authorized to execute and deliver this
Lease or the Guaranty, as applicable, and certified copies of the
following items: (i) the Certificate or Articles of Incorporation of
the Tenant and each Guarantor, (ii) the Bylaws of the Tenant and each
Guarantor, (iii) a certificate of the Secretary of State of the State
of Delaware as to the good standing of the Tenant as a Delaware
corporation and similar certificates for each Guarantor from its
jurisdiction of incorporation, and (iv) the action taken by the Board
of Directors of the Tenant and each Guarantor authorizing the Tenant's
and Guarantors' execution, delivery and performance of this Lease or
the Guaranty, as applicable;
95
<PAGE> 102
(e) receipt by the Agent from each of the
Guarantors as of the Effective Date of a duly executed counterpart of
the Guaranty signed by such Guarantor and from the Tenant and each of
the Guarantors as of the Effective Date of a duly executed counterpart
of the Contribution Agreement signed by the Tenant and such Guarantors;
(f) receipt by the Agent of (x) an amendment
fee, for the ratable account of the Banks, and (y) the other fees
payable on the Effective Date to the Agent, for its own account, in
each and pursuant to an engagement letter dated January 12, 1999,
between the Tenant, the Landlord and the Agent;
(g) receipt by the Agent of evidence
satisfactory to it of execution and delivery of the Credit Agreement as
contemplated in an engagement letter dated January 12, 1999, between
the Tenant and Wachovia Bank, N.A., as LC Agent;
(h) the Subordinated Debt shall have received a
Debt Rating of B- or higher by S&P and B3 or higher by Moody's;
(i) Receipt by the Agent and the Trustee of an
opinion of Wolff & Samson, counsel for the Landlord , to the effect
that the amendments to the Lease contained herein do not materially
adversely affect the interests of the Holders; and
(j) Consent of the Trustee pursuant to Section
9.08 of the Indenture.
96
<PAGE> 103
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
/s/ Susan Forsyth By: /s/ Roger J. Burns
- -------------------------------- --------------------------------
Name: Roger J. Burns
Title: Vice President
TENANT:
ATTEST: CARMIKE CINEMAS, INC.
/s/ F. Lee Champion, III By: /s/ John O. Barwick, III
- -------------------------------- --------------------------------
Secretary Name: John O. Barwick, III
Title: S.V.P.
97
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CARMIKE CINEMAS, INC. FOR THE THREE MONTH PERIOD
ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,877
<SECURITIES> 822
<RECEIVABLES> 4,517
<ALLOWANCES> 0
<INVENTORY> 3,654
<CURRENT-ASSETS> 21,440
<PP&E> 785,851
<DEPRECIATION> 169,220
<TOTAL-ASSETS> 744,837
<CURRENT-LIABILITIES> 88,072
<BONDS> 248,721
0
550
<COMMON> 341
<OTHER-SE> 216,027
<TOTAL-LIABILITY-AND-EQUITY> 744,837
<SALES> 30,694
<TOTAL-REVENUES> 97,716
<CGS> 3,719
<TOTAL-COSTS> 82,820
<OTHER-EXPENSES> 11,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,306
<INCOME-PRETAX> (3,781)
<INCOME-TAX> (1,437)
<INCOME-CONTINUING> (2,344)
<DISCONTINUED> 0
<EXTRAORDINARY> (6,291)<F1>
<CHANGES> 0
<NET-INCOME> (9,391)
<EPS-PRIMARY> (.83)
<EPS-DILUTED> (.83)
<FN>
<F1>EXTRAORDINARY ITEM - IN CONNECTION WITH THE RESTRUCTURING INDEBTEDNESS THE
COMPANY RECOGNIZED A CHARGE OF $6.3 MILLION ($10.1 MILLION LESS APPLICABLE
INCOME TAXES) FOR (A) A PREPAYMENT PREMIUM (9.2 MILLION) PAID IN CONNECTION WITH
THE REDEMPTION OF THE SENIOR NOTES, AND (B) THE ELIMINATION OF DEFERRED DEBT
COSTS ($.9 MILLION) ON RETIRED INDEBTEDNESS.
</FN>
</TABLE>
