Amended Indenture of Lease

THIS AMENDED INDENTURE OF LEASE, made this 2nd day of February, 1984, between THE CITY OF ATLANTA, a municipal corporation chartered pursuant to the laws of the State of Georgia, Party of the First Party (hereinafter defined as "Lessor"), and FILMWORKS U.S.A., INC., a Georgia corporation created pursuant to the laws of the State of Georgia, Party of the Second Part (hereinafter defined as "Lessee"), pursuant to assignment and transfer of the Indenture between Lessor and Atlanta Lakewood Enterprises, Ltd., dated May 1, 1979, which assignment and transfer were authorized by order of Judge A. D. Kahn, United States Bankruptcy Court, Northern District of Georgia, dated January 16, 1984, Case No. 80-03317A.


WHEREAS, the Council of the City of Atlanta, Georgia by ordinance approved January 3, 1984, has authorized the Amendment of this Lease, said ordinance being attached hereto as Exhibit "A"; and


WHEREAS, the parties desire to restate the Indenture of Lease as Amended, such restatement being set forth herein;


NOW, THEREFORE, in consideration of ten dollars ($10.00) paid by Lessee to Lessor and the mutual covenants herein contained, Lessor and Lessee hereby convenant and agree as hereinafter provided,


1. DEFINITIONS. For the purposes of this Agreement, the following defined terms shall have the meanings ascribed hereto in this Article 1.


1.1. "Affiliate" means, in the context of Lessee, any other entity of which two percent (2%) or more of the ownership interest therein is owned, directly or indirectly, by Lessee or by the holders of more than two percent (2%) of the stock of Lessee. Such ownership interests owned by members of the immediate families of the shareholders of Lessee shall be ascribed to such shareholders for the purpose of the foregoing definition.


1.2. "Agreement" means this Indenture of Lease.


1.3. "Demised Premises" means the Property, the Improvements (including the Existing Improvements) and all rights, members, easements and appurtenances appertaining thereto.


1.4. "Entity" means any person, corporation, partnership (general or limited), joint venture, association, joint stock company, trust or other business entity or organization.


1.5. "Event of Default" means those events, occurrences and circumstances so designated in Section 10.2 of Article 10 of this Agreement.


1.6. "Existing Improvements" means those buildings, structures and other facilities located upon the Property on the date of this Agreement and more particularly described in Exhibit "B" attached hereto and by reference made a part hereof.


1.7. "Gross Revenues" means the entire amount of all revenues received by Lessee during the term of this lease with respect to the following:


(a) Admission charges, ticket sales, or any and all income derived from sporting events, automobile races, and any and all other entertainment events or tours where the Lessee charges admission, or is otherwise compensated.


(b) All revenues received by Lessee from occupancy leases as defined in Section 1.18 hereof, or subleases as described in Section 1.22 hereof.


(c) All revenues received from charges made for vehicular parking on the demised premises.


1.8. "Impositions" means any and all lawful impositions of ad valorem taxes, special assessments for public improvements, street and sewer levies and utility charges upon the Property or any portion thereof.


1.9. "Improvements" means all buildings, (other than temporary buildings), structures and other facilities at any time and from time to time affixed to the Property, including, but not by way of limitation, the Existing Improvements; provided, however, that Improvements shall only include property which is a


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building or similar structure which is intended by Lessee to become a part of the Property as a permanent improvement thereof; and further provided that Improvements shall not include trade fixtures, sets of scenery, displays and similar property used in filming. Lessee shall notify Lessor within thirty (30) calendar days after completion of construction of any structure intended by Lessee to be an Improvement.


1.10. "Insurance Trustee" means the trustee appointed herein or by the requirements of any mortgagee holding a mortgage on Lessee's interest in the Demised Premises or any portion thereof, for the purpose of receiving, investing and paying Net Insurance Proceeds. Any mortgagee holding a mortgage on Lessee's interest in the Demised Premises or any portion thereof may elect itself to act as insurance trustee. If an insurance trustee is not otherwise designated, the Commissioner of Finance of Lessor shall perform the functions of the insurance trustee.


1.11. "Lease Term" means the period of time specified in Section 2.2 of Article 2 of this Agreement.


1.12. "Lessee" means Filmworks U.S.A., Inc., a Georgia corporation, the assignee of Atlanta Lakewood Enterprises, Ltd., a corporation created pursuant to the laws of the State of Georgia, and its successors and assigns of the leasehold estate and interest in the Demised Premises under this Agreement (but excluding any sub-lessees, occupancy-lessees, tenants and concessionaires).


1.13. "Lessor" means the City of Atlanta, a municipal corporation chartered pursuant to the laws of the State of Georgia. Whenever a provision of this Lease requires approval, agreement, or action by Lessor, such provision shall be construed to mean approval agreement or action by the governing body of said Lessor, unless otherwise stated.


1.14. "Mortgage" (in singular) and "Mortgages" (in the plural) means any deed to secure debt, deed of trust, mortgage, security agreement or other instrument in the nature thereof at


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any time and from time to time constituting a lien upon Lessee's interest in the Demised Premises or any portion thereof, or collectively, two (2) or more of such.


1.15. "Mortgagee" (in the singular) and "Mortgagees" (in the plural) means the holder or, collectively, the holders of a Mortgage or Mortgages.


1.16. "Net Insurance Proceeds" means, in the context of any insurance required pursuant to this Agreement, the gross proceeds from the insurance with respect to which such term has reference (that is, the gross proceeds arising by virtue of any insured loss in respect to the Demised Premises or any Improvements) remaining after payment of all expenses (including, but not by way of limitation, attorneys' fees and any extraordinary expenses of the Insurance Trustee) incurred in the collection of such gross proceeds.


1.17. "Notice" means a written advice or notification required or permitted by this Agreement to be served by Lessor or Lessee upon the other, or, in the circumstances defined in Article 13 of this Agreement, upon or by the Insurance Trustee or Mortgagees.


1.18. "Occupancy Lease" means any and all rental agreements in all or any portions of the Demised Premises between Lessee as landlord thereunder and others, as tenants thereunder for a term of twenty-four (24) months or less, including the term of all options to renew.


1.19. "Operating Year" means the calendar year through the lease term, except for the first operating year, which commences on the date of execution of this Agreement and terminates at the end of the day on December 31, 1964.


1.20. "Property" means those tracts or parcels of land in the County of Fulton, State of Georgia, more particularly described in Exhibit "C" attached hereto and by reference made a part hereof and shall include all portions thereof as to which the Lessor subsequently acquires title.


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1.21. "Rent" means all amounts payable by Lessee to Lessor as rental for the Demised Premises, as more particularly described in Article 5 of this Agreement. Rent does not include Impositions or other items payable by Lessee under this Agreement which are not designated as rental for the Demised Premises.


1.22. "Sub-Lease" means any and all instruments creating usufructs or subleasehold estates in all or any portion of the Demised Premises, between Lessee as landlord or lessor thereunder and others, as tenants or lessees thereunder for a term in excess of twenty-four (24) months, as set forth in Section 11.2 to this Agreement.


1.23. "Zoning and Other Encumbrances" means those matters, other than Impositions, affecting title to the Property and the Existing Improvements which are more specifically set forth in Exhibit "D" attached hereto and incorporated herein.


2. PREMISES AND TERM.


2.1. Premises. Lessor, for and in consideration of the rents, covenants, agreements and stipulations hereinafter mentioned, reserved and contained, to be paid, kept and performed by Lessee, has demised, leased and rented, and by these presents does demise, lease and rent, unto Lessee, and Lessee hereby agrees to lease and take upon the terms and conditions which hereinafter appear, the Demised Premises, subject only to the Impositions and zoning and other Encumbrances. As of the date of this Agreement, the Demised Premises consist of the Property and the Existing Improvements. Title to the Improvements during the Lease Term shall be in Lessee. Notwithstanding such title to the Improvements, the terms and conditions of this Agreement shall govern the use and operation of the improvements and the exercise of all Lessee's rights with respect thereto and Lessee's estate, right, title and interest in and to the Improvements, which,


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except for Subleases and Occupancy Leases, shall not be separable from the leasehold estate granted Lessee hereunder. Except for termination pursuant to Article 12 of this Agreement, upon termination of the Lease Term, whether by expiration of time or otherwise, title to the Improvements shall, subject to the rights of any Mortgagee, vest in and become the full and absolute property of Lessor without need of any further action being taken by Lessee or Lessor, and Lessee shall immediately surrender possession of the Improvements, subject to the rights of any Mortgagee, Sub-Lessee, or Occupancy Lessee.


2.2. Lease Term. The Lease Term under this Amended Indenture shall commence on the date of execution as set forth above and shall expire midnight, local time in the City of Atlanta, State of Georgia, on the date which is thirty-five (35) years from January 1, 1984, subject to being sooner terminated as provided in this Indenture of Lease, as amended.


2.3. Option. Lessee, if not in default at the expiration of this lease, and if it has faithfully performed its obligations during the term of the Lease, shall, upon notice to Lessor, have the right to extend the lease for an additional period of fifteen (15) years upon the same terms and conditions as herein. Said notice shall be in writing from Lessee to Lessor no less than 120 days prior to end of the initial thirty-five (35) year term of the lease.


2.4. Interest Conveyed By This Lease. The interest conveyed by this lease consists of a limited and restricted interest (said limitations and restrictions being set forth in this lease) and said conveyed interest does not include an estate in real property.


3. COVENANTS AND WARRANTIES BY LESSOR.


3.1. Quiet Enjoyment. Lessee paying the Rent hereby reserves, and fully performing and observing the covenants, duties and obligations by Lessee to be performed, observed and kept, may


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peaceably possess, hold, enjoy and use the Demised Premises with the exclusive control, possession and enjoyment thereof during the Lease Term.


3.2 Title. Lessor has fee simple title to the Property and the Existing Improvements and the Property and the Existing Improvements will be delivered to Lessee free and clear of all claims, demands, obligations, mortgages, liens and encumbrances of any nature or kind, except for Impositions and zoning and Other Encumbrances set out on Exhibit "D". Lessor warrants that the Demised Premises are, as of the effective date of this Amendment to Indenture of Lease, zoned M1-C, and such zoning permits the use of the Demised Premises for the use and purposes herein specified, which zoning shall, unless otherwise requested by Lessee, continue during the Term of this Amended Lease. As of the effective date of this Amendment, Lessor warrants that it has fee simple title to the Demised Premises, the Property and the Existing Improvements which is free and clear of all claims, demands, obligations, mortgages, liens, reversions and encumbrances of every nature, kind and description, except only for those Impositions, Zoning and other Encumbrances which are set forth on Exhibit "D", attached hereto and incorporated herein by reference. Lessor warrants that Lessor's fee simple title and the leasehold estate Amendment are marketable and insurable by such title insurance company, licensed to do business in the State of Georgia, as Lessee or Assigns may select, without exception other than those matters specifically set forth in Exhibit "D". The expense of obtaining any title policy shall be borne by Lessee.


3.3. Public Records. Pursuant to the provisions of Sections 50-18-70, et seq, of the Official Code of Georgia Annotated, Lessor hereby agrees to make available to Lessee any public records concerning the Demised Premises or any other matter directly or indirectly involving the Demised Premises or any portion thereof.


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4. ENCROACHMENTS.


4.1. Removal Lessor shall take any reasonable action necessary, including instituting legal proceedings for the purpose of protecting the title to the Demised premises and Lessee's quiet enjoyment thereof against any adverse claims, uses, occupancies and encroachments on the Property. Lessee will, if and when requested by Lessor, join with Lessor and become a party to any judicial or other proceedings that may be instituted by or on behalf of Lessor for the purpose of protecting and preserving Lessor's title to the Property and Lessee's enjoyment thereof pursuant to this Lease.


4.2. Use. Lessor and Lessee further understand and agree that when such encroachments, adverse uses and occupancies shall have been removed by judicial proceedings or otherwise, the use of the same for the remaining period of the Lease Term shall inure to the benefit of Lessee to the same extent as the other portions of the Demised Premises herein leased shall inure to Lessee under the provisions, covenants, terms and conditions of this Agreement.


5. RENT.


5.1. Minimum Rent.


5.1.1. Lessee shall pay to Lessor the sum of $100,000.00 for each of the first three Operating Years, and thereafter in the fourth and fifth Operating Years the sum of $150,000.00 per year. Thereafter, Lessee shall pay to Lessor a minimum rent of $150,000.00 per annum during the continuance of this Lease, subject to the rental adjustment provided in Section 5.1.2. Any rent payable for less than a full Operating Year shall be prorated in the proportion that such period of less than a full Operating Year bears to a full Operating Year.


5.1.2. Rental Adjustments. The minimum amount of Rent payable by Lessee to Lessor with respect to the sixth Operating Year and for each Operating Year thereafter shall be One Hundred Fifty Thousand Dollars ($150,000.00) multiplied by a fraction, the numerator of which fraction is the Consumer Price Index number for


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the Current Month applicable to the Operating Year and the denominator of which fraction is the Consumer Price Index number for the Base Month, provided that the increase in minimum rent in any given operating year shall not exceed six percent (6%) of the minimum rent for the previous Operating Year.


5.2. Computation of Rent. Commencing with the sixth Operating Year and subject to the provisions of Section 5.1 of this Article 5, Lessee shall, within sixty (60) calendar days after the close of each Operating Year, pay to Lessor three percent (3%) of its Gross Revenues received for each Operating Year, or portion thereof, during the Lease Term. The amount due Lessor under this Section 5.2 shall be reduced by any Minimum Rent paid by Lessee to Lessor with respect to such Operating Year, provided however, that under no circumstances shall the amount of Rent paid to Lessor be less than the Minimum Rent due under Section 5.1.1 and 5.1.2.


The term "Consumer Price Index" means the Consumer Price Index for Atlanta, Georgia for Urban Wage Earners and Clerical Workers [1967=100], as published by the Bureau of Labor Statistics of the United States Department of Labor. If the publishing of the "Consumer Price Index" shall cease, then the most comparable and similar index published by any department or agency of the United States government shall be used.


The term "Current Month" number which is applicable to the Operating Year means the Consumer Price Index number published for the last month of the last Operating Year which immediately precedes the beginning of the then current Operating Year (and if no Consumer Price Index is published for said month, then the number published for the most recent month prior thereto shall be used.


The term "Base Month" number means the Consumer Price Index number published for the last month of the fifth Operating Year (and if no Consumer Price Index is published for the last month of the fifth Operating Year, then the number published for the most recent month prior thereto shall be used).


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5.3. Payment of Rent. Lessee shall pay rent to Lessor in monthly installments, in advance, on or before the first day of each and every calendar month during the entire Lease Term. The amount of each such monthly installment shall be equal to one-twelfth (1/12th) of the amount of the Minimum Rent with respect to the applicable Operating Year as provided in Section 5.2 of this Article 5. (The parties recognize that the first Operating Year [1984] shall not be a complete year and rentals shall be prorated for such year.)


Within sixty (60) calendar days following the end of each Operating Year, Lessee shall submit to Lessor its annual audited financial statement showing the determination of Gross Revenues with respect to such Operating Year, and for the sixth Operating Year and each Operating Year thereafter in the event that three percent (3%) of the Gross Revenues for such sixth Operating Year and thereafter shall exceed the amount of Rent paid for such Operating Year pursuant to this Section, then Lessee shall remit and pay to Lessor the balance of the Rent due in accordance with Section 5.1.2.


5.4. Books and Records. During the Lease Term, Lessee shall maintain complete and accurate records, in accordance with generally accepted accounting principles consistently applied, of all Gross Revenues received and earned with respect to the Demised Premises by Lessee during each Operating Year, and such other records, data and facts necessary to determine Gross Revenues hereunder as Lessor may reasonably require.


Lessor expressly reserves the right to examine and audit all of said records, including sales, entertainment, business and occupation tax reports to the extent that said records and reports contain information relating to Gross Revenues derived by Lessee from the Demised Premises. The right of examination and audit may be exercised at any time during normal business hours. If Lessee fails to make the aforesaid records available to Lessor in Atlanta, Georgia, then Lessee shall pay all reasonable expenses incurred by Lessor to examine and audit said records in the place where they are located and maintained.


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Lessee agrees to keep, maintain and preserve for four (4) years following the expiration of each Operating Year all records required under this Section, or adequate photostatic copies thereof. In the event Lessor shall dispute the amount of Gross Revenues during said four-year period, Lessee agrees to preserve all such records until such dispute is resolved; and if Lessor shall not, within said four-year period, dispute the accuracy of the statement of Gross Revenues furnished by Lessee to Lessor, then such statement shall be conclusive on Lessor and Lessee with respect to the amount of Gross Revenues received by Lessee with respect to such Operating Year.


6. TAXES AND OTHER IMPOSITIONS.


6.1. Payment. Lessee shall bear and pay to the public officer charged with the collection thereof, before the same shall become delinquent, and shall indemnify, save and hold harmless Lessor from the payment of, any and all taxes, assessments, license fees, excises, imposts, fees and charges of every sort, nature and kind, which during the Lease Term are levied, assessed, charged or imposed upon or against the Demised Premises (including any Improvements) during the Lease Term for which the Lessee is liable at law, to the extent of all installments becoming due in connection therewith during the term of the Lease. The parties, however, recognize the restricted and limited interest conveyed by the lease as described in Section 2.4 above.


6.2. Contest. If any Imposition (including without limitation, any tax, assessment, license fee, excise, impost, fee or charge) shall be deemed by Lessee to be improper, illegal or excessive, Lessee may, at no cost or expense to Lessor and in Lessee's own name, dispute and contest the same and, in such case, such item need not be paid only if and to the extent that the laws or regulations governing such contest permit postponement of payment; provided, however, that Lessee shall first furnish to Lessor, if requested by Notice to Lessee from Lessor, reasonable security for the payment of such item so contested. Unless so


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contested by Lessee, all such Impositions shall be paid by Lessee within the time provided by law, and if contested, any such Imposition shall be paid before the issuance of an execution on the final judgment.


6.3. Receipts. After all payments are made by Lessee pursuant to and in conformity with Sections 6.1 and 6.2 of this Article 6, Lessee shall at once furnish to Lessor duplicate receipts or other satisfactory evidence of such payment.


6.4. Utilities. Lessee is to be responsible for and shall pay all water, sanitation, gas, heat, light, power, steam and telephone services and any and all other services supplied to the Demised Premises.


6.5. Performance by Lessor. If Lessee fails to procure insurance, as hereinafter provided, or wrongfully fails to pay any Impositions (including taxes, assessments, license fees, excises, imposts and fees), utility charges or premiums of insurance, Lessor may, at Lessor's option, after ten (10) days following Notice to Lessee by Lessor, and on behalf of Lessee, procure any such insurance and make any such payment or payments as may be reasonably necessary.


6.6. Reimbursement. Any reasonable amount paid or expended by Lessor under the provisions of Section 6.5 of this Article 6 shall be reimbursed and paid to Lessor by Lessee on demand.


7. USE OF DEMISED PREMISES.


7.1. Purposes and Compliance With Laws.


7.1.1. Lessee agrees that the dominant theme in the development of the Demised Premises shall be in connection with the entertainment field, production of film and television programming and complimentary uses and activities, as now exist or as may be developed in the future.


Lessor acknowledges and agrees that the Demised Premises may be used for any lawful purpose or use connected with


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or related to the production of motion pictures, television programming and similar or related entertainment, commercial and production activities, and all sorts and types of visual and sound recording, copying, producing and processing, and for retail stores, lodging, office buildings and complexes and related entertainment and commercial activities. Such uses, purposes and facilities for which the Demised Premises may be used shall include, without limitation, studios, sound stages, outdoor lots, recording studios, studio manufacturing, film processing laboratories, educational facilities for vocational and academic training, auditoriums, theatres and exhibition halls, lodging, office buildings and complexes, retail stores, food, beverage and entertainment facilities, parking, warehouses, fairs and special events, public tours, and entertainment facilities and parks. Further, the Demised Premises may be used for public entertainment, including, without limitation, such events as automobile and motorcycle races, expositions, demonstrations, trade shows, and any and all other presentations and performances which are lawful; and such other uses and purposes as shall from time to time be approved by Lessor upon application of Lessee. Lessee expressly covenants not to operate horse racing, dog racing, or any other events or undertakings involving wagering in connection with horse racing or dog racing without the express consent of Lessor.


7.1.2. At all times, Lessee shall conform to, obey and comply with all present and future laws and ordinances, and all lawful requirements, rules and regulations of all legally constituted authorities, existing at the commencement of the Lease Term, or at any time during the continuance of the Lease Term, which in any way affect the Demised Premises or the use of the Demised Premises, or any repair, replacement, demolition, renovation, construction, restoration or excavation being done on or to the Demised Premises, or in any way affecting this Agreement. The right to contest the validity thereof in good faith, at Lessee's


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sole cost and expense and in Lessee's own name, is hereby reserved to Lessee.


7.2. Condition of Demised Premises. Lessor shall not be liable or responsible for the condition of the Demised Premises, or for maintenance of the Demised Premises, or for the safety and suitability of the Demised Premises for any uses for which the Demised Premises may be employed by Lessee; nor shall Lessor be liable or responsible for any loss, damage or injury which may occur from any cause whatsoever to Lessee, or the property, agents, employees, patrols, exhibitors, licensees or concessionaires of Lessee, or any other person whatsoever, occurring on the Demised Premises or in or about the Improvements. Lessee hereby acknowledges that Lessee has inspected and is familiar with the condition of the Demised Premises, including the terrain features of the property and the Existing Improvements located thereon, and accepts such in the present condition thereof. Provided, however, that Lessee accepts the premises subject to the agreement of Lessor that Lessor will maintain the dam and related facilities located on the premises and the drainage of water from the lake impounded by such dam. Provided further, however, that the Lessor, recognizing Lessee's desire to relocate the dam, lake and drainage system now in place to accommodate better uses of the race track facilities on the Demised Premises, agrees to have its Department of Environment and Streets study possible alternatives to the present lake and dam, with a view toward cooperating with Lessee in this regard if it is determined to be both economically and environmentally feasible.


7.3. Optional Improvements and Demolition of Improvements.


7.3.1. If Lessee desires to undertake any material alteration or demolition of the grandstand, or of any of the four main exhibit buildings now located on the premises, Lessee must first obtain approval of such action by Lessor, acting through Lessor's


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governing body. In the event that material alteration or demolition of any of these five (5) specified structures is approved by Lessor, any salvage from these specified structu ...