Banc of America Leasing & Capital, LLC
Master Lease Agreement Number: 24874-90000
This Master Lease Agreement, dated as of October 26, 2012 (this “Agreement”), is by and between Banc of America Leasing & Capital, LLC, a Delaware limited liability company having an office at 2059 Northlake Parkway, 3 North, Tucker, GA 30084 (together with its successors and assigns, “Lessor”), and Consolidated Cinema Services, LLC as “Lessee”, a limited liability company existing under the laws of the state of Nevada, and having its chief executive office and any organizational identification number as specified with its execution of this Agreement below. Certain defined terms used herein are identified in bold face and quotation marks throughout this Agreement and in Section 16 below. This Agreement sets forth the terms and conditions for the lease of Equipment between Lessor and Lessee pursuant to one or more "Schedules" incorporating by reference the terms of this Agreement, together with all exhibits, addenda, schedules, certificates, riders and other documents and instruments executed and delivered in connection with such Schedule (as amended from time to time, a “Lease”). Each Lease constitutes a separate, distinct and independent lease of Equipment and contractual obligation of Lessee. This Agreement is not an agreement or commitment by Lessor or Lessee to enter into any future Leases or other agreements, or for Lessor to provide any financial accommodations to Lessee. Lessor shall not be obligated under any circumstances to advance any progress payments or other funds for any Equipment or to enter into any Lease if there shall have occurred a material adverse change in the operations, business, properties or condition, financial or otherwise, of Lessee or any Guarantor. This Agreement and each Lease shall become effective only upon Lessor’s acceptance and execution thereof at its corporate offices set forth above.
1.Lease; Term; Non-Interference. Lessor and Lessee agree to lease Equipment described in Schedules entered into from time to time, together with all other documentation from Lessee required by Lessor with respect to such Lease. Upon receipt of any item or group of Equipment intended for Lease hereunder, Lessee shall execute a Schedule, with all information fully completed and irrevocably accepting such Equipment for Lease, and deliver such Schedule to Lessor for its review and acceptance. Provided no Event of Default has occurred, Lessee shall be entitled to use and possess the Equipment during the original Lease Term provided in the Schedule (together with any extensions or renewals thereof in accordance with terms of the Lease, the “Lease Term”) free from interference by any person claiming by, through or under Lessor.
2.Rent. “Rent” shall be payable to Lessor during the Lease Term in the amounts and at the times provided in the Schedule. If any Rent or other amount payable hereunder is not paid within 10 days of its due date, Lessee shall pay an administrative late charge of 5% of the amount not timely paid. All Rent and other amounts payable under a Lease shall be made in immediately available funds at Lessor’s address above or such other place in the United States as Lessor shall specify in writing. Unless otherwise provided herein, payments received under any Lease will be applied to all interest, fees and amounts owing thereunder (other than Rent), and then to Rent payable thereunder.
3.Net Lease; Disclaimer Of Warranties. Each Lease is a net lease and a “finance lease” under Article 2A of the UCC, and Lessee waives all rights and remedies Lessee may have under sections 2A-508 – 2A-522 thereof, including any right to cancel or repudiate any Lease or to reject or revoke acceptance of any Equipment. Upon the “Acceptance Date” provided in the Schedule for each Lease, Lessee’s Obligations thereunder (i) shall be non-cancelable, absolute and unconditional under all circumstances for the entire Lease Term, (ii) shall be unaffected by the loss or destruction of any Equipment, and (iii) shall not be subject to any abatement, deferment, reduction, set-off, counterclaim, recoupment or defense for any reason whatsoever. LESSOR IS NOT A VENDOR OR AGENT OF THE EQUIPMENT VENDOR, AND HAS NOT ENGAGED IN THE SALE OR DISTRIBUTION OF ANY EQUIPMENT. LESSOR MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO TITLE, MERCHANTABILITY, PERFORMANCE, CONDITION, EXISTENCE, FITNESS OR SUITABILITY FOR LESSEE'S PURPOSES OF ANY EQUIPMENT, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENTS, THE CONFORMITY OF THE EQUIPMENT TO THE DESCRIPTION THEREOF IN ANY LEASE, OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE EQUIPMENT. If Equipment is not delivered or properly installed, does not operate as warranted, becomes obsolete, or is unsatisfactory for any reason, Lessee shall make all claims on account thereof solely against Vendor and not against Lessor. Lessee is solely responsible for the selection, shipment, delivery and installation of the Equipment and its Vendors, expressly disclaims any reliance upon any statements or representations made by Lessor in connection therewith, and has received and approved the terms of any purchase orders, warranties, licenses or agreements with respect to the Equipment. During the Lease Term, Lessee shall be entitled, on a non-exclusive basis, to enforce any applicable Vendor warranties, to the extent permitted thereby and by applicable law. Lessor assigns such warranties to Lessee, to the extent permitted thereby, and agrees to cooperate with Lessee, at Lessee’s sole cost and expense, in making any reasonable claim against such Vendor arising from any defect in the Equipment.
4.Use; Maintenance; Location; Inspection. Lessee shall:(i) use, operate, protect and maintain the Equipment (a) in good operating order, repair, condition and appearance, in the same condition as when received, ordinary wear and tear excepted, (b) consistent with prudent industry practice (but in no event less than the extent to which Lessee maintains other similar equipment in the prudent management of its assets and properties), and (c) in compliance with all applicable insurance policies, laws, ordinances, rules, regulations and manufacturer's recommended maintenance and repair procedures, and (ii) maintain comprehensive books and records regarding the use, operation, maintenance and repair of the Equipment. The Equipment shall be used only within the 48 contiguous United States or Hawaii, solely for business purposes (and not for any consumer, personal, home, or family purpose), and shall not be abandoned or used for any unlawful purpose. Lessee shall not discontinue use of any Equipment except for normal
maintenance nor, through modifications, alterations or otherwise, impair in any material respect the current or residual value, useful life, utility or originally intended function of any Equipment without Lessor's prior consent. Any replacement or substitution of parts, improvements, upgrades, or additions to the Equipment, including without limitation lenses financed as part of the Equipment (but excluding therefrom any such lenses not so financed), that are necessary to operate the Equipment during the Lease Term or upon termination or expiration of the Lease Term (unless Lessor consents otherwise in writing) shall become the property of Lessor and subject to the Lease, except that if no Event of Default exists, Lessee may at its expense remove improvements or additions provided by Lessee that can be readily removed without impairing the value, function or remaining useful life of the Equipment. If requested by Lessor, Lessee shall cause Equipment to be plainly marked to disclose Lessor's ownership, as specified by Lessor. Except as provided in (x) Section 13 with respect to a permitted assignment or sublease, or (y) Section 10 with respect to a permitted license, Lessee shall not change the location of any Equipment specified in its Schedule without Lessor's prior written consent. Lessor shall have the right to enter any premises where Equipment is located and inspect it (together with related books and records) at any reasonable time.
5.Loss and Damage. Lessee assumes all risk of (and shall promptly notify Lessor in writing of any occurrence of) any damage to or loss, theft, confiscation or destruction of any Equipment from any cause whatsoever (a “Casualty”) from the date shipped or otherwise made available to Lessee and continuing until it is returned to and accepted by Lessor in the condition required by the Lease, including Section 8 of this Agreement. If any Equipment suffers a Casualty which Lessor and Lessee reasonably determine is reparable, Lessee shall at its expense promptly place the same in good repair, condition or working order. If any Equipment suffers a Casualty which Lessor and Lessee reasonably determine is beyond repair or materially impairs its residual value (a “Total Loss”), Lessee shall at Lessor’s option either (a) promptly replace such Equipment with a similar item reasonably acceptable to Lessor having an equivalent value, utility and remaining useful life of such Equipment, whereupon such replacement items shall constitute Equipment for all purposes the Lease, or (b) on the Rent payment date following such Casualty (or, if none, within 30 days) pay Lessor the Stipulated Loss Value for such Equipment, together with all Rent scheduled for payment on such date, and all accrued interest, late charges and other amounts then due and owing under the Lease. Upon such payment following a Total Loss, the Lease with respect to the Equipment suffering a Total Loss shall terminate, and Lessor shall transfer all of its right, title and interest in such Equipment, free from all liens and encumbrances created by Lessor, but otherwise on an “AS-IS, WHERE-IS,” quitclaim basis. If less than all Equipment under a Schedule suffers a Total Loss, (i) the Stipulated Loss Value with respect to any such item of Equipment shall be calculated by reference to the allocable portion of “Lessor’s Cost” provided in the applicable Schedule, Rent or other amount related to such item, as reasonably determined by Lessor, and (ii) the remaining Rent under the Schedule shall be proportionately reduced as reasonably calculated by Lessor upon Lessor’s receipt of the payments described above.
6.Insurance. Lessee, at its own expense, shall keep each item of Equipment insured against all risks for its replacement value, and in no event less than its Stipulated Loss Value, and shall maintain general liability insurance against such risks and for such amounts as Lessor may require. All such insurance shall (a) be with companies rated “A-” or better by A.M. Best Company, in such form as Lessor shall approve, (b) specify Lessor and Lessee as insureds and provide that it may not be canceled or altered in any way that would affect the interest of Lessor without at least 30 days' prior written notice to Lessor (10 days' in the case of nonpayment of premium), (c) be primary, without right of contribution from any other insurance carried by Lessor and contain waiver of subrogation and “breach of warranty” provisions satisfactory to Lessor, (d) provide that all amounts payable by reason of loss or damage to Equipment shall be payable solely to Lessor, unless Lessor otherwise agrees, and (e) contain such other endorsements as Lessor may reasonably require. Lessee shall provide Lessor with evidence satisfactory to Lessor of the required insurance upon the execution of any Schedule and promptly upon any renewal of any required policy.
7.Indemnities; Taxes. Lessee's indemnity and reimbursement obligations set forth below shall survive the cancellation, termination or expiration of any Lease or this Agreement.
(a) General Indemnity. Lessee shall indemnify, on an after-tax basis, defend and hold harmless Lessor and its Affiliates and their respective officers, directors, employees, agents acting in their capacities as representatives of Lessor or such Affiliates (“Indemnified Persons”) against all claims, liabilities, losses and expenses whatsoever (except those determined by final decision of a court of competent jurisdiction to have been directly and primarily caused by the Indemnified Person's gross negligence or willful misconduct), including court costs and reasonable attorneys' fees and expenses (together, “Attorneys’ Fees”), in any way relating to or arising out of the Equipment or any Lease at any time, or the ordering, acquisition, rejection, installation, possession, maintenance, use, ownership, condition, destruction or return of the Equipment, including any claims based in negligence, strict liability in tort, environmental liability or infringement.
(b) General Tax Indemnity. Lessee shall pay or reimburse Lessor, and indemnify, defend and hold Lessor harmless from, on an after-tax basis, all taxes, assessments, fees and other governmental charges paid or required to be paid by Lessor or Lessee in any way arising out of or related to the Equipment or any Lease before or during the Lease Term or after the Lease Term following an Event of Default (but only to the extent that the Equipment remains in the possession of the Lessee after such Event of Default), including foreign, Federal, state, county and municipal fees, taxes and assessments, and property, value-added, sales, use, gross receipts, excise, stamp and documentary taxes, and all related penalties, fines, additions to tax and interest charges (“Impositions”), excluding only Federal and state taxes based on Lessor's net income and overall gross income and any franchise taxes and taxes imposed in lieu of such taxes,unless such taxes are in lieu of any Imposition Lessee would otherwise be required to pay hereunder. Lessee shall timely pay any Imposition for which Lessee is primarily responsible under law and any other Imposition not payable or not paid by Lessor,
but Lessee shall have no obligation to pay any Imposition being contested in good faith and by appropriate legal proceedings, the nonpayment of which does not, in the good faith and reasonable opinion of Lessor, result in a material risk of adverse effect on the title, property, use, disposition or other rights of Lessor with respect to the Equipment. Upon Lessor's request, Lessee shall furnish proof of its payment of any Imposition.
(c) Income Tax Indemnity. Lessor shall be treated for federal and state income tax purposes as the owner of the Equipment and shall be entitled to take into account certain Tax Benefits in computing its income tax liabilities in connection with any Lease. If Lessor suffers a Tax Loss that would not have been but for an act or failure to act by Lessee, or Lessee’s breach in any material respect of any representation, warranty or agreement in any Lease then, upon Lessor's demand and at Lessor's option, either: (i) all further Rent under the Lease, if any, shall be increased by an amount, or (ii) Lessee shall pay Lessor a lump sum amount, which in either case shall maintain the net economic after-tax yield, cash-flow and rate of return Lessor originally anticipated, based on Lessor’s federal and state corporate income tax rate in effect on the Acceptance Date of the applicable Schedule and other assumptions originally used by Lessor in evaluating the transaction (so long as such assumptions were reasonable when made and consistently appliedwhen evaluating all similarly situated transactions) and setting the Rent therefor and other terms thereof. Lessee shall also pay Lessor on demand all interest, costs (including Attorneys’ Fees), penalties and additions to tax associated with the Tax Loss. Lessor shall have no obligation to contest any Tax Loss. All references to “Lessor” in this Section 7(c) shall include (A) Lessor's successors and Assignees, and (B) each member of the affiliated group of corporations, as defined in Section 1504(a) of the Code, of which Lessor or such successor or Assignee is at any time a member. As used herein: “Tax Benefits” means all items of income, deduction (including depreciation consistent with Lessee's representation in the applicable Schedule), credit, gain or loss relating to ownership of the Equipment as are provided to owners of similar equipment under the Code and applicable state tax laws in effect on the Acceptance Date of such Schedule; and “Tax Loss” means and will be deemed to be suffered if Lessor loses, is delayed in claiming, is required to recapture, is not allowed or may not claim all or any portion of any Tax Benefits, provided, however, that Lessee shall be under no obligation to make any payments with respect to a Tax Loss to the extent that it (1) is caused by Lessor's failure to have sufficient taxable income to benefit from any Tax Benefits or its failure to timely and properly claim the Tax Benefits, or (2) results from any disposition of Equipment by Lessor other than a disposition of Equipment following an Event of Default.
8.Return. Upon any cancellation, termination or expiration of any Lease (after the occurrence of an Event of Default or otherwise), Lessee shall, at its expense, cause the Equipment to be prepared and adequately protected for shipment by an authorized manufacturer’s representative and either surrender it to Lessor in place or, if instructed by Lessor, ship the Equipment to Lessor, freight and insurance pre-paid, to a place designated by Lessor within the 48 contiguous United States, or in the case of Equipment located in the State of Hawaii, to a location on the West Coast of the continental United States within 500 miles of the port of return, in the condition required under Section 4 hereof and under the applicable Schedule, able to be put into immediate service and to perform at manufacturer's rated levels (if any), together with all related manuals, documents and records, and, if applicable, reassembled by an authorized manufacturer’s representative and immediately qualified for the manufacturer’s (or its authorized servicing representative’s) then available service contract or warranty. Upon its return, each item of Equipment shall have installed an operable lens, whether it is the lens originally financed and maintained as required hereunder or a lens of equal or greater value, utility and useful life. If requested by Lessor, Lessee shall, at its expense: (i) cause the Equipment to qualify for all applicable licenses or permits necessary for its operation and for its intended purpose, and to comply with all specifications and requirements of applicable federal, state and local laws, regulations and ordinances; (ii) provide safe, suitable storage, reasonably acceptable to Lessor, for the Equipment for a period not to exceed 90 days from the date of return; and (iii) cooperate with Lessor in attempting to remarket the Equipment, including display and demonstration to prospective parties (but excluding any obligation to permit a private sale of the Equipment at any relevant location).If Lessee does not surrender or return any item of Equipment to Lessor on the date or in the condition required under a Lease, in addition to all other available rights and remedies, at Lessor's election, such Equipment shall continue to be subject to all the terms and conditions of the Lease, with Rent and other charges continuing to accrue and be payable under the Lease with respect to such Equipment until it is so surrendered or returned to Lessor, except that Rent shall accrue at 125% of the last Rent allocable to such item of Equipment (as reasonably calculated by Lessor) during the Lease Term, payable on demand.
9.Lessee Representations and Agreements. Lessee represents, warrants and agrees that: (a) Lessee operates and does business under the legal name listed in the first paragraph of this Agreement,and is duly organized and validly existing in the form of business organization described above; (b) Lessee’s chief executive office and notice address, taxpayer identification number and any organizational identification number is as described with its execution of this Agreement below; (c) Lessee shall notify Lessor in writing at least 30 days before changing its legal name, state of organization, chief executive office location or organizational identification number; (d) Lessee is duly organized and existing in good standing under the laws of the state described above and all other jurisdictions where legally required in order to carry on its business, shall maintain its good standing in all such jurisdictions, and shall conduct its businesses and manage its properties in compliance with all applicable laws, rules or regulations binding on Lessee; (e) the execution, delivery and performance of this Agreement, each Lease and Related Agreement to which it is a party has been duly authorized by Lessee, each of which are and will be binding on and enforceable against Lessee in accordance with their terms, and do not and will not contravene any other instrument or agreement binding on Lessee; and (f) there is no pending litigation, tax or environmental claim, proceeding, dispute or regulatory or enforcement action against Lessee or any of its Affiliates (and Lessee shall promptly notify Lessor of any of the same that may hereafter arise) that may adversely affect any Equipment or Lessee's financial condition or impair its ability to perform its Obligations.
10.Title; Property; Additional Security. (a) Title; Personal Property. Each Lease is and is intended to be a lease of personal property for all purposes. Lessee does not acquire any right, title or interest in or to any Equipment, except the right to use and possess the same under the terms of the applicable Lease. Except as specifically provided herein or in the applicable Schedule, Lessee has no right or option to extend the Lease Term of a Lease or purchase any Equipment. Lessee assigns all of its rights (but none of its obligations) to Lessor under any purchase orders, invoices or other contracts of sale with respect to the Equipment, and conveys whatever right, title and interest it may now or hereafter have in any Equipment to Lessor. Lessor shall be the sole owner of Equipment free and clear of all liens or encumbrances, other than Lessee’s rights under the Lease. Lessee will not create or permit to exist any lien, security interest, charge or encumbrance on any Equipment except those created by Lessor. The Equipment shall remain personal property at all times, notwithstanding the manner in which it may be affixed to realty. Lessee shall obtain and record such instruments and take such steps as may be necessary to (i) prevent any creditor, landlord, mortgagee or other entity (other than Lessor) from having any lien, charge, security interest or encumbrance on any Equipment, and (ii) ensure Lessor's right of access to and removal of Equipment in accordance with the Lease. Notwithstanding the foregoing, Lessee shall have the right to license the Equipment to its Affiliates, and shall have the right to allow licensees to use the Equipment on third-party premises, provided that such license agreements are in form and substance reasonably acceptable to Lessor, and Lessee obtains from the owners and landlords of such premises a consent to installation and waiver in form and substance reasonably acceptable to Lessor.
(b) Additional Security. To secure the punctual payment and performance of Lessee’s Obligations under each Lease and, as a separate grant of security, to secure the payment and performance of all other Obligations owing to Lessor, Lessee grants to Lessor a continuing security interest in the Collateral, provided, however, that if there then exists no Event of Default, Lessor’s security interest in Collateral subject to a Lease shall terminate upon the payment and performance of all Obligations of Lessee under the applicable Lease. Notwithstanding the grant of a security interest in any Collateral, Lessee shall have no right to sell, lease, rent, dispose or surrender possession, use or operation of any Equipment to any third parties without the prior written consent of Lessor except as permitted by Sections 10(a) or 13 hereof. The foregoing grant of a security interest shall not of itself be a factor in determining whether any Lease creates a lease or security interest in the Equipment under applicable provisions of the UCC.
11.Default. Each of the following (a “Default”) shall, with the giving of any notice or passage of any time period specified, constitute an "Event of Default" hereunder and under all Leases:(1) Lessee fails to pay any Rent or other amount owing under any Lease within 10 days of its due date; (2) Lessee fails to maintain insurance as required herein, or sells, leases, subleases, assigns, conveys, or suffers to exist any lien, charge, security interest or encumbrance on, any Equipment without Lessor's prior consent unless the sublease or assignment is permitted by Sections 10(a) or 13 hereof, or any Equipment is subjected to levy, seizure or attachment; (3) Lessee fails to perform or comply with any other covenant or obligation under any Lease or Related Agreement and, if curable, such failure continues for 30 days after written notice thereof by Lessor to Lessee; provided that such 30-day period may be extended with Lessor’s consent if Lessee is diligently pursuing cure of such default and completes such cure within 60 days after written notice thereof by Lessor to Lessee; (4) any representation, warranty or other written statement made to Lessor by Lessee in connection with this Agreement, any Lease, Related Agreement or other Obligation, or by any Guarantor pursuant to any Guaranty (including financial statements) proves to have been incorrect in any material respect when made; (5) Lessee (w) enters into any merger or consolidation with, or sells or transfers all or any substantial portion of its assets to, or enters into any partnership or joint venture other than (A) in the ordinary course of business with, any entity, (B) in a transaction that would not otherwise result in a default under any of the incorporated covenants described in Section 15 hereof, (x) dissolves, liquidates or ceases or suspends the conduct of business, or ceases to maintain its existence, in each case in a transaction that would not otherwise result in a default under any of the incorporated covenants described in Section 15 hereof, or (y) enters into or suffers any transaction or series of transactions as a result of which Lessee is no longer directly or indirectly controlled by Parent; (6) Lessee undertakes any general assignment for the benefit of creditors or commences any voluntary case or proceeding for relief under the federal bankruptcy code, or any other law for the relief of debtors, or takes any action to authorize or implement any of the foregoing; (7) the filing of any petition or application against Lessee under any law for the relief of debtors, including proceedings under the federal bankruptcy code, or for the subjection of property of Lessee to the control of any court, receiver or agency for the benefit of creditors if such petition or application is consented to by Lessee or is otherwise not dismissed within 60 days from the date of filing; (8) any default occurs under any other lease, credit or other agreement or instrument to which Lessee and Lessor or any Affiliate of Lessor are now or hereafter party (each, an “Affiliate Obligation”); (9) any default by Lessee occurs under any other agreement or instrument to which Lessee is a party and under which there is outstanding, owing or committed an aggregate amount greater than $100,000; (10) any attempted repudiation, breach or default of any Guaranty; or (11) the occurrence of any event described in clauses (4) through (9) above with reference to any Guarantor or any controlling shareholder, general partner or member of Lessee.Lessee shall promptly notify Lessor in writing of any Default or Event of Default. As reflected in Section 15 hereof, any cure or waiver of any default under an Affiliate Obligation that has caused a default hereunder shall automatically cure, or result in a waiver of, such corresponding default hereunder.
12.Remedies. (a) Upon the occurrence of an Event of Default, Lessor may, in its discretion, exercise any one or more of the following remedies with respect to any or all Leases or Equipment: (1) cause Lessee to promptly discontinue use of or disable any Equipment, or to assemble and return any Equipment or other Collateral in accordance with the terms of the applicable Lease; (2) remedy such Event of Default or proceed by court action, either at law or in equity, to enforce performance of the applicable provisions of any Lease; (3) with or without court order, enter upon the premises where Equipment is located and repossess and remove the same, all without liability for damage to such premises or by reason such entry or repossession, except for Lessor's gross negligence or willful misconduct; (4) dispose of any Equipment in a public or private transaction, or hold, use, operate or keep idle the Equipment, free and clear of any rights or interests of Lessee therein; (5) recover direct, incidental, consequential and other damages for the breach of any Lease, including the payment of all Rent and other amounts payable thereunder (discounted at the Discount Rate with respect to any
accelerated future amounts), and all costs and expenses incurred by Lessor in exercising its remedies or enforcing its rights thereunder (including all Attorneys’ Fees); (6) by written notice to Lessee, cancel any Lease and, as liquidated damages for the loss of Lessor's bargain and not as a penalty, declare immediately due and payable an amount equal to the Stipulated Loss Value applicable to such Leases which Lessee acknowledges to be reasonable liquidated damages in light of the anticipated harm to Lessor that might be caused by an Event of Default and the facts and circumstances existing as of the Acceptance Date of each Lease; (7) without notice to Lessee, apply or set-off against any Obligations all security deposits, advance payments, proceeds of letters of credit, certificates of deposit (whether or not matured), securities or other additional collateral held by Lessor or otherwise credited by or due from Lessor to Lessee; or (8) pursue all other remedies provided under the UCC or other applicable law. Upon the commencement of any voluntary case under the federal bankruptcy code concerning the Lessee, the remedy provided in clause (6) above shall be automatically exercised without the requirement of prior written notice to Lessee or of any other act or declaration by Lessor, and the liquidated damages described therein shall be immediately due and payable. Lessee shall pay interest equal to the lesser of (a) 12% per annum, or (b) the highest rate permitted by applicable law (“Default Rate”) on (i) any amount other than Rent owing under any Lease and not paid when due, (ii) Rent not paid within 30 days of its due date, and (iii) any amount required to be paid upon cancellation of any Lease under this Section 12. Any payments received by Lessor after an Event of Default, including proceeds of any disposition of Equipment, shall be applied in the following order: (A) to all of Lessor's costs (including Attorneys’ Fees), charges and expenses incurred in taking, removing, holding, repairing and selling or leasing the Equipment or other Collateral or enforcing the provisions hereof; (B) to the extent not previously paid by Lessee, to pay Lessor for any damages then remaining unpaid hereunder; (C) to reimburse Lessee for any sums previously paid by Lessee as damages hereunder; and (D) the balance, if any, shall be retained by Lessor.
(b) No remedy referred to in this Section 12 shall be exclusive, each shall be cumulative (but not duplicative of recovery of any Obligation) and in addition to any other remedy referred to above or otherwise available to Lessor at law or in equity, and all such remedies shall survive the cancellation of any Lease. Lessor’s exercise or partial exercise of, or failure to exercise, any remedy shall not restrict Lessor from further exercise of that remedy or any other available remedy. No extension of time for payment or performance of any Obligation shall operate to release, discharge, modify, change or affect the original liability of Lessee for any Obligations, either in whole or in part. Lessor may proceed against any Collateral or Guarantor, or may proceed contemporaneously or in the first instance against Lessee, in such order and at such times following an Event of Default as Lessor determines in its sole discretion. In any action to repossess any Equipment or other Collateral, Lessee waives any bonds and any surety or security required by any applicable laws as an incident to such repossession. Notices of Lessor's intention to accelerate, acceleration, nonpayment, presentment, protest, dishonor, or any other notice whatsoever (other than notices of Default specifically required of Lessor pursuant to Section 11 above) are waived by Lessee and any Guarantor. Any notice given by Lessor of any disposition of Collateral or other intended action of Lessor which is given in accordance with this Agreement at least 5 business days prior to such action, shall constitute fair and reasonable notice of such action.
(c)Lessor agrees to honor the right given by Lessee to CIDM in Section 9(c)(i) of the CIDM Agreement, after an Event of Default hereunder, of first negotiation and last refusal to acquire the Equipment prior to its sale to any other party.
13. Assignment; Subleases. Lessor and any Assignee may assign or transfer any of Lessor's interests in any Lease or Equipment without notice to Lessee, subject, however, to the rights of Lessee (and any permitted assignees, licensees or sublessees) to use and possess the Equipment under such Lease for so long as no Event of Default has occurred and is continuing.Lessee agrees that: (i) the rights of any Assignee shall not be affected by any breach or default of Lessor or any prior Assignee, and Lessee shall not assert any defense, rights of set-off or counterclaim against any Assignee, nor hold or attempt to hold such Assignee liable for any such breach or default; (ii) no Assignee shall be required to assume any obligations of Lessor under any Lease except the obligation of non-interference in Section 1 and the recognition of CIDM’s rights to acquire the Equipment described in Section 12(c) above, (iii) any Assignee expressly assuming the obligations of Lessor shall thereupon be responsible for Lessor's duties under the applicable Lease accruing after assignment and Lessor shall be released from such duties, and (iv) Lessee shall execute and deliver upon request such additional documents, instruments and assurances as may be reasonably necessary in order to (y) acknowledge and confirm all of the terms and conditions of any Lease and Lessor's or such Assignee’s rights with respect thereto, and Lessee’s compliance with all of the terms and provisions thereof, and (z) preserve, protect and perfect Lessor’s or Assignee’s right, title or interest hereunder and in any Equipment, including, without limitation, such UCC financing statements or amendments, control agreements, corporate or member resolutions, votes, notices of assignment of interests, and confirmations of Lessee’s obligations and representations and warranties with respect thereto as of the dates requested. Lessor may disclose to any potential Assignee any information regarding Lessee, any Guarantor and their Affiliates; provided that any information provided to Lessor by Lessee under the terms of any Confidentiality Agreement will not be disclosed except pursuant to a confidentiality agreement between Lessee and the intended recipient of such information from Lessor containing terms and conditions substantially similar to those set forth in the Confidentiality Agreement under which such information was disclosed by Lessee to Lessor. Lessee shall not sell, pledge, transfer or hypothecate in any way dispose of any of its rights or obligations under any Lease without Lessor's prior written consent. Any purported sale, pledge, transfer, hypothecation, or disposal made without Lessor’s prior written consent shall be null and void, except in connection with (1) licenses permitted under Section 10 hereof, or (2) assignments and subleases permitted under this Section 13. Lessee may assign the Equipment or its interest under a Schedule only if: (i) Lessee provides Lessor with notice of such proposed assignment and financial information as may be requested on the assignee at least 60 days prior to the proposed assignment date; (ii) the assignee is an entity that is a direct or indirect wholly-owned subsidiary of one of the Guarantors; (iii) Lessor approves the identity and location of the assignee; (iv) the assignee assumes all obligations of Lessee hereunder and under the appropriate Schedule (and Lessee’s obligations hereunder shall correspondingly be terminated to the extent of the assignment); and (v) each existing Guaranty is amended or new guaranties
are entered into by each Guarantor to include a guaranty of payment and performance of all obligations of the assignee. Lessee may sublease (which for these purposes shall not include a license permitted under Section 10 or an assignment permitted under this Section 13) the Equipment or its interest under a Schedule only if: (i) Lessee provides Lessor with notice of such proposed sublease and financial information as may be requested concerning the sublessee at least 60 days prior to the proposed sublease commencement; (ii) the sublessee is an entity that is a direct or indirect wholly-owned subsidiary of one of the Guarantors; (iii) Lessor approves the identity and location of the sublessee; (iv) any permitted sublease shall be in a form satisfactory in form and substance to Lessor and shall provide that the sublessee's rights are subject and subordinate to the rights of Lessor; (v) Lessee shall remain liable at all times for the payment and performance of the terms and conditions of this Lease with respect to any subleased Equipment ; (iv) the sublease chattel paper shall be collaterally assigned to Lessor as additional security, and if requested, Lessee shall provide the original sublease chattel paper to Lessor to perfect Lessor’s security interest therein ; and (iv) each Guaranty is amended or new guaranties are entered into by each Guarantor to include a guaranty of payment and performance of all obligations of the sublessee.
14.Financial and Other Data. (a) During any Lease Term, Consolidated Entertainment, Inc. and Reading International Inc., each a Guarantor hereunder, shall maintain books and records in accordance with generally accepted accounting principles consistently applied (“GAAP”) and prudent business practice.Lessee shall promptly provide Lessor, within 120 days after the close of each fiscal year, and, upon Lessor's request, within 45 days of the end of each quarter and each fiscal year, as applicable, a copy of (i)company-prepared management reports for Lessee and Consolidated Amusement Holdings, Inc., (ii) quarterly financial statements for Consolidated Entertainment, Inc. and Reading International Inc. as requested by Lessor,which financial statements must be prepared in accordance with GAAP, and (iii) within 180 days after the close of each fiscal year, annual statements for Consolidated Entertainment, Inc. and Reading International Inc. audited by independent certified public accountants; provided, however, that for so long as any such Guarantor is legally and timely filing annual and quarterly financial reports on Forms 10-K and 10-Q with the Securities and Exchange Commission which are readily available to the public, the filing of such reports shall satisfy the foregoing financial statement reporting requirements for such entity; and (iii) furnish Lessor all other financial information and reports and such other information as Lessor may reasonably request concerning Lessee, any Guarantor and their respective affairs, or the Equipment or its condition, location, use or operation.
(b) Lessee represents and warrants that all written information and financial statements at any time furnished by or on behalf of Lessee or any Guarantor are accurate in all material respects and in the case of financial statements reasonably reflect as of their respective dates, results of operations and the financial condition of Lessee, such Guarantor or other entity they purport to cover. Credit and other information regarding Lessee, any Guarantor or their Affiliates, any Lease or Equipment may be disclosed by Lessor to its Affiliates, agents and potential Assignees, notwithstanding anything contained in any agreement that may purport to limit or prohibit such disclosure, subject, however, to such assignees’ agreement to hold all such credit and other information on a confidential basis consistent with the confidentiality obligation between Lessor and Lessee.
15. Financial Covenants
All covenants of Consolidated Entertainment, Inc. and its subsidiaries on a consolidated basis that are based upon a specified level or ratio relating to assets, liabilities, indebtedness, rentals, net worth, cash flow, earnings, profitability, or any other accounting-based measurement or test, now or hereafter existing (collectively, the “Additional Covenants”), contained in that certain Credit Agreement dated as of October __, 2012, as amended from time to time, among Consolidated Entertainment, Inc. as Borrower, other parties as Credit Parties and certain Lenders, or in any replacement credit facility between Lessee and another financial institution (a “Bank Facility”), are hereby incorporated into and made a part of this Agreement (with such adjustments to defined terms as may be necessary to assure consistency), as such Additional Covenants may be amended from time to time under such Bank Facility; provided, however, that the Additional Covenants shall be deemed permanently incorporated into the Agreement, in their then existing form without further modification or amendment except as may be agreed to in writing by Lessee and Lessor, upon and notwithstanding the cancellation or termination of a Bank Facility by either Lessee or the lender(s); provided further that any modification, amendment or waiver of any breach (or anticipated breach) of any Additional Covenant (by reason of amendment, forbearance or otherwise) shall not constitute a modification, amendment or waiver of the corresponding default (or anticipated default) of such Additional Covenant under this Agreement unless specifically agreed to in writing by Lessor.
Notwithstanding the foregoing, if a replacement credit facility is with Bank of America, N.A. or one of its Affiliates as a lender, any modification, amendment or waiver of any breach (or anticipated breach) of any Additional Covenant (by reason of amendment, forbearance or otherwise) under such replacement credit facility shall be binding on Lessor.
As used herein, the following terms shall have the meanings assigned or referred to them below:
“Affiliate” means any entity controlling, controlled by or under common control with the referent entity; “control” includes (i) the ownership of 25% or more of the voting stock or other ownership interest of any entity and (ii) the status of a general partner of a partnership or managing member of a limited liability company.
“Assignee” means any assignee or transferee of all or any of Lessor’s right, title and interest in any Lease or any Equipment.
“CIDM” means ACCESS DIGITAL CINEMA PHASE 2, CORP, the counterparty to the Master Digital Cinema and Administration Agreement described below, and its successors and assigns
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means and includes all of Lessee's right, title and interest in and to all Equipment, together with: (i) all parts, attachments, accessories and accessions to, substitutions and replacements for, each item of Equipment; (ii) all accounts, chattel paper, and general intangibles arising from or related to any sale, lease, rental or other disposition of any Equipment to third parties, or otherwise resulting from the possession, use or operation of any Equipment by third parties, including instruments, investment property, deposit accounts, letter of credit rights, and supporting obligations arising thereunder or in connection therewith, excluding however,(a) accounts or other amounts generated by intercompany rentals of the Collateral to Lessee’s Affiliates; and (b) Usage Payments and Virtual Print Fees payable to Lessee under a Master Digital Cinema and Administrative Agreement dated as of September__, 2012 (as amended, restated, supplemented or otherwise modified from to time, the “Digital Cinema Agreement”) generated in the ordinary course of Lessee’s or a permitted licensee’s use of the Collateral on third party sites, (iii) all insurance, warranty and other claims against third parties with respect to any Equipment; (iv) all software and other intellectual property rights used in connection therewith; (v) proceeds of all of the foregoing, including insurance proceeds and any proceeds in the form of goods, accounts, chattel paper, documents, instruments, general intangibles, investment property, deposit accounts, letter of credit rights and supporting obligations; and (vi) all books and records regarding the foregoing, in each case, now existing or hereafter arising.
“Discount Rate” means the 1-year Treasury Constant Maturity rate as published in the Selected Interest Rates table of the Federal Reserve statistical release H.15(519) for the week ending immediately prior to the original Acceptance Date of a Lease (or if such rate is no longer determined or published, a successor or alternate rate selected by Lessor).
“Equipment” means the items, units and groups of personal property,licensed materials and fixtures described in each Schedule, together with all replacements, parts, additions, accessories and substitutions therefor; and “item of Equipment” means a “commercial unit” as defined and described in Article 2A of the UCC, and includes each functionally integrated and separately marketable group or unit of Equipment.
“Guarantor” means any guarantor, surety, endorser, general partner or co-lessee of Lessee, or other party liable in any capacity, or providing additional collateral security for, the payment or performance of any Obligations of Lessee.
“Guaranty” means any guaranty, surety instrument, security, indemnity, “keep-well” agreement or other instrument or arrangement from or with any Guarantor.
"Obligations" means and includes all obligations of Lessee owing to Lessor under this Agreement, any Lease or Related Agreement, or of any Guarantor owing to Lessor under any Guaranty, together with all other obligations, indebtedness and liabilities of Lessee to Lessor under any other financings, leases, loans, notes, progress payment agreements, guaranties or other agreements, of every kind and description, now existing or hereafter arising, direct or indirect, joint or several, absolute or contingent, whether for payment or performance, regardless of how the same may arise or by what instrument, agreement or book account they may be evidenced, including without limitation, any such obligations, indebtedness and liabilities of Lessee to others which may be obtained by Lessor through purchase, negotiation, discount, transfer, assignment or otherwise.
“Parent” means Reading International Inc.
“Related Agreement” means and includes any Guaranty and any approval letter or progress payment, assignment, security or other agreement or addendum related to this Agreement, any Lease or any Collateral to which Lessee or any Guarantor is a party.
“Stipulated Loss Value” means, as of any particular date, the product obtained by multiplying the “Lessor’s Cost” specified in the Schedule by the percentage set forth in the “Schedule of Stipulated Loss Values” attached to the Schedule, specified opposite the Rent installment number (or date) becoming due immediately after the Casualty, Event of Default or other event requiring the calculation of Stipulated Loss Value. If there is no Schedule of Stipulated Loss Values attached to a Schedule, or if the Schedule of Stipulated Loss Values does not otherwise cover a Rent installment number (or date), Stipulated Loss Value on any Rent payment date shall equal the net present value of: (a) all unpaid Rent for the remainder of the Lease Term, plus (b) the amount of any purchase obligation, fixed price purchase option, or TRAC amount payment or, if there is no such obligation, option or payment, then the fair market value of the Equipment as of the end of the Lease Term, as estimated by Lessor in its sole discretion, all discounted to present value at the Discount Rate.
“UCC” means the Uniform Commercial Code in effect in the state specified in Section 17(f) of this Agreement.
“Vendor” means the manufacturer, distributor, supplier or other seller (whether or not a merchant or dealer) of the Equipment and any sales representative or agent thereof.
17.Miscellaneous. (a) At Lessor's request, Lessee shall execute, deliver, file and record such financing statements and other documents as Lessor deems necessary to protect Lessor's interest in the Equipment and to effectuate the purposes of any Lease or Related Agreement, and Lessee authorizes, and irrevocably appoints Lessor as its agent and attorney-in-fact, with right of substitution and coupled with an interest, to (i) execute, deliver, file, and record any such item, and to take such action for Lessee and in Lessee's name, place and stead, (ii) make minor corrections to manifest errors in factual data in any Schedule and any addenda, attachments, exhibits and riders thereto, and (iii) after the occurrence of an Event of Default, enforce claims relating to the Equipment against insurers, Vendors or other persons, and to make, adjust, compromise, settle and receive payment under such claims; but without any obligation to do so.
(b)Federal law requires all financial institutions to obtain, verify and record information that identifies each entity that obtains a loan or other financial accommodation. The first time Lessee requests a financial accommodation from Lessor, the Lessor may ask for Lessee’s (or any Guarantor’s) legal name, address, tax ID number and other identifying information. Lessee shall promptly provide copies of business licenses or other documents evidencing the existence and good standing of Lessee or any Guarantor requested by Lessor.
(c) Time is of the essence in the payment and performance of all of Lessee’s Obligations under any Lease or Related Agreement. This Agreement, and each Lease or Related Agreement may be executed in one or more counterparts, each of which shall constitute one and the same agreement. All demands, notices, requests, consents, waivers and other communications concerning this Agreement and any Lease or Related Agreement shall be in writing and shall be deemed to have been duly given when received, personally delivered or three business days after being deposited in the mail, first class postage prepaid, or the business day after delivery to an express carrier, charges prepaid, addressed to each party at the address provided herein, or at such other address as may hereafter be furnished in writing by such party to the other.
(d) Except as otherwise agreed between Lessee and Lessor in writing, Lessee shall reimburse Lessor upon demand for reasonable and documented costs and expenses incurred by Lessor in connection with the execution and delivery of this Agreement, any Lease or Related Agreement. Lessee shall reimburse Lessor on demand for all reasonable and documented costs (including Attorneys’ Fees) incurred by Lessor in connection with Lessee’s exercise of any purchase or extension option under any Lease, or any amendment or waiver of the terms of this Agreement or any Lease or Related Agreement requested by Lessee.
(e) Any provisions of this Agreement or any Lease or Related Agreement which are unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions thereof, and any such unenforceability shall not render unenforceable such provisions in any other jurisdiction. Any requirement for the execution and delivery of any document, instrument or notice may be satisfied, in Lessor’s discretion, by authentication as a record within the meaning of, and to the extent permitted by, Article 9 of the UCC.
(f) THIS AGREEMENT AND ANY LEASE OR RELATED AGREEMENT, AND THE LEGAL RELATIONS OF THE PARTIES THERETO, SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF RHODE ISLAND, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES; THE PARTIES CONSENT AND SUBMIT TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS OF SUCH STATE FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING THEREFROM, AND EXPRESSLY WAIVE ANY OBJECTIONS THAT IT MAY HAVE TO THE VENUE OF SUCH COURTS. THE PARTIES EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT THERETO. IN NO EVENT SHALL LESSOR HAVE ANY LIABILITY TO LESSEE FOR INCIDENTAL, GENERAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES. Any cause of action by Lessee against Lessor relating to this Agreement or any Lease or Related Agreement shall be brought within one year after any such cause of action first arises, and Lessee hereby waives the benefit of any longer period provided by statute.
(g)EACH LEASE, TOGETHER WITH THIS AGREEMENT AND ANY RELATED AGREEMENTS, (i) CONSTITUTES THE FINAL AND ENTIRE AGREEMENT BETWEEN THE PARTIES SUPERSEDING ALL CONFLICTING TERMS OR PROVISIONS OF ANY PRIOR PROPOSALS, APPROVAL LETTERS, TERM SHEETS OR OTHER AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES, (ii) MAY NOT BE CONTRADICTED BY EVIDENCE OF (y) ANY PRIOR WRITTEN OR ORAL AGREEMENTS OR UNDERSTANDINGS, OR (z) ANY CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES; and (iii) MAY NOT BE AMENDED, NOR MAY ANY RIGHTS THEREUNDER BE WAIVED, EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY CHARGED WITH SUCH AMENDMENT OR WAIVER.
Security Exchange Commission - Edgar Database, EX-10.31 2 rdi-20121231ex103112c99.htm EX-10.31, ViewedSeptember 27, 2021, View Source on SEC.
What is the definition of a master lease? ›
A master lease is a single lease that covers multiple properties leased from a landlord to a tenant. As a single lease, a master lease will not break out rents ascribed to individual properties. All properties within a master lease are bound by a single payment, lease escalation and lease renewal schedule.What is an example of a master lease? ›
A master lease agreement is legal document where you lease an income-producing property as a single tenant-landlord and sublease to two or more tenants to produce income. One common example are shopping malls, which have many stores renting space from one landlord.What are the benefits of a master lease agreement? ›
A master lease agreement provides an avenue to invest in commercial real estate without tens of thousands in the bank for a down payment or millions in net worth. These agreements allow a lessee to rent a property and sublease it for profit. Essentially, master lease agreements allow a lessee to act as a proxy owner.What are 5 things that should be included in a lease? ›
- Security Deposits. ...
- Specific Payment Requirements. ...
- Late Rent Fees. ...
- Rent Increases. ...
- Notice of Entry. ...
- Rental Agreement Disclosures. ...
- Gas and Electricity Disclosure. ...
- Recreational Marijuana and Rentals.
- Finance leasing. ...
- Operating leasing. ...
- Contract hire.
The two kinds of leases—capital leases and operating leases—each have different effects on business taxes and accounting. Capital leases transfer ownership to the lessee, while operating leases usually keep ownership with the lessor.What is lease with example? ›
A lease is a legal, binding contract outlining the terms under which one party agrees to rent property owned by another party. It guarantees the tenant or lessee use of the property and guarantees the property owner or landlord regular payments for a specified period in exchange.What is the most common type of lease? ›
1. Single Net Lease. A net lease is perhaps the most common form of commercial lease agreement. With a net lease, the tenant is responsible for a base rent payment, plus additional expenses associated with the property.Who is the master lessor? ›
Master Lessor means the lessor under any ground lease or lease of all or any portion of the Property, subject to the space leases, which may now or hereafter affect all or any portion of the Property.What are 3 advantages of a lease? ›
- Lower monthly payments. ...
- Less cash required at drive off. ...
- Lower repair costs. ...
- You don't have to worry about reselling it. ...
- You can get a new car every few years hassle-free. ...
- More vehicles to choose from. ...
- You may have the option to buy the car at the end of the lease.
What is the purpose of an agreement for lease? ›
An agreement for lease is a contract between two (or more) parties to enter into a lease. The agreement will place a contractual obligation on the respective parties to enter into the lease, either on a fixed date in the future or following the satisfaction of conditions set out in the agreement.What are three disadvantages of leasing? ›
- No equity/ownership in the vehicle.
- Potential early termination liability.
- Potential end-of-lease costs like excess wear and tear and additional.
- Mileage charge.
- #1: Use of Premises. Renters often take it for granted that they can use their apartment for any purpose, but that shouldn't be the case. ...
- #2: Subletting. ...
- #3: Lease Renewal. ...
- #4: Severability. ...
- #5: Joint and Several Liability.
The most important clause to landlords is the duty of the tenant to pay the rent in full and on time. This includes the right to charge a fee for damages if payment is late. Other important clauses grant the landlord the right to enforce the rules and regulations written into the lease.What clauses should be included in a lease? ›
- Rent Liability. This clause states that tenants are jointly and severally liable for the full rent amount. ...
- Severability Clause. ...
- Access to Premises. ...
- Use of Premises. ...
- Holding Over. ...
- Sublet Rules. ...
- Disturbance Clause. ...
- Lessee to Maintain.
- Habitual Late Payment of Rent. Emphasis on habitual! ...
- Noise Violations. ...
- Long-Term Guests. ...
- Unauthorized Pets (or violation of pet policy) ...
- Unauthorized Renovations and/or Decor. ...
- Unsanitary Conditions. ...
- Damage to the Property. ...
- Illegal Activities.
Essential Terms In a Commercial Lease
At a minimum, a commercial lease will have four essential terms: the parties; the premises; the rent payable; and the term. The Parties: The landlord and tenant must be clearly indicated in the lease agreement, whether as an individual or, as often the case, a corporation.
Through a lease, the landlord and tenant sign a mutual agreement to fixed terms and conditions, such as the rent, rules, duration of the agreement, and so on. A rental agreement, by contrast, is a month-to-month agreement, in some countries, a yearly agreement.What is the difference between a lease and an agreement to lease? ›
For example, your lease may not start until the landlord has finished building the premises. In this case the agreement to lease will only state an estimated commencement date. The deed of lease will then record when the building was finished and the lease started.What type of lease is best for a landlord? ›
Fixed-Term or Long-Term Lease Agreement
Most landlords prefer this type of lease agreement, since it offers a stable income for a longer period compared to short-term options.
What is the best definition of lease? ›
What is a Lease? A lease is an implied or written agreement specifying the conditions under which a lessor accepts to let out a property to be used by a lessee. The agreement promises the lessee use of the property for an agreed length of time while the owner is assured consistent payment over the agreed period.What is the definition of terms of a lease? ›
Lease Term Definition
Defined as the period of time in which a contracted lease is in place, lease term establishes the time period to both the lessee and lessor. Lease terms generally come on 3 forms: fixed, periodic, and indefinite. Additionally, a lease can cover either material or non-material property.
A lease is a contract between two parties where one party, the lessor, allows the other party, the lessee, use of their property for a period of time in exchange for consideration, usually a monthly sum of money. The original owner ultimately retains possession of the property. See landlord-tenant law.Who is the owner of an asset? ›
The owner of the asset is called the lessor while the party that uses the assets in known as the lessee.What is lease structure? ›
Structure of lease rentals –
The lease rentals should be made in such a way that it will be benefited for both lessor and lessee. Lessee want to enter in that contract where lease payments are lowest, where according to lessor it should be up to that rate where he recovers his cost of capital with earning his premium.
What Is Capital Lease? A capital lease is a contract entitling a renter to the temporary use of an asset and has the economic characteristics of asset ownership for accounting purposes.Who are the lessors that own this property? ›
The lessor is always the owner of the asset. For example, if a car is the asset in question, the lessor would be the property owner or auto dealer leasing out the car. The lessee is always the one using the asset temporarily. They never own the asset over the course of the lease.Can a sub lessee sublease? ›
Unless, there is a contract or local; usage to the contrary, the right of enjoyment given to a lessee on account of a lease can be assigned or sub-let. "As a sub lease is a demise by a lessee (or his assignee) for a less term than he himself has.Why is lease better than rent? ›
The advantage of a lease agreement is that the party cannot alter the terms of the contract that was agreed upon together until the contract expires, unlike the rent agreement where the landlord can alter the terms of the contract at any time.Why is leasing better than renting? ›
Stability is the key advantage of a lease. You're entitled to stay in your home through the duration of the contract. It's an ideal arrangement for someone who knows they want to stay in a place long-term. No rent increases.
What is a main disadvantage of leasing? ›
The obvious downside to leasing a car is that you don't own the car at the end of the lease. That means you don't have a trade-in if you decide to purchase a car. Consumers who routinely lease cars over many years may end up paying more than they would if they had initially bought the car.Is a lease agreement a legal contract? ›
A contract is an agreement between parties, creating mutual obligations that are enforceable by law. The basic elements required for the agreement to be a legally enforceable contract are: mutual assent, expressed by a valid offer and acceptance; adequate consideration; capacity; and legality.How binding is an agreement for lease? ›
It's entered into usually on or around the time that the tenant takes entry and is a binding contract between the parties setting out each of their rights and responsibilities to the other party.What are the risks of leasing? ›
Risk classification of a leasing company. The group of external risks includes the following: legal and political risks, currency and interest risks, social and environmental risks, marketing risk and client insolvency risk. The latter implies the impossibility of the lessee making payments under the lease agreement.Does leasing affect your credit? ›
Lease payments are reported to the major credit bureaus the same way finance payments are. On-time bill payments are one of the strongest factors influencing your credit score, so keeping up with your lease payments should have a positive effect.Which is better leasing or financing? ›
The monthly payments on a lease are usually lower than monthly finance payments if you bought the same car. With a lease, you're paying to drive the car, not to buy it. That means you're paying for the car's expected depreciation — or loss of value — during the lease period, plus a rent charge, taxes, and fees.What 2 criteria must be evaluated to determine if a contract contains a lease? ›
So in practice, in order to determine whether a contract is or contains a lease, we must first determine whether there is an identifiable asset and then determine whether the two components of control have been met.What are some important things to keep in mind before signing a lease? ›
- Quick question: If I am leasing from a friend, do I still need a written lease? ...
- Security deposit. ...
- Responsibility for utilities. ...
- Property manager contact information. ...
- Read the fine print. ...
- Discuss your rights and responsibilities as a tenant.
- Evaluate the length of the lease. ...
- Research comparable rents. ...
- Look for hidden costs. ...
- Ask for favorable clauses. ...
- Check the termination clause closely.
Three principal types exist: limitation clauses, exclusion clauses, and indemnity clauses. What is an exclusion clause? An exclusion clause is a type of exemption clause included in contracts to limit a party's liability.
What are examples of clauses in a contract? ›
- Choice of Law Clause. ...
- Statute of Limitations Clause. ...
- Time of Performance Clause. ...
- Non-Waiver Clause. ...
- Arbitration Clause. ...
- Assignment Clause. ...
- Confidentiality Clause. ...
- Consideration Clause.
- Check market rents. ...
- Research the property. ...
- Seek tenant inducements. ...
- Review termination conditions. ...
- Negotiate leasehold improvements. ...
- Check for a competitor clause. ...
- Look at renewal conditions. ...
- Don't be quick to sign. Landlords typically submit their own lease to prospective tenants.
A typical rental property lease from Rocket Lawyer includes all key clauses needed to cover basic lease terms and the most common landlord-tenant disputes. These standard tenant lease agreements are typically 15 pages or longer and reflect many years of accumulated knowledge and legalese.What is an acceptable lease length? ›
- Generally speaking, mortgage lenders won't lend on a property that will have less than 30 to 40 years left to run after the mortgage term expires. For example, if you are getting a 35 year mortgage then you'll need to have a lease with a minimum of 75 years.What are the two types of leases for a lessee? ›
The two most common types of leases are operating leases and financing leases (also called capital leases). In order to differentiate between the two, one must consider how fully the risks and rewards associated with ownership of the asset have been transferred to the lessee from the lessor.What is a master lessor? ›
Master Lessor means the lessor under any ground lease or lease of all or any portion of the Property, subject to the space leases, which may now or hereafter affect all or any portion of the Property.What is a master tenant California? ›
A primary tenant is a tenant who has a direct relationship with the landlord while the other subtenants do not. Primary tenants are often referred to as master tenants. This might be someone who has moved out and brought in a new tenant under a Sublease Agreement, but remains legally responsible for the lease.What is a 999 year lease called? ›
Since 1925 there have only really been two types of legal interest in land, these are commonly called leasehold and freehold. Freehold lasts for ever and leasehold is limited to a specified time, for example 99 or 999 years.What is the most common type of lease agreement? ›
This is probably the most common type of residential lease, and guarantees your tenancy (and your monthly rental cost) for a set period of time—for example, six months, a year, or two years.
A lessor is the owner of an asset that is leased, or rented, to another party, known as the lessee. Lessors and lessees enter into a binding contract, known as the lease agreement, that spells out the terms of their arrangement.
What is master lease investing? ›
A master lease agreement is a lease with an option to purchase commercial property. In effect, it's a way to invest in commercial property without a down payment and without using a lender. Happily, both the buyer and the seller can benefit from a master lease agreement.What is master container leasing? ›
They come under the category of Full-service Leases with no cap on the minimum or the maximum number of containers. The lease duration is variable and the lessor undertakes responsibility for maintenance, repair and repositioning of the containers.
As the property owner, your landlord has the right to sell his property whenever he so chooses—but he still has to abide by the lease he signed with you.Can a master tenant evict a subtenant in California? ›
Master tenants must comply with state law unlawful detainer procedures in order to evict a subtenant. Only landlords are allowed to evict their tenants. A master tenant is considered a landlord in relation to his or her subtenant, meaning that a master tenant is able to evict a subtenant.What a landlord Cannot do in California? ›
Tenants cannot be evicted for making a complaint against the landlord or for anything discriminatory. Under the Fair Housing Act, it's illegal for landlords to discriminate against a prospective tenant based on sex, race, color, national origin, religion, familial status, or disability.How long can a tenant stay as guest California? ›
Guests may stay a maximum of 14 days in a six-month period – or 7 nights consecutively on the property. Any guest residing on the property for more than 14 days in a six-month period or spending more than 7 nights consecutively will be considered a tenant.What is the longest possible lease? ›
A 99-year lease is generally the longest possible lease term for a piece of real estate property. It used to be the longest possible under common law.How long is a good lease? ›
There is no hard and fast rule about the minimum length a lease should be when it is sold. However, a number of buyers will be discouraged from buying a lease that is nearing or less than 80 years in length. When the length of a lease falls below 80 years, the cost of a lease extension increases dramatically.What is the longest lease in the world? ›
A 999-year lease, under historic common law, is an essentially permanent lease of property. The lease locations are mainly in Britain, its former colonies, and the Commonwealth. A former colony, the Republic of Mauritius (The Raphael Fishing Company Ltd v.