LEASE ASSIGNMENT AND ASSUMPTION

EX-10.18 52 v226517_ex10-18.htm EXHIBIT 10.18 Unassociated Document

EXHIBIT 10.18

LEASE ASSIGNMENT AND ASSUMPTION

THIS LEASE ASSIGNMENT AND ASSUMPTION (this “Assignment”) is made and entered into as of the 1st day of October, 2010 by and among Gribble Entertainment, Inc., a California corporation (“Assignor”), and Digital Domain Productions, Inc., a Delaware corporation (“Assignee”) with reference to the following facts:

RECITALS

A. Karled Enterprises, a California general partnership (“Landlord”), as landlord, and Assignor (as successor-in-interest to Humbug Entertainment), as tenant, are parties to that certain Standard Industrial/Commercial Single Tenant Lease – Net, dated as of September 17, 2007 (including addendum and rider thereto) as amended by that certain First Amendment to Lease dated June 13, 2008 (collectively the “Lease”).

B. Assignor desires to assign to Assignee, as of the “Effective Date” (defined below), all of its right, title and interest in and to the Lease, and Assignee is willing to receive from Assignor such assignment and to assume each and all of the obligations of the tenant under the Lease to be performed following the Effective Date, all as set forth below.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1. Effective Date. The “Effective Date” shall mean that date which is the last of the following to occur: (i) the date first above written; (ii) the date upon which all notice requirements under the Lease arising from the foregoing assignment and assumption have been met; and (iii) the date upon which the Landlord consent required under the Lease is obtained. For clarification, this Assignment and Assumption shall not constitute an agreement to assign the Lease if an attempted assignment thereof without notice to or the consent of the Landlord or other third party would constitute a breach of the Lease or in any way adversely affect the rights of Assignor and Assignee thereunder. Assignor and Assignee agree to memorialize the Effective Date by a separate document upon the request of either party.

2. Assignment. Effective as of the Effective Date, Assignor assigns and transfers to Assignee all its right, title and interest in and to the Lease.

3. Assumption. Assignee hereby assumes, effective as of the Effective Date, all Assignor’s rights, title, and interest (including Assignor’s duties, obligations and liabilities) arising or relating to the Lease to be performed thereunder from and after the Effective Date and agrees to be bound by and perform all of the covenants, duties and obligations to be performed by the tenant under the Lease from and after the Effective Date.

4. Indemnity. Assignee hereby agrees to defend, indemnify and hold Assignor harmless from and against all claims, demands, causes of action, liabilities, losses, costs, fees, fines, and expenses (including, without limitation, costs of suit and attorneys’ fees) arising from or in connection with the obligations and liabilities assumed by Assignee hereunder (including, without limitation, the performance or nonperformance of all duties and obligations required to be performed or not performed by Assignor under the Lease, as well as in connection with any holdover under the Lease by Assignee) and which accrue on and/or after the Effective Date. Assignee’s obligations under this paragraph shall survive the delivery of this Assignment and the Effective Date.

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5. Delivery of Premises. On the Effective Date, Assignor shall deliver the Premises (as such term is defined in the Lease) to Assignee, broom clean, free of debris, and otherwise in its “as is” “where-is” condition. Assignee acknowledges that Assignor has expressly disclaimed and made no representations or warranties whatsoever with respect to the Premises or the condition (including the environmental condition) thereof or the merchantability or fitness for any purpose thereof. Assignee acknowledges and agrees that it is accepting the Premises from Assignor “AS-IS” and “WHERE-IS,” with no representations or warranties of any kind whatsoever without any allowance or contribution, and Assignee, on behalf of itself and its successors and assigns, hereby forever releases Assignor from any liability therefore.

6. No Future Modifications. Assignee shall not cause or permit the Lease to be amended or modified in any manner whatsoever, including, without limitation, any early termination of all or any portion thereof or any extension of the Lease (either by way of the exercise of any option contained in the Lease or otherwise), without Assignor’s prior written consent, which consent may be withheld in Assignor’s sole discretion unless the liability of Assignor under the Lease (if any) has been, or is concurrently therewith, relieved and terminated. Assignee shall promptly provide Assignor with any notices given to or received from Landlord. Assignee shall not assign the Lease nor sublet the Premises without Assignor’s prior written consent, which consent may be withheld in Assignor’s sole discretion, nor without the consent of the Landlord, to the extent required pursuant to the terms of the Lease.

7. Proration of Rent. Any Rent under the Lease that is actually paid by Assignor to Landlord and which are payable for any period occurring on or after the Effective Date shall be reasonably prorated (based on the actual number of days occurring in the month in which the Effective Date occurs) and shall be refunded by Assignee to Assignor.

8. Transfer of Security Deposit. In consideration of the fact that Landlord holds a Security Deposit in the amount of $223,242.00 pursuant to, and in accordance with, the terms of the Lease, Assignee shall pay to Assignor $223,242.00 within ten days following the full execution of this Assignment. Assignee shall have the sole responsibility to recover the Security Deposit from Landlord pursuant to the terms of the Lease.

8. Further Assurances. Each party hereto shall execute, acknowledge and deliver to the other party all documents, and shall take all actions, reasonably required by such other party from time to time to confirm or to give effect to the matters set forth herein, or otherwise to carry out the purposes of this Assignment.

9. Attorneys’ Fees. In the event that any action shall be commenced concerning this Assignment by any party hereto, the party prevailing in such action shall be entitled to recover, in addition to such other relief as may be granted, its reasonable costs and expenses, including without limitation attorneys’ fees and court costs, whether or not taxable, as awarded by a court of competent jurisdiction, an arbitrator, or by such other finder of fact as may be involved in such action.

10. Notices. All notices, demands, approvals and other communications provided for in this Assignment shall be in writing and be delivered by United States mail, personal delivery, or overnight delivery by a nationally recognized delivery service, to the intended recipient at its address as follows:

If to Assignor:	Gribble Entertainment, Inc.
	c/o Disney CORE Services
	500 South Buena Vista Street
	Burbank, CA ###-###-####
	Attention: Lease Administration

With a copy to:	The Walt Disney Company
	500 South Buena Vista Street
	Burbank, CA ###-###-####
	Attention: Corporate Legal-Real Estate

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If to Assignee:	Digital Domain Productions, Inc.
	300 Rose Avenue
	Venice, CA 90291
	Attn: General Counsel

Addresses for notice may be changed from time to time by written notice to all other parties. All communications shall be effective when actually received; provided, however, that non-receipt of any communication as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.

11. No Third Parties Benefited. This Assignment is made for the purpose of setting forth certain rights and obligations of Assignee and Assignor, and no other person shall have any rights hereunder by reason hereof as a third party beneficiary or otherwise.

12. Authorization. The undersigned individual(s) executing this Assignment on behalf of Assignor and Assignee do hereby represent and warrant that they are each fully empowered and authorized to execute this Assignment on behalf of Assignor and Assignee, respectively.

13. Conflict. As between Assignor and Assignee, to the extent the terms and provisions of this Assignment conflict with the terms and provisions of the Lease, the terms and provisions of this Assignment shall prevail and control.

14. Persons Bound. This Assignment shall be binding upon and shall inure to the benefit of the undersigned parties and their respective heirs, legal representatives, successors and assigns.

15. Amendments. This Assignment may be amended only by a writing signed by each of the parties to this Assignment.

16. Interpretation. Whenever the context so requires, all words used in the singular will be construed to have been used in the plural, and vice versa, and each gender will include any other gender. The headings used in this Assignment are inserted solely for the convenience of reference and are not a part of, nor intended to govern, limit or aid in the construction of, any term or provision hereof.

17. Counterparts. This Assignment may be executed in any number of counterparts, each of which shall be an original and all of which shall be one and the same instrument.

18. Miscellaneous. No provision of this Assignment that is held to be inoperative, unenforceable or invalid shall affect the remaining provisions, and to this end all provisions hereof are hereby declared to be severable. Time is of the essence of this Assignment. This Assignment shall be governed by the laws of the State of California.

[END OF PAGE – SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first above written.

ASSIGNOR:

Gribble Entertainment, Inc.,

a California corporation

By:	/s/ Marsha L. Reed
Name:	Marsha L. Reed
Its:	Secretary

ASSIGNEE:

Digital Domain Productions, Inc.

a Delaware corporation

By:	/s/ Cliff Plumer
Name:	Cliff Plumer
Its:	CEO

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ASSIGNMENT AND ASSUMPTION OF LEASE

This Assignment and Assumption of Lease (this “Assignment”) is executed as of the 1st day of May, 2009, by and between Humbug Entertainment, a California corporation (“Assignor”), and Gribble Entertainment, Inc., a California corporation (“Assignee”).

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby acknowledged, and intending to be mutually bound, Assignor and Assignee hereby covenant and agree as follows:

1. Assignment and Assumption of Lease. Assignor hereby assigns, conveys and transfers to Assignee all of Assignor’s right, title and interest in and under that certain Industrial/Commercial Single-Tenant Lease – Net, with Addendum and Rider, dated September 17, 2007, by and between Karled Enterprises, a California general partnership, as Landlord, and Assignor, as Tenant, as amended by that certain First Amendment to Lease dated June 13, 2008 (collectively, the “Lease”) demising certain premises described as 12641 Beatrice Street, Los Angeles, California. Assignee hereby accepts the foregoing assignment and assumes and agrees to assume and be bound by and perform all of Assignor’s obligations under the Lease arising subsequent to the date of this Assignment, and to abide by all of the terms, provisions, covenants and conditions of the Lease.

2. Choice of Law. The validity, interpretation and enforceability of this Assignment shall be governed by and construed according to the laws of the State of California.

3. Successors and Assigns. The provisions of this Assignment shall bind and inure to the benefit of all successors and assigns of the parties hereto.

IN WITNESS WHEREOF, Assignor and Assignee have executed this document as of the date first written above.

“Assignor”		“Assignee”

HUMBUG ENTERTAINMENT,		GRIBBLE ENTERTAINMENT, INC.
a California corporation		a California corporation

By:	/s/ Jack Rapke	By:	/s/ Jack Rapke
Name: Jack Rapke, President		Name: Jack Rapke, President

FIRST AMENDMENT TO LEASE

This FIRST AMENDMENT TO LEASE (the “FIRST AMENDMENT”) is made and entered into as of June 13, 2008, by and between KARLED ENTERPRISES, a California General Partnership (Lessor) and HUMBUG ENTERTAINMENT, a California Corporation (Lessee). Lessor and Lessee entered into that certain Lease with Addendum to Standard Industrial/Commercial Single Tenant Lease- Net and Rider to Lease each dated as of September 17, 2007, hereinafter referred to as the “Lease”, for those certain premises described as 12641 Beatrice Street, Los Angeles, California (the “Premises”). Lessor and Lessee desire to amend the terms of the Lease as hereinafter provided. Unless otherwise defined herein, all capitalized terms used in this Amendment shall have the same meaning as are ascribed to such terms in the Lease.

NOW THEREFORE, Lessor and Lessee hereby agree as follows:

LEASE TERM The Term of the Lease is hereby extended for three (3) years commencing October I, 2008 (the “New Commencement Date”) accordingly, the Expiration Date of the Lease is hereby amended to be September 30, 2011.

BASE RENT

During the period commencing October 1, 2008 and continuing through September 30, 2009, the monthly Base Rent will be $66,716.000 per month

During the period commencing October 1, 2009 and continuing through September 30, 2010, the monthly Base Rent will be $69,051.00 per month

During the period commencing October 1, 2010 and continuing through September 30, 2011, the monthly Base Rent will be $71,468.00 per month.

OPTION TO EXTEND Lessee and Lessor acknowledge and agree that the Option to Extend provided in Addendum 56 of the Lease is hereby deleted and of no further force and effect and in lieu of such option, Lessor hereby grants to Lessee one (I) option to extend the term of this Lease for two (2) additional years commencing when the prior term expires upon each and all of the following terms and conditions:

In order to exercise an option to extend, Lessee must give written notice of such election to Lessor and Lessor must receive the same at least 6 months, but not more than 8 months, prior to the date that the option period would commence, time being of the essence. If proper notification of the exercise of an option is not given and/or received, such option shall automatically expire.

The provisions of paragraph 39, including those relating to Lessee’s Default set forth in paragraph 39.4 of this Lease, are conditions of this Option. Except for the provisions of this Lease granting an option to extend the term and improvements required to be made by Lessor, all of the terms and conditions of this Lease except where specifically modified by this option shall apply. Notwithstanding anything to the contrary herein, Lessor shall not be required to install any additional improvements for Lessee at the commencement of the option term.

Paragraph 39.2 of the Lease shall be deleted in its entirety and replaced with the following: Options Personal to Lessee: Any Option granted to Lessee in this Lease is personal to Lessee and any of Lessee’s affiliates or parent company and cannot be assigned (except to Lessee’s affiliates or parent company) or exercised by anyone other than Lessee and Lessee’s affiliates or parent company and only while Lessee or its affiliates or parent company are in substantially fill possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no then-known intention of thereafter assigning or subletting the Premises to any party other than Lessee’s affiliates or parent company.

The Rider provision to Paragraph 12.1(a) shall be amended to provide that the following shall be added to the end of the sentence “except to Lessee’s affiliates or parent company, which shall not require Lessor’s prior written consent provided that Lessee provides Lessor notice of any such assignment or subletting within thirty (30) days of such transfer.

The initial year’s Base Rent and subsequent periodic Base Rent adjustments during each Option Period shall be determined by Lessor in accordance with the fair market value of rental rates and terms prevailing for leases concluded on comparable buildings of similar size and construction in the business park surrounding the Premises. At the time Lessee provides written notice exercising an Option, Lessee shall request Lessor’s fair market rental proposal. Lessor shall provide Lessee with a written fair market proposal within ten (10) business days following receipt of Lessee’s written request; provided, however, that in no event shall the Base Rent so established for the first month of the Option Period be less than the Base Rent payable at the end of the Original Term. Lessee shall have ten (10) business days from receipt of Lessor’s fair market rental proposal to unconditionally accept Lessor’s proposal. In the event Lessee does not unconditionally accept Lessor’s proposal and Lessor and Lessee cannot agree, in their respective sole discretion, on any other economic terms and conditions for Lessee’s rental of the Premises during the Option Period within said ten (10) day period, the Option shall expire and be of no further force and effect.

TENANT IMPROVEMENT ALLOWANCE

Lessor and Lessee anticipate that Lessee will make certain electrical upgrades (the “Tenant Improvements”) to the Premises, on or before December 31, 2008, in accordance with plans and specifications to be prepared by Lessee and submitted to Lessor for Lessor’s approval as provided in Paragraph 7.3 of the Lease (such plans and specifications, once approved by Lessor, being hereafter referred to as the “Approved Plans”). Following Lessee’s completion of the Tenant Improvements in accordance with the Approved Plans, and provided that Lessee is not in Default or Breach under the Lease, Lessor shall provide Lessee with an amount (the “Tenant Improvement Allowance”) not to exceed $50,000 equal to one-half (1/2) of the cost the electrical upgrade for all costs, fees, overhead and profit reasonably incurred or reasonably charged by Lessee’s contractor and Lessee’s architect and engineers for the following: (i) design and redesign of the Approved Plans; and (ii) all reasonable costs for labor and material to construct and install the Tenant Improvements, direct job site supervision, transportation, storage charges, plan check and permit fees, costs of building permits, temporary services, costs of insurance premiums, and taxes for the purchase of materials, pursuant to the Approved Plans (collectively the “Work Costs”). It is specifically understood and agreed that Work Costs shall not include the cost of any of Lessee’s Trade Fixtures, nor any of its other furniture, fixtures or other personal property, and nor shall Lessee’s architect and engineer fees reimbursable from the Tenant Improvement Allowance exceed an aggregate of $1,000.

The Tenant Improvement Allowance shall be disbursed by Lessor to Lessee within ten (10) business days following the later of: (i) the last day that any mechanic’s lien can lawfully be recorded against the Premises, provided that Lessee has previously delivered to Lessor properly ink-executed mechanic’s lien releases in compliance with California Civil Code Section 3262(d)(4), as well as ink-executed stop notice releases for any stop notices which may have been served on Lessor or Lessor’s lender, or other documentary evidence satisfactory to Lessor that neither Lessee’s contractor nor any subcontractor or laborer or materialman engaged by Lessee’s contractor has filed a mechanic’s lien against the Premises, and provided further that no suits are threatened against Lessor, Lessor’s lender, Lessee or the Premises, or in the alternative, all liens shall be bonded in accordance with the provisions of California Civil Code Section 3143, and all stop notices shall be bonded in accordance with the provisions of California Civil Code Section 3171; (ii) Lessee having opened the Premises for the conduct of its business; (iii) Lessee delivering to Lessor a statement prepared by Lessee’s contractor, in a form reasonably approved by Lessor, showing by trade the work completed; (iv) Lessee delivering to Lessor a schedule of and copies of any reasonably relevant invoices from all laborers, materialmen and Lessee’s contractor for labor rendered and materials delivered to the Premises, whether or not being paid for out of the Tenant Improvement Allowance; and (v) Lessee delivering to Lessor all of the following: (a) copies of all required governmental permits (including without limitation any required health department permits), certificates of insurance and business licenses, and (b) a copy of the certificate of occupancy for the Premises and completed signed-off inspection cards.

Any portion of the Tenant Improvement Allowance which exceeds the Work Cost of the Tenant Improvements or is otherwise remaining undisbursed after June 30, 2009 shall thereafter belong to Lessor and shall no longer be disbursable to Lessee, it being agreed that Lessee shall not be entitled to any credit, abatement or payment with respect to such undisbursed component of the Tenant Improvement Allowance.

INDUCEMENT PROVISIONS Paragraph 13.3 of the Lease shall be amended by deleting the 2nd and 3rd sentences of the provision in their entirety and replacing with the following: “If at any time during the Term, Lessee causes any Breach of the Lease and the Lease or Lessee’s right to possess the Premises is terminated, then any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force ore effect, and Lessee shall promptly pay to Lessor, in addition to all other amounts due to Lessor under the lease, the full amounts of any rent, charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under any Inducement Provisions.”

IMPROVEMENTS Lessor and Lessee hereby acknowledge and agree that Lessor’s obligations to complete the work contemplated under Addendum 55 (i.e. installing carpet and slurry and restripe the parking lot) is complete and Lessor shall have no further obligations to perform any work pursuant to Addendum 55.

REPRESENTATIONS Each party represents to the other that it has full power and authority to execute this Amendment. Each party represents to the other that it has not made any assignment, sublease, transfer, conveyance or other disposition of the Lease or any interest in the Lease or the Premises and, except as provided herein, has no knowledge of any existing or threatened claim, demand, obligation, liability, action or cause of action arising from or in any manner connected with the Lease or the Premises by any other party. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

NO OFFER This Amendment shall not be binding until executed and delivered by both parties. This Amendment shall not be relied upon by any other party, individual, corporation, partnership or other entity as a basis for terminating its Lease with Lessor.

BROKERS Other than Prudential Realty (“Lessee’s Broker”) and Coldwell Banker Commercial (“Lessor’s Broker”) Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder in connection with this Amendment, and that no one is entitled to any commission or finder’s fee in connection herewith except as provided for in a separate agreement between Lessor and Lessor’s Broker (“Listing Agreement”). Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys’ fees reasonably incurred with respect thereto. In accordance with the foregoing, Lessee acknowledges and agrees that Lessee shall be solely responsible for any charge of Lessee’s Broker, except as provided for the Listing Agreement.

10.

WHOLE AGREEMENT The mutual obligations of the parties as provided herein are the sole consideration for this Amendment and no representations, promises or inducements have been made by the parties other than as appear in this Amendment This Amendment may not be amended except in writing signed by all parties.

11.

ATTORNEY’S FEES In the event either party hereto commences an action or arbitration against the other party arising out of or in connection with this Amendment, the prevailing party shall be entitled to recover from the losing party reasonable attorney’s fees and costs.

12.

INCORPORATION Except as otherwise expressly set forth herein, and to the extent necessary to give effect to the provisions hereof, all terms and conditions of the Lease and the First Amendment shall remain unmodified and in full force and effect; provided, however, Lessee shall not be entitled to any free rent, additional improvements by Lessor, tenant improvement allowances, or additional options to extend the Term and any such terms contained in the Lease prior to this Amendment are hereby deleted and are of no further force and effect.

IN WITNESS WHEREOF, the parties hereto have entered in this Amendment as of the date first set forth above.

Lessee:

Humbug Entertainment, a California Corporation

By:	/s/ Marsha L. Reed
	Marsha L. Reed, Secretary

Dated: 6-18-08

Lessor:

KARLED Enterprises, a California General Partnership

BY: KAR4 Properties Limited Partnership,

a Delaware Limited Partnership, General Partner

BY: AKG3 Properties, LLC,

a California Limited Liability Company, General Partner

BY:	/s/ Aliza Karney Guren
	Aliza Karney Guren, Manager

Dated: 7-8-08

RIDER TO LEASE

The following is a rider (the “Rider”) to the Lease, including the Addendum thereto (the “Lease”) dated as of September 17, 2007, between Karled Enterprises (the “Lessor”) and Humbug Entertainment, a California corporation (“Lessee”) with respect to the premises located at 12633-41 Beatrice Street, Los Angeles, CA (the “Premises”) in connection with the motion picture tentatively entitled “A Christmas Carol” (the “Picture”). In the event of a conflict between the terms of this Rider and the terms of the Lease (including the Addendum), the terms of this Rider shall prevail. Capitalized terms used herein not otherwise defined shall have the same meaning as in the Lease.

The following Amendments are hereby made to the Lease (including the Addendum):

Paragraph 1.2

1. Add at the end of this Paragraph after “square feet,” the words “as described in Exhibit “A” attached hereto.”

Paragraph 2.2:

Add to the end of the Paragraph: “Lessee shall not be deemed to have prior knowledge of any hidden defects or hidden conditions or of defects or conditions which could not be ascertained by a reasonable pre-term investigation. Lessor represents that Lessor is not aware of any defects in connection with the Premises.

Paragraph 5:

The following shall be added at the end of the second sentence thereof: “, subject to Lessee’s opportunity to cure as set forth in Paragraph 13 of the Lease, as modified by this Rider, and provided Lessor delivers to Lessee an itemized statement detailing any deductions from the Security Deposit within 10 business days thereof.”

Delete “90 days” and replace with “30 days” after the first “Within” and before “after the” in the penultimate sentence of such Paragraph.

Paragraph 6.1:

1. Add the following sentence at the end of this Paragraph: “Notwithstanding the foregoing, it is acknowledged that Lessee may bring for into the Premises mocap/photography purposes during business hours animals used in connection with the photography/mocapping/scanning/production of the Picture subject to compliance with municipal codes.”

Paragraph 6.2 (b) and (c):

The following sentence shall be added to the end of both subparagraphs: “Lessor and Lessee hereby acknowledge that materials technically termed “hazardous materials” which are customarily used in motion picture production (i.e. paintsand solvents) will be used on the Premises, and Lessee hereby warrants that all such hazardous materials will be used in full compliance with all applicable federal, state and local laws and regulations. The Use shall not include the use of chemicals for the development of film.”

Paragraph 6.2(d):

Delete the last bolded sentence at the end of the subparagraph.

Paragraph 6.2(e):

Delete “gross” in the third line of such subparagraph.

Paragraph 6.2 (h):

1. Add a new subparagraph 6.2.(h) as follows: “Lessor shall provide Lessee: (1) any reports disclosing the presence and location of asbestos and lead-based paint, and (2) a disclosure of known releases of hazardous materials on or beneath the property and Premises. Lessor shall have no duty to perform any investigations or searches of our files for these reports or disclosures.”

Paragraph 6.4:

1. Delete the Paragraph and replace with the following: “Lessor shall not have the right to enter into the Premises except upon prior written notice to Lessee during normal business hours only; excepting only that in the case of an emergency, Lessor has the right to enter into the Premises after attempting in good faith to give notice to Lessee.”

Paragraph 7.1:

After “first-class condition,” in the last sentence, add the words, “i.e., in substantially the same condition as the Premises were delivered to Lessee at commencement of the Lease.”

Paragraph 7.3(b):

Add the words “which shall not be unreasonably withheld” after “consent” and before “to” in the fifth line from the end of such subparagraph.

Add “which consent shall not be reasonably withheld” at the end of the first sentence of this subparagraph.

Add as the last sentence of the subparagraph: “Lessor acknowledges and approves that Lessee will build one or more sound proof walls on the Premises (which walls will be removed by Lessee upon termination of the Lease).”

Paragraph 8.4(a):

Delete the second sentence.

Paragraph 8.4(b):

Delete entire subsection.

Paragraph 8.5:

Delete “certified copies of such insurance policies or” at the end of line four.

Paragraph 8.6:

Insert at the end of the first sentence “except for gross negligence.”

Paragraph 8.7:

Delete “gross” in the first line.

Paragraph 8.8:

Delete at the beginning of the first sentence the words “Notwithstanding the negligence...or its agents” so that the first sentence of the Paragraph begins “Neither Lessor nor...”

Delete subclause (ii) after Lessor “or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project.”

Paragraph 9.1(a):

Delete “6” and replace with “3” in the second sentence.

Paragraph 12.1(a):

Add at the end of the sentence “except to Lessee’s affiliates or parent company.”

Paragraph 13.1(c):

Delete “3” in the last line of subparagraph (c) and replace with “10.”

Paragraph 16.(b) and (c)

Delete both subparagraphs (b) and (c).

Paragraph 32:

1. Delete the Paragraph and replace with the following: “Lessor shall not have the right to enter into the Premises except upon prior written notice to Lessee during normal business hours only: excepting only that in the case of an emergency, Lessor has the right to enter into the Premises after attempting in good faith to give notice to Lessee.”

Addendum 57:

Delete “that is consented” and replace with “that is required to be consented” in the first line.

Additional Provisions:

The following provisions shall be added to the Lease:

Lessor warrants that Lessor is the owner (or the agent for the owner) of said Premises, that Lessor is fully authorized to enter into this Lease and has the right to grant Lessee the use of said Premises and each and all of the rights herein granted.

Lessor irrevocably grants to Lessee, and any agent and/or assignee (“Successor”) of Lessee the right to use and photograph (including without limitation by means of motion picture, still, video device or motion capture photography and/or mocapping) both the real and personal property located at the Premises in conformance with the terms of the Lease and the right to attribute any fictitious events as occurring on the Premises, together with access to and egress from said Premises with Lessee’s personnel and equipment for the purpose of erecting and maintaining temporary motion picture sets and structures (to the extent required by Lessee), and of photographing/mocapping said Premises, sets and structures and/or recording sound for such scenes as Lessee may desire.

All rights of every kind in and to all photography, mocapping, scanning and sound recordings made hereunder shall be solely owned in perpetuity by Lessee and its Successors, and neither Lessor nor any Lessee or other party now or hereafter having an interest in said Premises shall have any right of action, including without limitation any right to injunctive relief against Lessee, its Successors and/or any other party arising out of any use or non-use of said photography and/or sound recordings.

Lessor hereby irrevocably grants in connection with the Picture to Lessee and its Successors the right, in perpetuity, throughout the world, to duplicate and re-create all or a portion of said Premises in the Picture and to use the same (as portrayed in the Picture) in any media and/or manner known or unknown, including without limitation in and in connection with any motion picture, theme park, motion picture studio tour, and/or merchandise in connection with any of the foregoing and/or in connection with any publicity, promotion and/or advertising of same.

Neither Lessee, nor its Successors shall be obligated to make any actual use of any photography, mocapping, recordings, depictions or other references to the Premises hereunder in any motion picture or otherwise.

Neither Lessor nor any other person or entity shall acquire any rights whatsoever under the Lease, or under any other document executed or delivered in connection herewith, to use, and neither Lessor nor any such person or entity shall use Lessee’s name, the name of the Picture, the name “Disney” (either alone or in conjunction with or as a part of any other word or name) ImageMovers Digital or other fanciful characters or design owned or licensed by Lessee or its related, affiliated or subsidiary entities: (a) in any advertisements, publicity or promotions; (b) to express or imply any endorsement by Lessee of any goods or services provided or furnished by Lessor or any other person or party, or (c) in any other manner whatsoever (whether or not similar to the uses specifically prohibited).

Lessor and Lessee acknowledge that all notices must be in writing.

Lessor acknowledges that Lessee’s motion picture activities at the Premises may include special effects, prop shop/warehouse, storage and use as a shooting/mocapping stage.

Lessor:			Lessee:

Karled Enterprises,			Humbug Entertainment, a California
a California General Partnership			Corporation

By: DKV Partners, L.P. a Delaware Limited
Partnership, General Partner
By:	DVK Management, LLC A California
	Limited Liability Company, General Partner
	By: Aliza Karney Guren Trust, Member

	By:	/s/ Aliza K. Guren	By:	/s/ Steven J. Boyd
	Aliza K. Guren, Trustee