LEASE AGREEMENT
THIS LEASE is made and entered into this 17th day of May, 1996, by and
between NEW YORK-NEW YORK HOTEL, LLC, a Nevada limited liability company, herein
referred to as "Landlord", and LAS VEGAS STEAKHOUSE CORP., a Nevada corporation,
herein referred to as "Tenant".
R E C I T A L S
A. Landlord is the owner of that certain real property located in Las
Vegas, Nevada upon which Landlord is constructing a hotel and casino which will
be known as the New York-New York Hotel (the "Hotel"); and
B. Tenant desires to lease an area within the Hotel for the operation of a
full service "Gallagher's Steak House" restaurant (the "Restaurant").
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:
ARTICLE 1
DESCRIPTION AND LOCATION OF PREMISES
1.1 Premises. Landlord, in reliance upon and in consideration of the
representations, warranties, covenants and conditions herein contained on the
part of Tenant, hereby lets and demises to Tenant, and Tenant hereby rents,
hires and takes of and from Landlord for the term and upon the provisions,
covenants and conditions herein set forth, that certain area (the "Premises")
cross-hatched on Exhibit "A" attached hereto and incorporated herein by
reference. The Premises consists of approximately five thousand (5,000) square
feet.
1.2 Relocation of Premises. Tenant acknowledges that Landlord shall have
an absolute right from time to time to relocate the Premises within the Hotel at
any time during the term hereof provided that the site to which the Premises is
relocated shall be approximately the same size as the original Premises and
shall be exposed to reasonably equivalent pedestrian traffic. Landlord shall
notify Tenant of such relocation not less than sixty (60) days prior to the date
thereof. Landlord shall reconstruct on the relocated Premises improvements
substantially identical to those constructed by Tenant and Landlord in the
Premises prior to the relocation. As of the latter of the date specified in
Landlord's notice to Tenant or ten (10) days after Landlord has notified Tenant
that it has completed the improvements to be constructed by Landlord on the
relocated Premises, Tenant shall surrender the Premises originally demised to
Tenant hereunder and move to the relocated Premises. All reasonable
out-of-pocket costs incurred by Tenant in moving to the relocated Premises shall
be reimbursed to Tenant by Landlord. The relocated Premises shall thereafter be
deemed to be the Premises for all purposes of this Lease as if originally
demised to Tenant hereunder. Tenant agrees
1
that, promptly on demand, it shall execute an amendment to Exhibit A designating
the location of the relocated Premises. If the relocated Premises are not ready
for Tenant's occupancy for the operation of the Restaurant on the date on which
the Premises originally demised must be surrendered to Landlord under this
Section 1.2, then all rent and other charges under this Lease shall be abated
until the relocated Premises has been completed and are ready for Tenant's
occupancy for the operation of the Restaurant. If any period referred to in the
preceding sentence continues for more than twenty-one (21) days (the period
which begins after the expiration of such twenty-one (21) days and which ends
when the relocated Premises is completed and ready for Tenant's occupancy for
the operation of the Restaurant is referred to herein as the "Extended Hiatus
Period"), Landlord shall make the following payments to Tenant: (i) for all
employees of the Restaurant actually paid by Tenant (and provided that all such
employees are actually employed and fully compensated by Tenant during the
twenty-one (21) days preceding the Extended Hiatus Period), Tenant's full,
normal payroll expense for the Extended Hiatus Period (including, without
limitation, payroll taxes, health and disability insurance, unemployment
insurance contributions and pension and profit-sharing contributions), but less
any compensation paid to any employees of the Restaurant as employees of another
restaurant operated by an affiliate of Tenant; (ii) an amount equal to the Net
Profit (as defined below) of the Restaurant for the Extended Hiatus Period. Such
amounts shall be paid monthly to Tenant, on the first day of each calendar
month, beginning with the month following the month in which the Extended Hiatus
Period begins; each of such payments shall include all sums due hereunder in
respect of the preceding month and shall be pro rated for any partial month.
Tenant shall submit to Landlord each month a statement, in reasonable detail,
showing the amounts then due to Tenant under this Section 1.2, and Landlord's
payment shall be based on such statement (subject to Landlord's right to dispute
such statement in good faith). As used in this Section 1.2: the term "Agreed
Gross Receipts" shall mean, for each month during the Extended Hiatus Period, an
amount equal to the average of the Gross Sales of the Restaurant for each of the
three calendar months immediately preceding the month in which the Extended
Hiatus Period begins; and the term "Net Profit" shall mean, for each such month,
one-twelfth of the net profit of the Restaurant reported (in accordance with
GAAP) on Tenant's books for the calendar year preceding the year in which the
Extended Hiatus Period begins. Any payments due to Tenant under this Section 1.2
and unpaid at the end of the Extended Hiatus Period, may (without limiting
Tenant's remedies) be deducted by Tenant from the installments of Base Rent and
Percentage Rent thereafter coming due under this Lease.
1.3 Modification of Premises. In connection with any remodeling of all or
any portion of the Hotel, Landlord shall have the right to change the dimensions
or reduce the size of the Premises. However, no such reduction may result in the
size of the Premises being less than ninety percent (90%) of its original size
or in the remaining portion of the Premises not being suitable for the conduct
of Tenant's business hereunder, or in a material change in the nature or conduct
of Tenant's operations in the Premises. In the event of any remodeling pursuant
to this Section 1.3, Landlord shall repair any resulting damage to the Premises,
and shall restore the Premises (including Tenant's interior design concept) so
as to create an architecturally and functionally harmonious space. In connection
with any such remodeling, Landlord may require Tenant to cease conducting
2
business from the Premises for up to thirty (30) days. Rent shall be abated
during any period that Landlord requires Tenant to cease conducting business.
ARTICLE 2
IMPROVEMENT OF PREMISES
2.1 Landlord's Work. Landlord shall, at its expense, construct the
Premises shell in substantial accordance with plans and specifications prepared
or to be prepared by Landlord's architect, incorporating in such construction
all "Landlord's Work" set forth in the "Work Letter" attached hereto as Exhibit
"B". Landlord represents and warrants to Tenant that Landlord's Work will be
constructed in compliance with all applicable laws, including building codes,
and will conform in all material respects to the building plans which have been
made available to Tenant. Landlord's Work with respect to the Premises will
substantially conform to Landlord's Building Plans, as described in Section 2.3.
2.2 Tenant's Work. All work in the Premises not provided herein to be done
by Landlord shall be performed by Tenant (hereinafter called "Tenant's Work"),
including, but not limited to, all work designated as Tenant's Work in the Work
Letter, and Tenant shall commence Tenant's Work as soon as reasonably
practicable after Landlord has substantially completed Landlord's Work and
delivered the Premises to Tenant, and shall do and perform at its expense all
Tenant's Work diligently and promptly and in accordance with the terms of the
Work Letter. Tenant covenants and agrees that it shall expend not less than the
amount required for the construction of the Tenant's Work in accordance with
plans approved by Landlord.
2.3 Tenant's Obligations Before Commencement Date. Landlord has made
available to Tenant and to Tenant's architect and space planning consultants,
Landlord's plans and specifications for Landlord's Work ("Landlord's Building
Plans"). Not later than thirty (30) days after receipt of Landlord's Building
Plans, Tenant will deliver to Landlord Tenant's proposed plans and
specifications for Tenant's Work in such detail as Landlord may reasonably
require (a "Preliminary Submittal"). Within ten (10) business days after receipt
of the Preliminary Submittal, Landlord shall notify Tenant of any
nonconformity's with the Work Letter, Landlord's Plans or any other failure to
meet with Landlord's approval, to the extent the same is required by an express
provision of this Lease. Tenant shall, within fifteen (15) days after receipt of
any such notice, submit "Final Construction Documents" based upon the
Preliminary Submittal and incorporating Landlord's comments thereto. Landlord
shall notify Tenant of its approval or disapproval of the Final Construction
Documents within ten (10) days after receipt. Upon approval, Landlord shall
return one (1) set of approved Final Construction Documents to Tenant and the
same shall become a part hereof by this reference as Exhibit "B-2". Approval of
construction documents by Landlord shall not constitute the assumption of any
responsibility by Landlord for their accuracy or sufficiency, or compliance with
applicable codes, and Tenant shall be solely responsible for such construction
documents and for obtaining all governmental approvals which are required for
Tenant's Work.
3
Tenant shall not commence any of Tenant's Work until Landlord has approved
Tenant's Final Construction Drawings in writing. During the construction of
Tenant's Work, Landlord shall cooperate and shall cause its contractors to
cooperate in good faith with Tenant and its contractors, to the end that
construction may be completed as promptly as possible.
Provided that the Delivery Date, as hereinafter defined, is no later than
June 15, 1996, Tenant shall complete Tenant's Work by November 15, 1996 (the
"Required Completion Date"). Landlord shall give Tenant five (5) days prior
written notice of the Delivery Date, such Delivery Date being the date upon
which (i) Landlord's Work in the Premises has been substantially completed in
accordance with the requirements therefor and (ii) the Premises are available
for the commencement of Tenant's Work. If the Delivery Date is later than June
15, 1996, the Required Completion Date shall be one hundred fifty-three (153)
days after the actual Delivery Date. Tenant hereby releases Landlord and its
contractors from any claim whatsoever for damages against Landlord or its
contractors for any delay in the date on which the Premises shall be ready for
delivery to Tenant or for any delay in commencing or completing any of
Landlord's Work; provided, however, that (i) nothing contained in the foregoing
provisions of this paragraph shall relieve Landlord of its obligations under the
final sentence of the preceding paragraph; and (ii) if the Delivery Date does
not occur on or before December 15, 1997, or if the Hotel (including the casino)
does not open for business on or before such date, then Tenant may terminate
this Lease by notice given to Landlord not later than January 15, 1998, in which
event Landlord shall promptly pay to Tenant the amount of all costs then paid or
payable by Tenant in connection with Tenant's Work, and neither party shall
otherwise have any rights against or obligations to the other with respect to
this Lease or the Premises.
2.4 Failure of Tenant to Perform. The parties recognize that it would be
extremely difficult or impossible to determine Landlord's damages resulting from
Tenant's failure to open for business fully fixtured, stocked and staffed on the
Required Completion Date, including, but not limited to, damages from loss of
Percentage Rent (hereinafter defined) from Tenant and other tenants, diminished
leaseability, and/or mortgageability and damage to the economic value of the
Hotel. Accordingly, if Tenant fails to proceed diligently with Tenant's Work or
to open for business fully fixtured, stocked and staffed on or before the
Required Completion Date (except to the extent that any delay is caused by
Landlord's failure to complete any material portion of Landlord's Work in a
timely manner or by any unreasonable interference with Tenant's Work by
Landlord's contractors, or by Landlord's failure to allow Tenant's contractors
to have access to the Premises to construct Tenant's Work), such failure shall
be a Tenant Event of Default and Landlord may, on ten (10) days notice to Tenant
and in addition to the right to exercise any other remedies and rights herein or
at law provided, proceed with Tenant's Work using any contractor Landlord
desires and making any changes or revisions to Landlord's Work required because
of any delay or failure of Tenant to perform its obligations hereunder, all at
Tenant's expense. In addition, Landlord shall have the right to collect rent
from the Required Completion Date in an amount equal to the Base Rent
(hereinafter defined) and other additional rent and other amounts payable by
Tenant hereunder, together with an amount equal to fifty percent (50%) of
1/365ths of the Base Rent for each day that
4
Tenant has failed to open for business on and after the Required Completion
Date, which latter amount shall be in lieu of Percentage Rent that might have
been earned had Tenant opened in a timely fashion. In the event that Tenant
fails to make a timely Preliminary Submittal or to timely submit its Final
Construction Documents, as provided in this Lease, then Landlord shall have the
right, in addition to its other rights and remedies as herein provided, to
collect from Tenant One Hundred Dollars ($100.00) per calendar day for each day
that such plans are not so submitted. All remedies in this Lease or at law
provided shall be cumulative and not exclusive and shall survive the expiration
of the Lease Term or the earlier termination of this Lease.
2.5 Condition of Premises. Tenant's taking possession of the Premises for
the construction of Tenant's Work shall be conclusive evidence of Tenant's
acceptance thereof in good order and satisfactory condition; except for such
matters as Tenant shall, within thirty (30) days after taking possession of the
Premises, specify in a written notice or notices to Landlord (hereinafter,
"Punch List Items") and except for latent defects in Landlord's Work which were
not discoverable in the exercise of ordinary prudence during such thirty (30)
day period. Landlord shall diligently correct all Punch List Items which
constitute defects in Landlord's Work. Tenant agrees that no representations
respecting the condition of the Premises, no warranties or guarantees, expressed
or implied, with respect to workmanship or any defects in material, and no
promise to decorate, alter, repair or improve the Premises either before or
after the execution hereof, have been made by Landlord or its agents to Tenant
unless the same are contained herein.
2.6 Refurbishment. Tenant shall keep the Premises and all of Tenants'
personal property in a first class condition and state of repair in keeping with
the standards of the Hotel throughout the Term of this Lease. Not less than once
every five (5) years during the Term, as defined below, including any renewal
term, Tenant agrees that it will substantially refurbish the Premises, it being
understood that the refurbishment may be accomplished in phases during each five
(5) year period, as Tenant reasonably determines.
ARTICLE 3
TERM
3.1 Lease Term. The term (the "Term") of this Lease shall be for a period
of Ten (10) years, commencing on the earlier of (i) the Required Completion
Date; or (ii) the first date upon which the Premises is open for business to the
general public (the "Opening Date"), unless terminated earlier as elsewhere
herein provided. The date upon which the Term commences shall be referred to
herein as the "Commencement Date". At such time as the Commencement Date has
been determined, Landlord shall insert the Commencement Date and the expiration
date of the Term on Exhibit "C" attached hereto and deliver a copy thereof to
Tenant, which shall thereafter be incorporated in, and form a part of, this
Lease.
3.2 Holding Over. Should Tenant hold possession of the Premises with the
consent of Landlord after the expiration of the stated Term of this Lease, such
holding over shall create a
5
tenancy from month to month only, upon the same terms and conditions as are
herein set forth. If any such holding over is without Landlord's express written
consent, the Percentage Rent and the Base Rent shall be equal to one hundred
fifty percent (150%) of the Percentage Rent and the Base Rent which were payable
during the last month of the Lease Term.
3.3 Option to Renew. Tenant shall have two (2) five (5) year options to
renew subject to Tenant's average Gross Sales being at least Three Million
Dollars ($3,000,000) per year for the immediate two (2) prior Lease Years. Each
such option shall be exercised, if at all, by written notice to Landlord not
less than one hundred eighty (180) days prior to the end of the then current
term. The Base Rent for the first renewal Term hereunder shall be increased to
[omitted]* per month, and the Base Rent for the second renewal Term hereunder
shall be increased to [omitted]* per month.
ARTICLE 4
RENT
4.1 Base Rent. Tenant shall pay minimum rent to Landlord during the Term
of the Lease at the rate of [omitted]* per month for years 1 through 10,
(the "Base Rent"), in advance, beginning on the Commencement Date and
continuing on the first day of each calendar month thereafter. If the month
in which the Term commences or ends is not a full calendar month, then the
Base Rent for such month shall be prorated on the basis of the actual number of
days in such month.
4.2 Percentage Rent. Tenant shall pay to Landlord at the time and in the
manner set forth herein the amount by which the following applicable percentage
of Gross Sales during each month of the Lease Year exceeds the Base Rent for
such period (hereinafter called the "Percentage Rent"):
Gross Sales Percentage Rental Payable
----------- -------------------------
[omitted]* [omitted]*
Notwithstanding the foregoing, the Percentage Rent in respect of any Lease
Year shall not exceed the applicable percentage of Gross Sales for the full
Lease Year. Accordingly, if the monthly payments of Percentage Rent made during
any Lease Year exceed the aggregate Percentage Rent due for such Lease Year, the
amount of any overpayment shall be applied pursuant to Section 4.5.
4.3 Lease Year. "Lease Year," as used herein, means each calendar year
during the Term, together with the "Partial Lease Year" which begins on the
Commencement Date and ends on December 31 of the year in which the Commencement
Date occurs and the Partial Lease Year, if any, which ends on the date upon
which the Term expires or the Lease is otherwise terminated.
- -----------------
* Certain Information has been Omitted and Filed Separately with the SEC
Pursuant to a Request for Confidential Treatment Pursuant to Rule 24b-2
under the Securities and Exchange Act of 1934, as amended.
6
4.4 Gross Sales. As used in this Lease, "Gross Sales" means the aggregate
selling price received by Tenant (except as provided herein with respect to
promotional and complimentary meals) of all products, merchandise and services
("Products") sold in, upon or from the Premises by Tenant, its subtenants,
licensees and concessionaires, personally or from any vending or coin operated
or token operated device, whether for check, cash, on credit or otherwise,
including other types of "cashless" transactions, excluding only the following:
(i) monies and credit received by Tenant in the settlement of claims
for loss or damage of Tenant's Products;
(ii) an amount equal to the cash refunded or credit allowed on
Products returned by customers and accepted by Tenant, or the amount of
cash refunded or credit allowed thereon in lieu of Tenant's acceptance
thereof, but only to the extent that the sales relating to such Products
were made in, about or from the Premises; provided, however, that in no
event shall the cost or value of any coupons, trading stamps, premiums,
advertising or other promotional devices be deducted or excluded from
Tenant's Gross Sales or be otherwise construed as a discount, refund,
allowance or credit hereunder. Any credit or refund shall reduce Gross
Sales for the accounting period during which such credit or refund is made
but shall not affect Gross Sales, for the period in which the original
sale was made; and
(iii) sales taxes, casino entertainment taxes, if any, so called
luxury taxes now or hereafter imposed upon the sale of Products, whether
such taxes are added separately to the selling price thereof and collected
from customers or paid by Tenant and included in the retail selling price;
(iv) any sales of product, merchandise, services or the like by
Landlord.
(v) promotional or complimentary meals served without charge (up to
$1,000 per month, noncumulative, and the parties agree that, except as
provided in clause 4.4(ix) below, the menu price of all other promotional
or complimentary meals shall be included in Gross Sales;
(vi) the value of complimentary appetizer or dessert items furnished
as a part of a meal which is included in Gross Sales;
(vii) amounts which are deducted from meal checks in response to
customer dissatisfaction;
(viii) goods or food items delivered to another restaurant of Tenant
where such delivery is made solely for the convenient operation of
Tenant's business and not for the purpose of consummating a sale made in,
upon or from the Premises;
7
(ix) Landlord's Complimentaries, as described in Section 5.5 below,
up to Five Hundred Thousand Dollars ($500,000) per Lease Year;
(x) Receipts from pay telephones in the Premises;
(xi) gratuities received by Tenant;
(xii) the sale of Tenant's trade fixtures and equipment not in the
ordinary course of business; and
(xiii) meals furnished to Tenant's employees without profit.
All gross income of Tenant or any other person, firm or corporation from
any operations in, at or upon the Premises which are not specifically excluded
by this Section shall be included in Gross Sales. All sales originating at, upon
or from the Premises shall be considered as made and completed thereon and shall
be included in Tenant's Gross Sales, even though bookkeeping and payment of the
account therefor may be transferred to another place for collection, and even
though actual filling of the sale or order or actual delivery of the merchandise
may be made from a place other than the Premises. In the event Tenant elects to
allow its customers to make credit purchases, no credit shall be allowed for
uncollected or uncollectible credit accounts. Each sale upon credit shall be
treated as a sale for the full price in the month during which such sale is
made, regardless of the time of when or whether Tenant shall receive payment
therefor. Tenant agrees that it will not directly or indirectly operate a
"Gallagher's Steak House" Restaurant at any other Las Vegas Strip location,
including any location within a hotel and/or casino property, during the Term of
this Lease.
4.5 Percentage Rent Payments. On or before the 15th day of each calendar
month during the Term of this Lease (including the calendar month next
succeeding the last month of the Term hereof), Tenant shall deliver to Landlord
a written statement signed and certified by Tenant or an officer of Tenant as
being true and correct, setting forth the amount of Tenant's Gross Sales during
the immediately preceding calendar month, and on the same date Tenant shall pay
Landlord the percentage rental for the immediately preceding calendar month.
Within thirty (30) days after the end of each Lease Year during the Term of this
Lease, Tenant shall deliver to Landlord a written statement, signed and
certified by Tenant or an officer of Tenant to be true and correct, setting
forth the amount of Tenant's Gross Sales made during each month of the
immediately preceding year. If Tenant has paid Landlord for such Lease Year
Percentage Rent that is less than Tenant is obligated to pay for such period,
Tenant shall pay Landlord the amount of such deficiency concurrently with
Tenant's delivery of its annual report of Gross Sales hereunder. If Tenant has
paid more than the Percentage Rent required to be paid for such period, Landlord
shall credit the amount of such excess against rent next coming due hereunder
from Tenant, or, if the Term has expired, Landlord shall pay the amount of such
excess to Tenant directly.
8
4.6 Books and Records; Audit. Tenant agrees that it will keep complete
books of accounts reflecting Gross Sales,and all of the business activities with
respect to the Premises and will comply with generally accepted accounting
principles ("GAAP"). Said books of account shall, at a minimum, include:
1. Dated and time stamped cash register tapes (customer receipt
and detail audit) which provide a non-resettable, non-clearing
gross sales total and/or consecutively numbered duplicate
sales tickets which are to be dated and time stamped. When
consecutively numbered sales tickets are utilized, Tenant
shall maintain the vendor invoice for such sales ticket
purchases, which shall accurately reflect the commencing and
ending numbers of all sequences. Documentation of voided sales
must be kept with regular sales tickets and tapes and
originals of voided tickets must be retained.
2. Daily sales summaries showing Nevada and out-of-state sales.
3. Monthly sales journals showing breakdown of sales by day.
4. Authenticated bank deposit slips showing deposits of daily
sales. If deposits are not made on a daily basis, then the
number of days' receipts deposited should be shown on the
deposit slip and in the monthly sales journal.
5. Monthly state sales tax returns and cancelled checks showing
payment of those taxes;
6. The portion of Federal Income Tax returns showing Tenant's
gross receipts for the same period of time that Tenant is
required to maintain its Federal Income Tax returns by the
Internal Revenue Service.
7. All of Tenant's purchase orders and invoices relating to the
purchase, exchange, or replacement of Products sold or to be
sold by Tenant at, upon, or from the Premises.
Landlord shall have the right to examine such books and records at any
reasonable time and place. Lessor shall have the right at any time during the
Term and within thirty (30) days after the end of the Term to have an audit
conducted of Tenant's books of account by Landlord's employees or auditors of
Landlord's choice. If any audit reveals Gross Sales were understated by more
than two percent (2%), the entire cost and expense of such audit shall be borne
by Tenant. It is further agreed that an understatement by Tenant of five percent
(5%) or more of Gross Sales during any three (3) months being audited shall be
deemed an Event of Default unless such understatement was caused by the fraud of
Tenant's employees without Tenant's knowledge.
9
4.7 Place for Payments. All Base Rent, Percentage Rent and other monies
required to be paid by Tenant hereunder (collectively referred to herein as
"rent") shall be paid to Landlord without deduction or offset, and, except as
may be specifically set forth in this Lease without prior notice or demand, in
lawful money of the United States of America, at 3790 Las Vegas Blvd. South, Las
Vegas, Nevada, 89109 or at such other place as Landlord may, from time to time,
designate in writing. If the time for payment of any amount due from Tenant to
Landlord is not set forth in this Lease, such amount shall be due within five
(5) business days after such amount is billed by Landlord.
4.8 Interest. Any rent due from Tenant to Landlord which is not paid
within five (5) business days after the date due shall bear interest at two
percent (2%) per annum in excess of the Prime Rate of Interest published from
time to time in the "Money Rates" section of the Wall Street Journal (or a
comparable interest rate selected by Landlord in the event the Wall Street
Journal no longer publishes a Prime Rate) (hereinafter, the "Default Rate").
4.9 Late Charge. In the event Tenant is more than ten (10) days late in
paying any rent due under this Lease more than twice during the same Lease Year,
then, beginning with the third such delinquent payment of rent, and continuing
with each subsequent payment of rent during the Term which is more than ten (10)
days late, Tenant shall pay Landlord a late charge equal to five percent (5%) of
the delinquent rent, and, provided that Landlord gives Tenant written notice of
the delinquent rent, Tenant shall pay an equivalent late charge every ten (10)
days thereafter until the delinquent rent, including all interest and assessed
late charges, has been paid in full. The parties agree that the amount of such
late charge represents a reasonable estimate of the cost and expense that would
be incurred by Landlord in processing each delinquent payment of rent by Tenant
and that such late charge shall be paid to Landlord as liquidated damages for
each delinquent payment, but the payment of such late charge shall not excuse or
cure any default by Tenant under this Lease. The parties further agree that the
payment of late charges and the payment of interest provided for in Section 4.8
above are distinct and separate from one another in that the payment of interest
is to compensate Landlord for the use of Landlord's money by Tenant, while the
payment of a late charge is to compensate Landlord for the additional
administrative expense incurred by Landlord in handling and processing
delinquent payments.
4.10 Failure to Achieve Minimum Sales. Notwithstanding anything to the
contrary contained elsewhere in this Lease, Landlord may, at the end of the
fifth full Lease Year or any subsequent Lease Year, terminate this Lease,
without compensation to Tenant, in the event that Tenant's average monthly Gross
Sales for a period consisting of three consecutive months during any such Lease
Year is less than Three Hundred Thousand Dollars ($300,000), unless Tenant pays
to Landlord, in addition to Base Rent, an amount equal to the difference between
Tenant's Percentage Rent for such months and the amount of Percentage Rent which
would have been due from Tenant had Tenant's actual average Gross Sales for such
months been Three Hundred Thousand Dollars ($300,000). Termination hereunder
shall be upon ninety (90) days written notice. Tenant
10
acknowledges that Landlord has made no representation to Tenant regarding
anticipated Gross Sales or projected number of visitors and guests in the Hotel.
ARTICLE 5
GUEST RELATIONS; COMPLIMENTARIES
5.1 Standard of Operations. Tenant acknowledges that the Hotel is a first
class hotel and that the maintenance of Landlord's reputation and the reputation
of the Hotel, as well as the goodwill of all of Landlord's guests and invitees,
is essential to Landlord and that any impairment thereof may cause great damage
to Landlord. Tenant therefore covenants that it shall operate the Premises in
accordance with high standards of honesty, integrity, quality and courtesy so as
to maintain and enhance the reputation and goodwill of Landlord and the Hotel
and at all times in keeping with and not inconsistent with or detrimental to the
operation by Landlord of an exclusive, first-class resort hotel facility. Tenant
shall regularly monitor the performance of each of Tenant's employees at the
Premises so that such standards may be consistently maintained. Tenant therefore
further agrees that repeated failure to maintain such standards shall be deemed
an Event of Default by Tenant and that repeated complaints from customers or
guests which are reasonable and which are not promptly remedied by Tenant shall
be evidence of Tenant's failure to maintain such standards.
5.2 Room Charges. Tenant may permit Hotel guests to charge purchases from
Tenant to their room account. Tenant shall be solely responsible for
ascertaining that any persons purporting to be Hotel guests are in fact Hotel
guests and shall further be solely responsible for the credit worthiness of such
persons. Landlord shall not be responsible for uncollected or uncollectible
charges; provided that Landlord shall have the duty to exercise its good faith
efforts to collect any charges by Tenant's customers to their hotel rooms.
Tenant shall, at Tenant's expense, use Landlord's point-of-sale system in order
to record all guest charges, and Landlord shall make its point of sale system
available to Tenant at no cost to Tenant (i.e., Tenant's input devices shall be
purchased and maintained by Tenant at its cost but Landlord will not impose an
additional charge or fee for the use of Landlord's point of sale system). Tenant
agrees to comply with all rules and regulations which Landlord may, in its
reasonable discretion, from time to time, adopt to facilitate charges to rooms
and/or to minimize uncollected charges.
5.3 Room Charge Accountings. Landlord shall cause to be prepared and
delivered to Tenant a weekly accounting of all charges to Hotel guest accounts
by Tenant's customers and concurrently therewith shall deliver to Tenant any
sums collected with respect to such charges. If any customer account was paid by
credit card, Landlord shall deduct from the amounts due to Tenant such charges
as the credit card company actually imposes on the Hotel; Landlord's accounting
shall specify all such deductions.
5.4 Collections. In the event that any Hotel guest pays any portion of his
bill but refuses to pay any charges of Tenant, Tenant agrees separately to bill
such guests and to pursue collection
11
independently of Landlord. Landlord will make reasonable efforts to consult with
Tenant in connection with such charges and will cooperate with Tenant's efforts
to collect the same. In the event Tenant determines that collection efforts
(other than the sending of a routine reminder notice or statement) are necessary
to collect an unpaid bill by one of its customers, Tenant shall inform Landlord
in writing of the identity of such customer at least five (5) days prior to the
commencement of any collection effort.
5.5 Complimentaries. Landlord may desire to provide designated Hotel
guests with complimentary food and beverages ("Complimentaries") at the
Premises. From time to time Landlord and Tenant shall develop procedures for
authorization of Complimentaries, up to Five Hundred Thousand Dollars ($500,000)
per Lease Year, and for reimbursement by Landlord of seventy-five percent (75%)
of the full retail cost for the Complimentaries in any Lease Year. Tenant
recognizes that Landlord is not responsible for the payment of gratuities on
Complimentaries. Landlord agrees to pay to Tenant any gratuities with respect to
Complimentaries which are charged by customers to their Hotel guest accounts as
provided in Section 5.2 and 5.3 above. In addition to the foregoing, Landlord
may request Tenant to provide complimentary food and beverages, in an amount not
exceeding $1,000 in value in any month (on a noncumulative basis), to persons
other than Hotel guests or casino patrons; Landlord shall not be obligated to
reimburse Tenant for the cost of such meals, and the value of such meals shall
not be included in Gross Sales. In the event Tenant desires to provide
complimentary food and/or beverages to any of its guests, Tenant shall be
responsible for payment of the full retail value thereof in excess of One
Thousand Dollars ($1,000) per month and the same shall be included in
computation of Gross Sales. However, there shall not be included in Gross Sales:
the value of complimentary items furnished by Tenant as part of a meal which is
included in Gross Sales; or amounts deducted from meal checks in response to
customer dissatisfaction.
ARTICLE 6
EMPLOYEES; BONDING
6.1 Staffing. Tenant shall staff the Premises with such number of its
employees as are reasonably required for the proper and efficient operation of
Tenant's business. Tenant agrees to adopt its own rules of conduct and personal
appearance standards which are consistent with the first class standards of the
Hotel. Tenant shall, at Tenant's expense, require its prospective and present
employees to participate in a pre-employment drug testing program. Such program
shall not apply to persons who have been employed by an affiliate of Tenant for
in excess of three (3) years; and, in connection with such program, Tenant may
advise its employees that the testing is a requirement of the Hotel.
6.2 Gaming Compliance. Tenant acknowledges that Landlord, its parent,
subsidiaries and affiliates are businesses that are or may be subject to and
exist because of privileged licenses issued by governmental authorities. If
requested to do so by Landlord, Tenant shall obtain any license, qualification,
clearance or the like which shall be requested or required of Tenant by
12
Landlord or any regulatory authority having jurisdiction over Landlord or any
parent company, subsidiary or affiliate of Landlord. If Tenant fails to satisfy
such requirement or if Landlord or any parent company, subsidiary or affiliate
of Landlord is directed to cease business with Tenant by any such authority, or
if Landlord shall in good faith determine that Tenant, or any of its officers,
directors or employees was or is involved in any relationship which jeopardizes
Landlord's business or such licenses, or those of its parent, subsidiaries or
affiliates, or if any such license is threatened to be, or is, denied,
curtailed, suspended or revoked by reason of any improper activities of Tenant
or any such related person and if, promptly after receiving notice thereof from
Landlord (which notice must contain sufficient particulars to permit Tenant to
take appropriate action), Tenant does not cease such activities or sever the
relationship of any such person to Tenant so as to satisfy Landlord and the
appropriate governmental authority, this Lease may be terminated by Landlord on
not less than thirty (30) days notice to Tenant and without liability to either
party.
6.3 Restricted Areas. Tenant shall not cause or permit its employees to
enter upon those areas of the Hotel which are designated "Employees Only".
Access to such areas is to be restricted to the employees of Landlord. The
foregoing shall not apply to employee lavatories or to the employee cafeteria.
However, in the case of the employee cafeteria, (i) the use thereof by Tenant's
employees will be permitted only so long as such use does not unreasonably
interfere with the use of such cafeteria by Landlord's employees, and (ii)
Tenant shall cause its employees to abide by reasonable scheduling requirements
established by Landlord.
6.4 Bonding. All employees of Tenant who are reasonably expected to
perform a portion of their tasks in portions of the Hotel outside of the
Premises (including, for example, employees who are expected to deliver items to
rooms in the Hotel) shall be bonded in such amounts as may be reasonably
required by Landlord from time to time. In no event shall any employee of Tenant
perform work in portions of the Hotel outside of the Premises until the bond for
such employee has been delivered to Landlord and Landlord has approved the same,
in writing.
6.5 Tenant's Employees. Tenant shall be responsible for all salaries,
employee benefits, social security taxes, federal and state unemployment
insurance and any and all similar taxes relating to its employees and for
workers' compensation coverage with respect thereto pursuant to applicable law.
Tenant's employees shall not be entitled to participate in, or to receive, any
of Landlord's employee benefit or welfare plans, nor shall they be deemed agents
of Landlord for purposes of this Lease. Tenant shall be responsible for
verifying its employees' work authorizations under federal law, including any
necessary employment verification process under the Immigration Reform and
Control Act of 1986, as amended, before such employees perform services at the
Premises.
6.6 Tenant's Employment Policies. Landlord and Tenant agree that Tenant
shall have the sole and complete responsibility for establishing the employment
practices, policies, procedures and terms and conditions of employment of
Tenant's employees. Nothing contained in this Lease shall be used to infer or
create a single or joint employer relationship between Landlord and Tenant,
13
as the terms single and joint employer are interpreted by the National Labor
Relations Board, courts and administrative agencies.
ARTICLE 7
POSSESSION AND SURRENDER OF PREMISES
7.1 Acceptance. Tenant shall, by entering upon and occupying the Premises,
be deemed to have accepted the Premises subject to the conditions and
limitations stated in Section 2.5 above.
7.2 Surrender. Upon any surrender of the Premises, or termination or
expiration of this Lease, Tenant shall, except as otherwise provided in this
Lease, redeliver the Premises to Landlord in the same condition in which it
existed at the Opening Date, reasonable wear and tear, repairs which are the
obligation of Landlord and permitted alterations and installations excepted, and
deliver to Landlord all keys for, and all combinations for locks, safes and/or
vaults in the Premises.
7.3 Fixtures. All fixtures (except trade fixtures) which may be made or
installed or placed by either Tenant or Landlord upon the Premises, either
before or during the Term of this Lease, shall remain upon the Premises and
shall be surrendered with the Premises at the termination of this Lease.
14
7.4 Removal of Trade Fixtures. Upon the termination of this Lease, Tenant
shall be entitled to remove from the Premises all of its trade fixtures,
furnishings and equipment, including the personal property shown on Tenant's
Plans. If Tenant fails to remove any trade fixtures from the Premises prior to
the end of the Lease Term or prior to any earlier termination thereof, such
trade fixtures shall become Landlord's property.
7.5 Failure to Surrender. If the Premises is not surrendered at the end of
the Lease Term, Tenant shall indemnify Landlord against loss or liability
resulting from delay by Tenant in so surrendering the Premises including,
without limitation, any claims made by any succeeding tenant founded on such
delay.
ARTICLE 8
USE OF PREMISES
8.1 Permitted Use. The Premises is leased to Tenant solely for the purpose
of conducting thereon on a non-exclusive basis a "Gallagher's Steak House" full
service restaurant, serving a variety of food, nonalcoholic and alcoholic
beverages. Tenant may offer catering service from the Premises. Tenant may also
offer souvenir items for sale, so long as such items make specific reference to
Tenant's tradename and do not include the words "New York" or "NY" or show or,
in Landlord's sole judgment, otherwise make use of Landlord's name, theme or
intellectual property. Food items to be offered from the Premises and the
pricing thereof shall be subject to the prior written approval of Landlord,
which approval shall not be unreasonably withheld or delayed. Except for
Tenant's initial pricing, Landlord agrees that prices which do not exceed four
(4) times Tenant's actual costs shall not require further approval. Tenant shall
not use or suffer to be used the Premises, or any portion thereof, for any other
purpose or purposes whatsoever, without Landlord's written consent therefor
first had and obtained, and such consent may be withheld in Landlord's sole and
absolute discretion. Without limiting the generality of the foregoing, Tenant
shall not conduct gaming activities at the Premises. Landlord hereby reserves to
itself the right to conduct keno
15
gaming on the Premises, the location and type of which shall be subject to
Tenants' approval, which approval shall not be unreasonably withheld or delayed
but which may take into account the preservation of Tenant's theme, considering
location, design, sound sensitivity and ambience. As provided in Section 4.4
above, Tenant shall not operate a restaurant or similar operation under the
tradename used by Tenant at the Premises at any other Las Vegas Strip location,
including any location within a hotel and/or casino property, during the Term of
this Lease.
8.2 Tenants' Trade Name. Tenant shall conduct business under the trade
name "Gallagher's Steak House" and no other without prior written consent of
Landlord which shall not be unreasonably withheld. Tenant shall not conduct any
business at any time either before or after the termination of this Lease,
either in the Premises or elsewhere, under a name in which the words "New
York-New York" appear; provided, however, that Tenant may conduct its business
in the Premises under such a name (and the trade name set forth above) and use
the logo of Landlord in advertising, but such use of Landlord's logo shall be
deemed a revocable license or privilege only, terminable at any time, which
confers no property rights on Tenant, and which, in any event, shall cease upon
the expiration or sooner termination of this Lease. Any such use shall not occur
without the consent of Landlord to the presentation of its name and/or logo,
which consent shall not be unreasonably withheld. Neither such approval of name
and use of logo nor anything herein shall be deemed to abridge the right of
Landlord to grant or license the use of the words "New York-New York" to any
other person at any time. During the Term of this Lease Tenant hereby grants
Landlord a license to use Tenant's trade name and any marks related to such
trade name for the limited purpose of promoting and advertising the Restaurant.
Any such use shall not occur without the consent of Tenant to the presentation
of its name and/or logo, which consent shall not be unreasonably withheld.
8.3 Liquor License. Immediately after execution of this Lease, Tenant
shall make application for a liquor license in order to be able to provide
liquor service at the Premises. If Tenant is unable to obtain a liquor license
for a reason not related to the identity of Landlord or Landlord's ownership or
operation of the Hotel (other than the Premises) within ninety (90) days after
the commencement of the Lease Term, then Landlord may treat the same as an Event
of Default; provided, however, that so long as (i) Tenant is diligently and in
good faith seeking to obtain a liquor license; and (ii) Tenant obtains the
required liquor license no later than March 17, 1997, no Event of Default shall
be deemed to have occurred hereunder. Should the Premises open for business
prior to Tenant's obtaining the necessary liquor license(s), Tenant shall apply
for a temporary liquor license and, until a temporary license is obtained,
Landlord shall have the right, but not the obligation, to provide liquor service
to the Premises for so long as Landlord may lawfully do so and Tenant does not
hold the necessary liquor license(s). In such event, Landlord shall be entitled
to retain all revenue derived therefrom and Tenant shall have no claim or right
to such revenue.
8.4 Product Agreements. Tenant acknowledges that Landlord may enter into
agreements with Coke or Pepsi-Cola which will require that only certain beverage
products may be offered for sale or use within the Hotel, including the
Premises. Tenant agrees that upon reasonable
16
notice from Landlord it will abide by the terms and conditions of such
agreements as they may relate to product use within the Premises; provided that
(i) such agreements provide that the subject products will be offered at the
lowest available price; (ii) the service provided and the quality of the subject
products is reasonably comparable to the quality of similar products which would
be available to Tenant in the Las Vegas marketplace; and (iii) any such product
agreement for soda shall require that Tenant receive its soda equipment without
charge.
8.5 Prohibited Uses. Tenant shall not permit the Premises to be used for
any of the following purposes:
a. Vending Machines. Tenant shall not, without Landlord's prior
written approval, operate or permit to be operated on the Premises any coin or
token operated vending machines or similar device for the sale or leasing to the
public of any goods, wares, merchandise, food, beverages, and/or service,
including, without limitation, pay telephones, pay lockers, pay toilets, scales
and amusement devices. Notwithstanding the foregoing, Tenant may have pay
telephones in the Premises so long as the company which services such telephones
is the company which services Landlord's pay telephones in the Hotel.
b. No Residential Use. Tenant shall refrain from using or permitting
the use of the Premises or any portion thereof as living quarters,sleeping
quarters or lodging rooms.
c. No Non-Retail Use. Tenant shall refrain from using or permitting
the use of the Premises or any portion thereof for office, clerical or other
nonselling purposes, provided, however, that space in the Premises may be used
for such purposes to the extent reasonably required for the conduct of Tenant's
permitted business.
d. No Fire Sales. Tenant shall not, without Landlord's prior written
approval, conduct or permit any fire, bankruptcy or auction sale in, on or about
the Premises.
e. No Obstructions. Tenant shall not, without Landlord's prior
written approval, which shall not be unreasonably withheld, cover or obstruct
any windows, glass doors, lights, skylights, or other apertures that reflect or
admit light into the Premises, except for temporary closures and obstructions
during remodeling, repair or maintenance work in the Premises.
f. No Animals. Tenant shall not keep or permit the keeping of any
animals of any kind in, about or upon the Premises without Landlord's prior
written approval.
g. No Warehouse Use. Tenant shall not use the Premises for storage
or warehouse purposes beyond such use as is reasonably required to keep Tenant's
business adequately stocked for sales of product and merchandise in, at or from
the Premises.
17
8.6 Approval of Fixtures and Equipment. All fixtures and other equipment
to be used by Tenant in, about or upon the Premises shall be subject to the
prior written approval of Landlord, which shall not be unreasonably withheld.
8.7 Maintenance of Personal Property. Except as provided for elsewhere
herein, Tenant shall keep and maintain in good order, condition and repair
(including any such replacement and restoration as is required for that purpose)
Tenant's personal property and all portions of the Premises (other than
Landlord's Work) and every part thereof and any and all appurtenances thereto
wherever located. Tenant shall also keep and maintain in good order, condition
and repair (including any such replacement and restoration as is required for
that purpose) any special equipment, fixtures or facilities (other than
Landlord's Work) which special facilities shall include but not be limited to
grease traps, located outside the Premises. Tenant shall store all trash and
garbage in metal or other Health Department approved containers so as not to be
visible or create a nuisance to guests, customers and business invitees in the
Hotel, and so as not to create or permit any health or fire hazard, and arrange
for the prompt and regular removal thereof. Landlord shall keep and maintain in
good order, condition, and repair (including, except as otherwise provided in
this Lease, any such replacement and restoration as is required for that
purpose) those portions of the Premises constituting Landlord's Work, as well as
the common areas of the Hotel in the vicinity of the Premises and cause all such
areas to be in compliance with all governmental rules, regulations, ordinances,
statutes and laws, and the orders and regulations of the National Board of Fire
Underwriters, the Insurance Service Office, or any other body now or hereafter
exercising similar functions, now or hereafter in effect.
8.8 Compliance with Law. Except as provided in the following sentence,
Tenant shall at all times during the Term of this Lease comply with and shall
cause the Premises to be in compliance with all governmental rules, regulations,
ordinances, statutes and laws, and the orders and regulations of the National
Board of Fire Underwriters, the Insurance Service Office, or any other body now
or hereafter exercising similar functions, now or hereafter in effect pertaining
to the Hotel, the Premises or Tenant's use thereof. Landlord shall cause those
portions of the Premises constituting Landlord's Work to be in compliance with
all governmental rules, regulations, ordinances, statutes and laws. Tenant shall
not, without the prior written consent of Landlord and all insurance companies
which have issued any insurance of any kind whatsoever with respect to the Hotel
or the Premises, sell, or suffer to be kept, used or sold in, upon or about the
Premises any gasoline, distillate or other petroleum products or any other
substance or material of an explosive, inflammable or radiological nature,
except for the lawful use of petroleum products in a manner and for such
purposes as are customarily associated with the operation of a restaurant.
8.9 Rules and Regulations. Tenant hereby covenants and agrees that it
shall make all reasonable efforts to ensure that its agents, employees,
servants, contractors, subtenants and licensees shall abide by any reasonable
rules and regulations as Landlord may, from time to time, reasonably adopt for
the safety, care and cleanliness of the Premises, or the Hotel or for the
preservation of good
18
order thereon or to assure the operation of a first-class resort hotel facility.
All such rules and regulations shall be enforced by Landlord uniformly and in a
nondiscriminatory manner.
8.10 Business Practices and Minimum Hours of Operation. Tenant shall
operate the Premises during the entire Lease Term in accordance with sound
business practices, due diligence and efficiency so as to provide the maximum
Gross Sales which may reasonably be expected to be produced by such manner of
operation. Tenant shall maintain in the Premises Tenant's personal property
necessary for the conduct of Tenant's business therein, in a businesslike
manner, shall carry at all times in the Premises sufficient quantities of
Products as shall be reasonably designed to produce the maximum return to
Landlord and Tenant, and shall staff the Premises at all times with sufficient
personnel to serve its customers. All Products shall meet the high standards of
the Hotel. Tenant's minimum hours and days of operation shall be mutually agreed
upon by Landlord and Tenant. In the event of breach by Tenant of any of the
conditions of this paragraph, Landlord shall have, in addition to any and all
remedies herein provided, the right, at its option, to collect an amount equal
to one-thirtieth (1/30) of the highest monthly Percentage Rent to which Landlord
is or was entitled during the preceding twelve (12) month period for each and
every day, or any portion thereof, that Tenant is not open for business as
herein provided. Said amount shall be due on demand and shall be deemed to be in
lieu of any Percentage Rent that might have been earned during such period of
Tenant's failure to conduct its business as herein provided. Tenant shall be
open for such additional hours as shall be set from time to time by Landlord,
and Tenant may, upon prior written notice to Landlord, remain open additional
hours.
8.11 Private Parties. Tenant shall not materially restrict the use of
Premises to guests or patrons of the Hotel nor conduct any private parties
therein, without the prior written consent of Landlord, which consent shall not
be unreasonably withheld, provided that Landlord is satisfied, in its reasonable
judgment, that the conduct of any such party will not deprive Hotel guests of
adequate access to the Restaurant.
8.12 Photographic Services. Tenant shall permit the photographic
concessionaire with whom Landlord has entered into an agreement to provide
photographic services to patrons of Tenant's restaurant on the Premises,
provided the same does not unreasonably interfere with the conduct of Tenant's
business or the ambiance of the Restaurant.
8.13 Interference with Other Tenants. Tenant shall not do, permit or
suffer anything to be done, or kept upon the Premises which will obstruct or
interfere with the rights of other tenants, Landlord or the patrons and
customers of any of them, or which may reasonably be anticipated to annoy any of
them or their patrons or customers by reason of unreasonable noise or other
objectionable conduct, nor will Tenant commit or permit any nuisance on the
Premises or commit or suffer any immoral or illegal act to be committed thereon.
8.14 Refunds and Settlements by Landlord. In the event a dispute shall
arise between Tenant and any of its customers concerning the acceptability of
Tenant's Products which results in
19
a customer demanding a refund from Landlord, Landlord may in good faith and in
the exercise of a reasonable business judgment make such refund or rebate to
avoid embarrassment to the Hotel and to retain the goodwill of its customers. In
such case Tenant will forthwith reimburse Lessor in the amount of such refund or
rebate.
8.15 Advertising and Signage. All advertising, signs, placards or
other promotional events proposed to be posted, shown or exhibited by Tenant in
or upon the Premises and all additional outside advertising (including, without
limitation, television, radio and print advertising) which mentions Landlord or
the Hotel, shall be subject to the prior written approval of Landlord. Without
limiting the foregoing, Tenant shall not advertise at the Premises any other
premises owned or operated by Tenant without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Tenant acknowledges
that the Premises may be designated by a particular suite number. In such event,
Tenant agrees to include and use such suite number on all of its stationary,
correspondence, sales receipts and advertisements as part of its address. Tenant
agrees to forthwith remove or cease any such advertising, sign, placard or
exhibit which in the reasonable judgment of Landlord is deemed to be
objectionable or inconsistent with the decor or policies of Landlord in the
operation of the Hotel. Tenant shall also refrain from any advertising which is
so objectionable, in Landlord's reasonable judgment, as to result in
embarrassment to Landlord, loss of goodwill or damage to the reputation of the
Hotel. None of Tenant's signs, placards or advertising shall be exhibited
outside of the Premises or in the lobby or any other part of the Hotel without
Landlord's prior written consent. However, Landlord shall permit outside
advertising consistent in tone and content with that allowed to other
restaurants in the Hotel upon the same terms as are required of such other
restaurants. At no time during the Term of this Lease nor for a period of six
(6) months after its termination shall Tenant place or cause to be placed,
whether on or off the Premises, any window card, sign or other advertising,
including newspaper adds, which recites that Tenant has lost its lease, is going
out of business or is vacating the Premises. Landlord shall provide reasonable
directional signage within the Hotel to assist customers in locating the
Premises.
8.16 Intellectual Property. Tenant represents and warrants to
Landlord that Tenant owns, or has obtained an appropriate license to use, all
copyrights, trademarks, tradenames and other intellectual property rights used
in Tenant's business, including, without limitation, all rights in Tenant's
tradename, trade or service mark and logo.
8.17 Security. Tenant acknowledges that Landlord's security
department and security officers are not responsible for providing security
services in the Premises and that all such responsibility is the obligation of
Tenant. In no event shall Landlord be liable to Tenant or any third-party for
the security department's failure to respond to a request for aid or assistance
by Tenant.
8.18 Conduct of Tenant. Tenant acknowledges that Landlord, its
parent, subsidiaries and affiliates have a reputation for offering high-quality
entertainment and/or services to the public, and that it and its affiliates are
subject to regulation and licensing, and desire to maintain their reputation and
receive positive publicity. Tenant therefore agrees that throughout the Term of
this Lease, it and
20
its officers and management will not conduct themselves in a manner that
adversely affects or is detrimental to the reputation or image of Landlord or
its affiliates, and will not directly or indirectly make any oral, written or
recorded public statement or comment that is disparaging, critical, defamatory
or otherwise not in the best interests of Landlord. Landlord shall use its good
faith business judgment in determining whether Tenant's conduct or that of its
officers and management adversely affects Landlord or its affiliates, and, upon
such determination, Landlord shall have the right to terminate this Lease upon
notice to Tenant without liability to either party if Tenant does not cause such
activity to be terminated and use its reasonable best efforts to remedy or
mitigate any material harm done to Landlord within thirty (30) days after such
notice from Landlord. The termination or removal of any person responsible for
actions or statements prohibited by this Section 8.18 shall constitute full
compliance with Tenant's obligations to remedy such default.
8.19 Emissions and Hazardous Materials. Except for small quantities of
substances customarily used in the operation of a restaurant and kept and used
by Tenant in accordance with applicable laws, Tenant shall not, without the
prior written consent of Landlord, cause or permit, knowingly or unknowingly,
any Hazardous Material (hereinafter defined) to be brought upon, kept, used,
discharged, leaked, or emitted in or about, or treated at the Premises. As used
in this Lease, "Hazardous Material(s)" shall mean any hazardous, toxic or
radioactive substance, material, matter or waste which is or becomes regulated
by any federal, state or local law, ordinance, order, rule, regulation, code or
any other governmental restriction or requirement, and shall include asbestos,
petroleum products and the terms "Hazardous Substance" and "Hazardous Waste" as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended 42 U.S.C. 'SS' 9601 et seq. ("CERCLA"), and the Resource
Conservation and Liability Act, as amended 42 U.S.C. 'SS' 9601 et seq. ("RCRA").
To obtain Landlord's consent, Tenant shall prepare an "Environmental Audit" for
Landlord's review. Such Environmental Audit shall list: (1) the name(s) of each
Hazardous Material and a Material Safety Date Sheet ("MSDS") as required by the
Occupational Safety and Health Act; (2) the volume proposed to be used, stored
and/or treated at the Premises (monthly); (3) the purpose of such Hazardous
Material; (4) the proposed on-premises storage location(s); (5) the name(s) of
the proposed off-premises disposal entity; and (6) an emergency preparedness
plan in the event of a release or spill. Additionally, the Environmental Audit
shall include copies of all required federal, state, and local permits
concerning or related to the proposed use, storage, or treatment of any
Hazardous Material(s) at the Premises. Tenant shall submit a new Environmental
Audit whenever it proposes to use, store, or treat a new Hazardous Material at
the Premises or when the volume of existing Hazardous Materials to be used,
stored or treated at the Premises expands by ten percent (10%) during any thirty
(30) day period. If Landlord in its reasonable judgment finds the Environmental
Audit acceptable, then Landlord shall deliver to Tenant Landlord's written
consent. Notwithstanding such consent, Landlord may revoke its consent upon:(1)
Tenant's failure to remain in full compliance with applicable environmental
permits and/or any other requirements under federal state, or local law,
ordinance, order, rule, regulation, code or any other governmental restriction
or requirement (including but not limited to CERCLA and RCRA related to
environmental safety, human health, or employee safety; (2) the Tenant's
business operations pose or potentially pose a human health risk to other
Tenants; or (3) the Tenant expands
21
its use, storage, or treatment of any Hazardous Material(s) in a manner
inconsistent with the safe operation of a restaurant and hotel. Should Landlord
consent in writing to Tenant bringing, using, storing or treating any Hazardous
Material(s) in or upon the Premises, Tenant shall strictly obey and adhere to
any and all federal, state or local laws, ordinances, orders, rules,
regulations, codes or any other governmental restrictions or requirements
(including but not limited to CERCLA and RCRA which in any way regulate, govern
or impact Tenant's possession, use, storage, treatment or disposal of said
Hazardous Material(s). In addition, Tenant represents and warrants to Landlord
that (1) Tenant shall apply for and remain in compliance with any and all
federal, state or local permits in regard to Hazardous Materials; (2) Tenant
shall report to any and all applicable governmental authorities any release of
reportable quantities of any Hazardous Material(s) as required by any and all
federal, state or local laws, ordinances, orders, rules, regulations, codes or
any other governmental restrictions or requirements; (3) Tenant, within five (5)
days of receipt, shall send to Landlord a copy of any notice, order, inspection
report, or other document issued by any governmental authority relevant to the
Tenant's compliance status with environmental or health and safety laws; and,
(4) Tenant shall remove from the Premises all Hazardous Materials at the
termination of this Lease, except for those, if any, introduced by Landlord or
at Landlord's direction.
In addition to, and in no way limiting Tenant's duties and obligations as
set forth in Article 16 of this Lease, should Tenant breach any of its duties
and obligations as set forth in this Section 8.20, or if the presence of any
Hazardous Material(s) brought onto or occurring on the Premises after the
Delivery Date results in contamination of the Premises, the Hotel, any land
other than the Hotel, the atmosphere or any water or waterway (including
groundwater), or if contamination of the Premises or of the Hotel by any
Hazardous Material(s) otherwise occurs for which Tenant is otherwise legally
liable to Landlord for damages resulting therefrom, Tenant shall indemnify, save
harmless, and at Landlord's option and with attorneys approved in writing by
Landlord, defend Landlord, and their contractors, agents, employees, partners,
officers, directors and mortgagees, if any, from any and all claims, demands,
damages, expenses, fees, costs, fines, penalties, suits, proceedings, actions,
causes of action, and losses of any and every kind and nature (including,
without limitation, diminution in value of the Premises or the Hotel, damages
for the loss or restriction on use of the rentable or usable space or of any
amenity of the Premises or the Hotel, damages arising from any adverse impact on
marketing space in the Hotel, and sums paid in settlement of claims and for
attorney's fees, consultant fees and expert fees, which may arise during or
after the Lease Term or any extension thereof as a result of such
contamination). This includes, without limitation, costs and expenses, incurred
in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of the presence of
Hazardous Material(s) on or about the Premises or the Hotel, or because of the
presence of Hazardous Material(s) anywhere else which came or otherwise emanated
from Tenant or the Premises. Without limiting the foregoing, if the presence of
any Hazardous Material(s) on or about the Premises or the Hotel caused or
permitted by Tenant results in any contamination of the Premises or the Hotel,
Tenant shall, at its sole expense, promptly take all actions and expense
necessary to return the Premises and/or the Hotel to the condition existing
prior to the introduction of any such Hazardous Material(s) to the
22
Premises or the Hotel; provided, however, that Landlord's approval of such
actions shall first be obtained in writing.
Nothing contained herein shall be deemed to limit Landlord's obligations
under law for the removal of Hazardous Materials which exist on the Premises
prior to the delivery thereof to Tenant or to impose upon Tenant any obligation
for the removal of such Hazardous Materials.
ARTICLE 9
ALTERATIONS AND IMPROVEMENTS
Tenant may make no alteration, repairs, additions or improvements in, to
or about the Premises (collectively, "Tenant Alterations"), without the prior
written consent of Landlord, which shall not be unreasonably withheld, and
Landlord may impose as a condition to such consent such requirements as
Landlord, in its reasonable discretion, may deem necessary or desirable,
including without limitation, (a) the right to approve the plans and
specifications for any work, (b) the right to require insurance satisfactory to
Landlord, (c) the right to require evidence of Tenant's ability to make full
payment for any work, (d) requirements as to the manner in which or the time or
times at which work may be performed and (e) the right to designate the
contractor or contractors to perform Tenant Alterations which affect the fire
sprinkler or life safety systems of the Hotel. All Tenant Alterations shall be
compatible with a first class hotel/casino complex and completed in accordance
with Landlord's requirements and all applicable rules, regulations and
requirements of governmental authorities and insurance carriers. Tenant shall
pay to Landlord Landlord's reasonable charges (which shall be assessed by
Landlord at its cost, without profit) for reviewing and inspecting all Tenant
Alterations to assure full compliance with all of Landlord's requirements.
Landlord does not expressly or implicitly covenant or warrant that any plans or
specifications submitted by Tenant are safe or that the same comply with any
applicable laws, ordinances, codes, rules or regulations. Further, Tenant shall
indemnify, protect, defend and hold Landlord harmless from any loss, cost or
expense, including attorneys' fees and costs, incurred by Landlord as a result
of any defects in design, materials or workmanship resulting from Tenant
Alterations. If requested by Landlord, Tenant shall provide Landlord with copies
of all contracts, receipts, paid vouchers, and any other documentation in
connection with the construction of such Tenant Alterations. Tenant shall
promptly pay all costs incurred in connection with all Tenant Alterations.
Notwithstanding the foregoing provisions of this Article 9, Landlord's prior
consent shall not be required with respect to any Tenant Alteration which (i)
costs less than Twenty-Five Thousand Dollars ($25,000); (ii) does not materially
affect the interior or exterior appearance of the Premises; and (iii) does not
affect fire sprinklers, life safety, plumbing, electrical or mechanical systems
of the Hotel.
ARTICLE 10
LANDLORD'S REPAIR OBLIGATION
Landlord agrees to keep in good structural order, condition and repair the
exterior walls, and roof of the Hotel and all portions of Landlord's Work except
for any damage thereto as to which
23
Article 21 applies and other damage caused by any act or negligence of Tenant or
its agents, employees, servants, contractors, subtenants or licensees (which
other damage shall be promptly repaired by Tenant at Tenant's expense).
ARTICLE 11
PARKING AND COMMON AREAS
Tenant, its agents, employees, servants, contractors, subtenants,
licensees, customers and business invitees shall have the nonexclusive right, in
common with Landlord and all others to whom Landlord has or may hereafter grant
rights, to use such common areas of the Hotel (including, but not limited to,
the parking lot, walkways, sidewalks, hallways, lobby and public restrooms) as
may be designated from time to time by Landlord, subject to such rules and
regulations as Landlord may from time to time impose, provided such designation
and such rules and regulations do not materially interfere with Tenant's
business. Subject to the foregoing: Tenant agrees that it, its agents,
employees, servants, contractors, subtenants and licensees shall abide by such
rules and regulations and that Landlord shall have the exclusive management and
control of all common areas; Landlord may at any time close any common area or
other portions of the Hotel to make repairs or changes, to prevent the
acquisition of public rights in such areas, or to discourage noncustomer parking
(provided that no such closure (other than temporary closures which are
necessary to make repairs or changes) materially and adversely affects access to
the Premises). Landlord may do such other acts in and to the common areas and
the other portions of the Hotel as in its judgment may be desirable. Landlord
agrees, however, to use all reasonable efforts to maintain adequate access to
the Premises when the Premises is open for business so that Tenant's customers
and staff can enter and leave the Restaurant. All parking areas which Tenant's
employees may be permitted to use are to be used under a revocable license, and
if any such license is revoked, or if the amount of such area is diminished,
Landlord shall not be subject to any liability, nor shall Tenant be entitled to
any compensation or diminution or abatement of rent, nor shall such revocation
or diminution of such areas be deemed constructive or actual eviction; provided,
however, that Landlord shall exercise its rights with respect to such revocable
license for parking by Tenant's employees in a nondiscriminatory manner. Tenant
shall direct its employees to park only in those areas (which may include
off-site parking areas) designated by Landlord from time to time for such
purposes. Landlord agrees to maintain the common areas in the vicinity of the
Premises in good condition and to keep the same clean and neat in appearance.
ARTICLE 12
TAXES
12.1 Personal Property Taxes. Tenant shall be liable for and shall pay
before delinquency (and, upon demand by Landlord, Tenant shall furnish Landlord
with satisfactory evidence of the payment thereof) all taxes, fees and
assessments of whatsoever kind or nature, and penalties and interest thereon, if
any, levied against Tenant's property or any other personal property of
whatsoever kind and belonging to Tenant or any person claiming by, through or
under Tenant,
24
situate or installed in or upon the Premises, whether or not affixed to the
realty. If at any time during the Term of this Lease any such taxes on personal
property are separately assessed as part of the tax on the real property of
which the Premises is a part, then in such event Tenant shall pay to Landlord
the amount of such additional taxes upon presentation of appropriate evidence as
to the amount due.
12.2 Other Taxes. Tenant shall pay when due all taxes, assessments or fees
for which Tenant is liable under applicable law and which arise directly or
indirectly from Tenant's operations at the Premises. Within five (5) days of
written demand from Landlord, Tenant shall furnish Landlord evidence
satisfactory to Landlord of the timely payment of any such tax, assessment or
fee.
12.3 Tax on Rents. If at any time during the Term of this Lease, under the
laws of the United States, Nevada or any political subdivision thereof, a tax or
excise on rents, however described, is levied or assessed by the United States,
Nevada or any political subdivision against Landlord on account of any rent
reserved under this Lease, all such tax or excise on rents shall be paid by
Tenant. The foregoing shall not apply to any income, franchise, profits, estate,
gift, or similar tax imposed on Landlord.
12.4 Statements Received by Landlord. Whenever Landlord shall receive any
statement or bill for any tax, payable in whole or in part by Tenant as
additional rent, or shall otherwise be required to make any payment on account
thereof, Tenant shall pay the amount due hereunder within ten (10) days after
demand therefor (or, if later, within 10 days prior to the last date on which
such tax may be paid without penalty) accompanied by delivery to Tenant of a
copy of such tax statement, if any.
12.5 Casino Entertainment Tax. Tenant agrees that it will collect any
applicable Casino Entertainment Tax ("CET") associated with the sale of food,
beverage or merchandise from the Premises and will pay the same to the taxing
authority on a timely basis, or if not permitted to pay the same directly, shall
remit the CET due to Landlord no later than the 10th day of the month following
the month in which the taxable sales occurred. Tenant shall make all documents
containing information relative to the computation of the CET available for
inspection upon notice by representatives of Landlord and the Gaming
Authorities. This obligation shall continue beyond the Term of this Lease.
Tenant shall be liable for any and all CET, interest and penalties found to be
payable in connection with the sale of food, beverage or merchandise from the
Premises as a result of understated taxable revenues, insufficiency of records
or, if Tenant is permitted to pay the CET directly to the taxing authority,
untimely payment of the CET. If Tenant is not permitted to pay the CET directly
to the taxing authority, then, if Tenant has timely remitted the payment to
Landlord as required in this Section 12.5,Tenant shall not be liable for the
untimely payment of the CET to the taxing authority.
25
ARTICLE 13
SERVICES TO THE PREMISES
13.1 Utilities. Landlord shall provide customary utility lines stubbed to
the Premises, including supply and return lines for air conditioning, in the
manner and to the extent set forth in the Work Letter. Except as otherwise
provided in the Work Letter, the distribution of utility lines within the
Premises shall be the responsibility of Tenant, at Tenant's cost. Tenant shall
pay all "hook-up fees," connection charges and other similar charges which may
be levied by utility provides as a fee for connecting the Premises to the
utility supply. Landlord shall pay for all gas, power and electric current,
sewer and all other utilities (including sewer usage charges, but not sewer
"hook-up fees" or connection charges) used by Tenant in the Premises; Tenant
acknowledges that, because of the nature of the Premises, Tenant might not have
access to the controls for heating,air conditioning or lighting at the Premises
and shall not attempt to make any changes to such controls located outside the
Premises. Landlord, at Landlord's cost, shall provide Tenant with one telephone
line and a house phone. Tenant shall be responsible for local and long distance
service. Tenant may at Tenant's expense, install other telephone lines
(including pay telephones), provided the same are not incompatible with the
Hotel's telephone system. Landlord, at Landlord's cost, shall provide garbage
service for the Premises; provided that Tenant shall be responsible for removing
garbage from the Premises and transporting the same to Landlord's designated
trash enclosure or dumpster. In addition, heating, air conditioning, sewer, hot,
cold and chilled water and natural gas (for cooking purposes) shall be supplied
to the Premises without additional cost to Tenant. Heat and air conditioning
shall be supplied so as to maintain comfort levels in keeping with those of the
Hotel and, in any event, so as to keep the Premises reasonably comfortable at
all times. Hot, cold, and chilled water shall be supplied in such quantities and
at such temperatures as are suitable for Tenant's operations. Landlord may, from
time to time, prescribe reasonable rules and regulations for the implementation
of this Section. Tenant shall not install any equipment which can exceed the
capacity of any utility facilities serving the Premises and if any equipment
installed by Tenant requires additional utility facilities, the same shall be
installed at Tenant's expense in compliance with all code requirements and plans
and specifications which must first be approved in writing by Landlord, which
approval shall not be unreasonably withheld.
13.2 Limitation upon Landlord's Obligation. Landlord shall not be
obligated to perform any service or to repair or maintain any structure or
facility except as provided in this Article and Articles 10 and 11 of this
Lease. The cost of any service, maintenance or repairs made by Landlord pursuant
to this Lease which are made necessary because of the negligence or misuse of
Tenant, Tenant's agents, employees, servants, contractors, subtenants,
licensees, shall be paid by Tenant within ten (10) days after receipt of a
billing therefor from Landlord. Landlord reserves the right to temporarily stop
any service when Landlord deems such stoppage necessary, whether by reason of
accident or emergency, or for repairs or improvements or otherwise. Landlord
shall not be liable under any circumstances for loss or injury however
occurring, through or in connection with or incident to any stoppage of such
services. Landlord shall have no responsibility or liability for failure to
supply any services or maintenance or to make any repairs when prevented from
doing so
26
by any cause beyond Landlord's control. Landlord shall not be obligated to
inspect the Premises and shall not be obligated to make any repairs or perform
any maintenance within the Premises hereunder unless first notified of the need
thereof in writing by Tenant. In the event that Landlord shall fail to commence
such repairs or maintenance within ten (10) days after said notice (or two (2)
days after said notice if the failure of the item requiring repair materially
interferes with the conduct of Tenant's business), Tenant's sole right and
remedy for such failure shall be, after further notice to Landlord, to make such
repairs or perform such maintenance and to deduct the cost and expenses thereof
from the rent payable hereunder; provided, however, that the amount of such
deduction not exceed the reasonable value of such repairs or maintenance; and
provided, further, if such repairs or maintenance are needed because of act or
omission of Tenant, its agents, servants, employees, customers, invitees or
licensees, the cost thereof shall be paid by Tenant. To the extent that Landlord
is required to perform any service or repair, Landlord shall do so with
reasonable diligence and in a manner which is reasonably calculated to avoid
interference with Tenant's business in the Premises.
ARTICLE 14
INSURANCE
14.1 Liability Insurance. Tenant shall, at all times during the term
hereof, at its sole cost and expense, procure and maintain in full force and
effect a policy or policies of commercial general liability insurance including
coverage for both owned and non-owned automobiles and contractual indemnity
coverage issued by an insurance carrier reasonably acceptable to Landlord
assuring against loss, damage or liability for injury or death to persons and
loss or damage to property occurring from any cause whatsoever (subject to usual
and customary policy exclusions) in connection with the Premises or Tenant's use
thereof. Such liability insurance shall be evidenced by a single limits policy
or policies in an aggregate amount of not less than Ten Million Dollars
($10,000,000.00). Such liability insurance shall include fire legal liability
coverage of not less than the amount of Landlord's deductible under Landlord's
property insurance for the Hotel, as such deductible amount may be modified from
time to time ("Landlord's Deductible"), so long as such insurance is available
upon commercially reasonable terms. Upon request from Tenant, Landlord shall
notify Tenant of the current amount of Landlord's Deductible. Landlord expects
that the initial amount of Landlord's Deductible will be Five Hundred Thousand
Dollars ($500,000). Landlord, Primadonna Resorts and MGM Grand Hotel, Inc. shall
be named as an additional insured (but not named insureds) (and at Landlord's
option, any other persons, firms or corporations having an interest and
designated by Landlord shall be named as additionally insured (but not named
insured)) under each such policy of insurance.
14.2 Property Insurance. Tenant shall, at all times during the term
hereof, at its sole cost and expense, procure and maintain in full force and
effect standard form of fire and casualty with standard "ALL-RISK" coverage
protecting against all risks of physical loss or damage, including, without
limitation, sprinkler leakage coverage and plate glass insurance covering all
plate glass in the Premises and all of Tenant's property, improvements and
betterments to the Premises and Tenant's products and merchandise, and the
personal property of others in Tenant's possession in,
27
upon or about the Premises. Such insurance shall be in an amount equal to the
current replacement value of the property required to be insured. Tenant and
Landlord, as their interests may appear, shall be the named loss payee (and at
Landlord's option, Landlord's lender shall be named as additional loss payee)
under each such policy of insurance. Tenant shall also carry business
interruption insurance covering actual losses for a period of not less than
twelve (12) months.
14.3 Policy Requirements. All policies required hereunder shall be with
companies licensed to do business in Nevada and with a "General Policyholder's
Rating" of A- or better and a "financial rating" of VII or better in the most
recent edition of Best's Insurance Guide (or similar rating service if such
guide is no longer published). A certificate issued by the insurance carrier for
each policy of insurance required to be maintained by Tenant hereunder, and,
upon request of Landlord, a copy of each such policy, shall be delivered to
Landlord and all other additional insureds no later than ten (10) days after
execution of this Lease and thereafter, as to policy renewals, within thirty
(30) days prior to the expiration of the terms of each such policy. Each of said
certificates of insurance and each such policy of insurance required to be
maintained by Tenant hereunder shall be from an insurer and in form and
substance reasonably satisfactory to Landlord and shall expressly evidence
insurance coverage as required by this Lease and shall contain an endorsement or
provision requiring not less than thirty (30) days written notice to Landlord
and all other additional insured prior to the cancellation, diminution in the
perils insured against, or reduction of the amount of coverage of the particular
policy in question (provided that such thirty (30) day period may be reduced to
ten (10) days if the cause for cancellation of the insurance policy is Tenant's
failure to pay the insurance premium). In addition to the foregoing
certificates, Tenant shall at all times during the Term hereof furnish Landlord
with a current certificate of worker's compensation coverage evidencing coverage
at Nevada statutory limits. Each policy of insurance provided for in Section
14.2, shall contain an express waiver of any and all rights of subrogation
thereunder whatsoever against Landlord, its officers, agents and employees. All
policies to be maintained in this Article 14, shall be written as primary
policies and not contributing with or in excess of the coverage, if any, which
Landlord may carry. Any other provision contained in this Article 14 or
elsewhere in this Lease notwithstanding, the amounts of all insurance required
hereunder to be maintained by Tenant shall be not less than an amount sufficient
to prevent Landlord from becoming a coinsurer. The limits of the public
liability insurance required to be maintained by Tenant under this Lease shall
in no way limit or diminish Tenant's liability under Article 16 hereof and such
limits shall be subject to increase at any time and from time to time during the
Term if Landlord, in the exercise of reasonable discretion, deems such an
increase necessary for its adequate protection; provided, however, that (i)
Landlord may not exercise its right under this sentence more frequently than one
time in any calendar year; and (ii) Tenant shall not be required to increase its
required insurance coverage if the increased coverage would be unreasonable in
light of insurance requirements for similarly situated tenants in similar
projects in Las Vegas, Nevada. Coverage required by this Article 14 may be
provided by a blanket policy or policies provided that the protection afforded
pursuant to said policies with respect to the Premises and the Hotel shall not
be less than that which is required pursuant to the terms hereof for a separate
policy or policies.
28
14.4 Hazardous Activities. Tenant shall not use or occupy, or permit the
Premises to be used or occupied, in a manner which will increase the rates of
fire or any other insurance for the Premises or the Hotel; provided that
Tenant's lawful use of the Premises as a restaurant as contemplated in this
Lease shall not constitute a default under this Section 14.4. Subject to the
foregoing, Tenant shall also not use or occupy, or permit the Premises to be
used or occupied, in a manner which will make void or voidable any insurance
then in force with respect thereto or the Hotel, or which will make it
impossible to obtain fire or other insurance with respect thereto or the Hotel.
If by reason of Tenant's default under the provisions of this Section, the fire
or any other insurance rates for the Premises or the Hotel be higher than they
otherwise would be, Tenant shall reimburse Landlord, as additional rent, on the
first day of the calendar month next succeeding notice by Landlord to Tenant of
said increase, for that part of all insurance premiums thereafter paid by
Landlord which shall have been charged because of such failure of Tenant.
14.5 Waiver of Subrogation. Each Party hereby waives subrogation and any
and all rights of recovery from the other,its officers, agents and employees for
any loss or damage, including consequential loss or damage, caused by any peril
or perils (including negligent acts) enumerated in their insurance actually
carried or required to be carried pursuant to this Lease and to the extent of
such insurance coverage or required coverage, and waive any right of subrogation
which might otherwise exist in or accrue to any person on account thereof to the
extent of such insurance coverage or required coverage. Notwithstanding the
foregoing provisions of this Section 14.5, Landlord waives its right of recovery
against Tenant for damage to the Hotel caused by the negligence of Tenant or
Tenant's employees or agents, to the extent that the cost of repairing such
damage exceeds Landlord's Deductible, and Tenant waives its right of recovery
against Landlord for damage to Tenant's property caused by the negligence of
Landlord or Landlord's employees or agents, to the extent that the cost of
repairing such damage exceeds any applicable insurance deductible amount
maintained by Tenant.
14.6 Landlord's Insurance.During the Term, Landlord shall maintain such
property insurance as may be required by Landlord's lenders. Upon request form
Tenant, Landlord shall furnish Tenant with a current certificate showing
Landlord's insurance coverage.
ARTICLE 15
LIENS
15.1 Indemnity for Liens. Tenant, at all times, shall indemnify and hold
harmless Landlord, the Hotel, the Premises, the leasehold estate created by this
Lease, any trade fixtures, equipment or personal property within the Premises,
and each of them, from any claim, lien, tax lien or levy, attachment,
garnishment, encumbrance, litigation or judgment, to the extent arising directly
or indirectly from any obligation, action or inaction of Tenant whatsoever.
Similarly, Landlord, at all times, shall indemnify and hold harmless Tenant, the
leasehold state created by this Lease, any trade fixtures equipment or personal
property within the Premises, and each of them, from any claim,
29
lien, tax lien or levy, attachment, garnishment, encumbrance, litigation or
judgment, to the extent arising directly or indirectly from any obligation,
action or inaction of Landlord whatsoever.
15.2 Prevention of Liens. Tenant, at all times, shall keep the Landlord,
the Hotel, the Premises, the leasehold estate created by this Lease, any trade
fixtures, equipment or personal property within the Premises, free and clear
from any claim, liens, tax lien or levy, attachment, garnishment or encumbrance
to the extent arising directly or indirectly from any obligation, action or
inaction of Tenant whatsoever. However, this Section 15.2, and Section 15.1,
shall not apply to the granting of a security interest in Tenant's personal
property in connection with a financing by Tenant or Tenant's direct or indirect
parent corporation.
15.3 Release of Liens. If a mechanics' lien, tax lien or other lien is
filed against the Hotel arising directly or indirectly from any obligation,
action or inaction of Tenant whatsoever, Tenant shall discharge or cause to be
discharged (by bond or otherwise) such lien within thirty (30) days after Tenant
receives notice of the filing thereof and shall not allow any such lien to be
foreclosed upon. If such a mechanic's lien or other lien is filed against the
Hotel, and Tenant fails to timely discharge such lien, Landlord may, without
waiving its rights and remedies based on such breach of Tenant and without
releasing Tenant from any of its obligations, cause such liens to be released by
any means it shall deem proper, including payment in satisfaction of the claim
giving rise to such lien. Tenant shall pay to Landlord within thirty (30) days
following notice by Landlord, any sum paid by Landlord to remove such liens,
together with interest at Landlord's cost of money from the date of such payment
by Landlord. Tenant's obligation under the Section shall survive the expiration
of the Term of this Lease or the earlier termination of this Lease.
15.4 Notice of Nonresponsibility. Tenant shall give Landlord at least ten
(10) business days prior written notice before the commencement of any work,
construction, alteration or repair on the Premises to afford Landlord the
opportunity to record appropriate notices of nonresponsibility.
ARTICLE 16
INDEMNIFICATION
Tenant hereby covenants and agrees to indemnify, save, and hold Landlord,
the Premises and the leasehold estate created by this Lease free, clear and
harmless from any and all liability, loss, costs, expenses, including attorneys'
fees, judgments, claims, liens, and demands of any kind whatsoever in connection
with, arising out of, or by reason of any accident, injury, or damage, howsoever
and by whomsoever caused, to any person or property whatsoever occurring, in,
upon, about, or relating to Tenant's activities or use of the Premises or any
portion thereof, including, without limitation, any infringement by Tenant or by
any person engaged by Tenant or acting on Tenant's behalf of any copyright,
patent, trademark or similar intellectual property rights of any other person or
entity, other than pursuant to and in compliance with a license granted by
Landlord. Landlord shall not be liable to Tenant or to any other person
whatsoever for any damage occasioned
30
by fire, smoke, falling plaster, electricity, plumbing, gas, water, steam,
sprinkler, or other pipe and sewage system or by the bursting, running, or
leaking of any tank, washstand, closet or waste of other pipes, nor for any
damages occasioned by water being upon or coming through the roof, skylight,
vent, trap door, or otherwise or for any damage arising from any acts or neglect
of co-lessees or other occupants of the Hotel or of adjacent property, or of
Landlord, or of the public, nor, to the extent provided in Section 13.2, shall
Landlord be liable in damages or otherwise for any failure to furnish, or
interruption of, service of any utility.
ARTICLE 17
SUBORDINATION
17.1 Subordination of Tenant's Interest. Tenant agrees that this Lease and
Tenant's interest in the Premises is secondary, junior and inferior to the lien
of any mortgage, deed of trust or other encumbrance, together with any renewals,
extensions or replacements thereof, now or hereafter placed, charged or enforced
against the Premises, or any portion thereof, or any property of which the
Premises is a part (hereinafter, a "Mortgage"). Notwithstanding the foregoing,
upon request by Landlord, Tenant shall execute and deliver at any time, and from
time to time, such documents as may be required to effectuate such
subordination.
17.2 Priority. In the event that the mortgagee or beneficiary of any
Mortgage elects to have this Lease a prior lien to its mortgage or deed of
trust, then and in such event, upon such mortgagee's or beneficiary's giving
written notice to Tenant to that effect, this Lease shall be deemed prior in
lien to such mortgage or deed of trust, whether this Lease is dated prior to or
subsequent to the date of recordation of such mortgage or deed of trust.
17.3 Attornment. Tenant shall, in the event any proceedings are brought
for the foreclosure of the Premises in the event of exercise of the power of
sale under any Mortgage covering the Premises, or in the event of a sale of
Landlord's interest in the Premises attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as Landlord under this Lease.
17.4 Nondisturbance. Landlord, Tenant and Landlord's current lender shall
enter into a nondisturbance and attornment agreement on the lender's form
providing that, so long as no Tenant Event of Default occurs under this Lease,
such lender will recognize this Lease and Tenant's rights hereunder. Tenant's
obligation to subordinate its leasehold interest to any future Mortgage shall be
subject to Tenant's receipt of a commercially reasonable nondisturbance and
attornment agreement from the holder of such Mortgage.
31
ARTICLE 18
ASSIGNMENT AND SUBLETTING
18.1 Assignment or Sublease without Consent Prohibited. The economic
provisions and rental rates set forth in this Lease were negotiated by Landlord
in consideration of, and would not have been granted by Landlord but for, the
specific nature of the leasehold interest granted to Tenant hereunder, as such
interest is limited and defined by various provisions throughout this Lease,
including, but not limited to, the provisions of this Article 18 which define
and limit the transferability of such leasehold interest. Landlord hereby
reserves the right to receive any increased rental value of the Premises during
the Term hereof as the same may be realized by any transfer of said estate (but
not any value realized for Tenant's business or furniture, fixtures and
equipment), except to the extent Tenant is specifically granted the right to
transfer all or part of its leasehold and to retain all or part of the increased
rental value thereof pursuant to the provisions of this Article 18. Except for
the grant of a security interest in Tenant's personal property in connection
with a financing by Tenant or its direct or indirect parent corporation, Tenant
shall not directly or indirectly, voluntarily or by operation of law sell,
assign, encumber, pledge or otherwise transfer or hypothecate all or any part of
the Premises or Tenant's leasehold estate hereunder (collectively "Assignment"),
or permit the Premises to be occupied or used by anyone other than Tenant or
sublet the Premises (collectively "Sublease") or any portion thereof without
Landlord's prior written consent in each instance.
18.2 Notice of Proposed Sublease or Assignment. If Tenant desires at any
time to enter into an Assignment of this Lease or a Sublease of the Premises or
any portion thereof, it shall first give written notice to Landlord of its
desire to do so, which notice shall contain (a) the name of the proposed
assignee, subtenant or occupant, (b) the nature of the proposed assignee's,
subtenant's or occupant's business to be carried on in the Premises, (c) the
material terms and provisions of the proposed Assignment or Sublease, as
reasonably requested by Landlord and (d) such financial information as Landlord
may reasonably request concerning the proposed assignee, subtenant or occupant.
18.3 Landlord's Options. At any time within thirty (30) days after
Landlord's receipt of the notice specified in Section 18.2 above together with
any information requested by Landlord pursuant to subsections (c) and (d) of
such Section 18.2, Landlord may by written notice to Tenant elect to (a)
Sublease itself the portion of the Premises specified in Tenant's notice or any
portion thereof for the term specified in such notice, in the case of a proposed
Sublease, or (b) take an Assignment of Tenant's leasehold estate specified in
Tenant's notice hereunder, or any portion thereof, in the case of a proposed
Assignment. In the event Landlord elects to Sublease or take an Assignment from
Tenant as described in subsections (a) and (b) above, it shall do so upon the
terms set forth in Tenant's notice.
18.4 Standards for Consent. If Landlord does not elect either of the
options set forth in subsections (a) and (b) of Section 18.3 above, Landlord
shall not unreasonably withhold its consent to any Assignment, Sublease or
Subleases to a third party or parties ("transferees"); provided, however, that
Landlord's refusal to consent to any Assignment or Sublease shall be deemed
reasonable if:
32
(i) The transferee, in Landlord's reasonable opinion, is not of
reputable and good character;
(ii) The proposed transferee (itself or through its management or
controlling organization), in Landlord's reasonable judgment, is not an
experienced, proven and successful operator of businesses comparable to
the type contemplated by this Lease;
(iii) If the proposed use of the Premises by the subtenant or
assignee is not a restaurant of similar kind and quality to the
Restaurant, the purposes for which the transferee intends to use the
Premises are, in Landlord's reasonable judgment, incompatible with the
Hotel or the business operations of other Tenants in the Hotel;
(iv) In the reasonable judgment of the Landlord the purpose for
which the subtenant or assignee intends to use the Premises is not in
keeping with the standards of Landlord for the Hotel as a first class
resort hotel facility, or is in violation of the terms of any other lease
in the Hotel, it being understood that the purpose for which any subtenant
or assignee intends to use the Premises may not be in violation of this
Lease;
(v) The proposed transferee has been involved in bona fide
negotiations with Landlord for space in the Hotel within the preceding
twelve (12) months and Landlord has available other comparable space in
the Hotel to offer to the prospective subtenant or assignee;
(vi) The proposed subtenant or assignee is either an occupant of the
Hotel (but only if Landlord can offer comparable space in the Hotel to
such proposed assignee or sublessee) or a government (or subdivision or
agency thereof);
(vii) Taking into account funds available from and committed by a
controlling organization: the proposed assignee or sublessee is, in the
reasonable judgment of Landlord, insolvent or financially unable to meet
the projected costs of the obligations to be assumed for the unexpired
Term of this Lease; or the proposed assignee or sublessee has a net worth
which is, in the reasonable opinion of Landlord, insufficient to enable it
to operate a successful first class business of the type contemplated
herein and to meet the projected costs of obligations to be assumed for
the unexpired Term of this Lease;
(viii) The transferee operates another similar business, under the
same trade name to be used at the Premises, at a Las Vegas Strip location,
including any location within a hotel and/or casino property;
(ix) An Event of Default has occurred and is continuing under this
Lease;
(x) The proposed Sublease is for less than all of the Premises; or
33
(xi) The proposed Sublease or Assignment is to be effective within
two (2) years after the Commencement Date at a time when Tenant's
Restaurant is profitable.
If Landlord consents to any Sublease or Assignment under this Section
18.4, Tenant may thereafter within thirty (30) days after Landlord's consent,
but not later than the expiration of said thirty (30) days, enter into such
Sublease of the Premises or portion thereof, or Assignment upon the terms and
conditions set forth in the notice furnished by Tenant to Landlord pursuant to
Section 18.2 above.
18.5 No Release of Tenant. No consent by Landlord to any Assignment or
Sublease by Tenant shall relieve Tenant of any obligation to be performed by
Tenant under this Lease, whether arising before or after the Assignment or
Sublease. The consent by Landlord to any Assignment or Sublease shall not
relieve Tenant from the obligation to obtain Landlord's express written consent
to any other Assignment or Sublease. Any Assignment or Sublease which is not in
compliance with this Article 18 shall be void as against the Landlord and, at
the option of Landlord, shall constitute a material default by Tenant under this
Lease. The acceptance of rent by Landlord from a proposed assignee or sublessee
shall not constitute the consent to such Assignment or Sublease by Landlord.
Notwithstanding the foregoing, if Landlord exercises its option under Section
18.3 with respect to an Assignment or a Sublease of all or substantially all of
the Premises, or if Landlord consents to an Assignment to a successor tenant
with a net worth (including the net worth of any guarantor or guarantors) not
less than that of Tenant at the time of such Assignment, then Tenant shall be
relieved of any liability under this Lease accruing after the effective date of
such Assignment.
18.6 Assumption of Tenant's Obligations. Each assignee or other
transferee, other than Landlord, shall assume, as provided in this Section 18.6,
all obligations of Tenant under this Lease and shall be and remain liable
jointly and severally with Tenant from and after the effective date of the
assignment for the payment of the rent, and for the performance of all the
terms, covenants, conditions and agreements herein contained on Tenant's part to
be performed for the Term of this Lease. No Assignment shall be binding on
Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart
of the Assignment and an instrument in recordable form which contains a covenant
of assumption by the assignee reasonably satisfactory in substance and form to
Landlord, consistent with the requirements of this Section 18.6, but the failure
or refusal of the assignee to execute such instrument of assumption shall not
release or discharge the assignee from its liability as set forth above.
18.7 Assignment to Affiliate. Notwithstanding the foregoing provisions of
Section 18.1, 18.2, 18.3 and 18.4 above, Tenant may assign this Lease without
Landlord's consent to any corporation or partnership in which ARK Restaurants
Corp. owns more than fifty percent (50%) of all ownership interests; provided
that ARK Restaurants Corp. (or another restaurant operator with comparable
experience and a comparable reputation which is otherwise reasonably acceptable
to Landlord) retains control over the management of Tenant's business in the
Premises. The provisions
34
of Sections 18.1, 18.2, 18.3 and 18.4 shall not apply to any assignment which is
permitted by this Section 18.7.
ARTICLE 19
INSOLVENCY AND DEATH
It is understood and agreed that neither this Lease nor any interest
therein or hereunder, nor any estate hereby created in favor of Tenant, shall
pass by operation of law under any state or federal insolvency, bankruptcy, or
inheritance act, or any similar law now or hereafter in effect, to any trustee,
receiver, assignee for the benefit of creditors, heirs, legatees, devisees or
any other person whomsoever without the express written consent of Landlord
first had and obtained therefor.
ARTICLE 20
CONDEMNATION
20.1 Awards. Should the whole or any part of the Premises be condemned or
taken by a competent authority for any public or quasi-public purpose, all
awards payable on account of such condemnation and taking shall be payable to
Landlord, and Tenant hereby waives any and all interest therein. Tenant shall,
however, be entitled to retain any award made separately to Tenant by the
condemning authority.
20.2 Taking of the Premises. If the whole of the Premises shall be so
condemned and taken, then this Lease shall terminate upon such taking. If
greater than one-third (1/3) of the floor space of the Premises is condemned or
taken or if by reason of any condemnation or taking the remainder of the
Premises will not be reasonably adequate for the operation of Tenant's business
after Landlord completes such repairs or alterations as Landlord elects to make,
either Landlord or Tenant shall have the option to terminate this Lease by
notifying the other party hereto of such election in writing within forty-five
(45) days after such taking. If by such condemnation and taking one-third (1/3)
or less of the Premises has been taken or if a part only of the Premises is
taken and the remaining part thereof is suitable for the purposes for which
Tenant has leased said Premises, this Lease shall continue in full force and
effect. In the event a partial taking does not terminate this Lease, Tenant
shall make repairs and restorations to the remaining premises of the nature of
Tenant's Work required by Exhibit B, Landlord shall make the proceeds of any
condemnation award available to Tenant for such purposes and if Tenant has
closed Tenant shall reopen for business promptly after completion of the
restoration.
20.3 Taking of the Hotel. Notwithstanding the provisions of Section 20.2,
if any part of the Hotel or the Premises shall be so taken or appropriated, and
if in the reasonable judgment of either Landlord or Tenant, the Restaurant would
not be able to be operated profitably in consequence of such taking, then either
Landlord or Tenant, as the case may be, shall have the right, at its option, to
terminate this Lease by notifying the other within six (6) months of such
taking.
35
20.4 Deed-in-Lieu. For the purposes hereof, a deed in lieu of condemnation
shall be deemed a taking.
ARTICLE 21
DESTRUCTION OF PREMISES
21.1 Landlord's Right of Termination. In the case of the destruction of
all or any material portion of the Premises, whether by fire or other casualty,
not caused by the intentional misconduct of Tenant, Landlord shall, except as
provided in Sections 21.2 and 21.3 below, diligently repair all structural
elements of the Premises, including structural steel and reinforced concrete. So
long as Landlord proceeds with such work with reasonable dispatch, this Lease
shall not terminate, but shall continue in full force and effect. In determining
what constitutes reasonable dispatch, consideration shall be given to delays
caused by Force Majeure events. If this Lease is terminated pursuant to this
Article 21, all rights and obligations hereunder shall cease and terminate as of
the date of termination.
21.2 Damage Caused by Tenant. Notwithstanding Section 21.1, in the event
the Premises, or any portion thereof, shall be damaged by fire or other casualty
due to the intentional misconduct of Tenant, then, without prejudice to any
other rights and remedies of Landlord, this Lease shall not terminate, the
damage shall be repaired by Tenant, and Percentage Rent payable by Tenant shall
be determined by the method set forth in Section 8.11 of this Lease.
21.3 Damage to Hotel. In the event of any damage not limited to, or not
including, the Premises, such that the building of which the Premises is a part
is damaged to the extent of twenty-five percent (25%) or more of the cost of
replacement, or the buildings and improvements (taken in the aggregate) of the
Hotel owned by Landlord shall be damaged to the extent of more than twenty-five
percent (25%) of the aggregate cost of replacement, Landlord may, if Landlord
elects not to reopen the Hotel or if Landlord elects to reopen the Hotel using a
theme or concept other than the "New York-New York" theme and concept, elect or
terminate this Lease upon giving notice of such election in writing to Tenant
within one hundred twenty (120) days after the occurrence of the event causing
the damage.
21.4 Repair Obligations. The provisions of this Article 21 with respect to
repair by Landlord shall be limited, as set forth above, to the structural
elements of the Premises, and when such work in completed, the Premises shall be
deemed restored and rendered tenantable, and Tenant shall restore the remainder
of the Premises and Tenant's Work, replace its stock in trade, and if Tenant has
closed, Tenant shall promptly reopen for business. Landlord shall make available
to Tenant, to the extent of the insurance proceeds received by Landlord with
respect to Landlord's Work and not otherwise used by Landlord to complete its
repair of the structural elements of the Premises, sufficient funds to perform
such repair as is necessary to place the Premises in the condition specified for
the commencement of Tenant's Work.
36
21.5 Insurance Proceeds. Subject to the provisions of Section 21.1 above,
all insurance proceeds payable under any fire and extended coverage risk
insurance covering the Hotel and/or the Premises shall be payable solely to
Landlord, and Tenant shall have no interest therein. Tenant shall in no case be
entitled to compensation for damages on account of any annoyance or
inconvenience in making repairs under any provision of this Lease. Except to the
extent provided for in this Section 21, neither the rent payable by Tenant nor
any of Tenant's other obligations under any provision of this Lease shall be
affected by any damage to or destruction of the Premises or any portion thereof
by any cause whatsoever.
ARTICLE 22
RIGHT OF ACCESS
22.1 Right of Access. Landlord, and its authorized agents and
representatives shall be entitled to enter the Premises at any reasonable time
for the purpose of observing, posting or keeping posted thereon notices provided
for hereunder, and such other notices as Landlord may deem necessary or
appropriate for protection of Landlord and/or its interest in the Premises; for
the purpose of inspecting the Premises or any portion thereof; and for the
purpose of making repairs to the Premises or any other portion of the Hotel and
performing any work therein or thereon which Landlord may elect or be required
to make hereunder, or which may be necessary to comply with any laws,
ordinances, rules, regulations or requirements of any public authority or any
applicable standards that may, from time to time, be established by the
[Insurance Services Office] or any similar body, or which Landlord may deem
necessary or appropriate to prevent waste, loss, damage or deterioration to or
in connection with the Premises or any other portion of the Hotel or for the
purpose of conducting its legitimate business purposes therein or for any other
lawful purpose. Except in an emergency, Landlord shall coordinate any entry
hereunder with Tenant so as to avoid unnecessary interference with Tenant's
business in the Premises. Landlord shall have the right to use any means which
Landlord may deem proper to open all doors in the Premises in an emergency.
Entry into the Premises obtained by Landlord by any such means shall not be
deemed to be forcible or unlawful entry into, or a detainer of, the Premises, or
an eviction of Tenant from the Premises or any portion thereof. Nothing
contained herein shall impose or be deemed to impose any duty on the part of
Landlord to do any work or repair, maintenance, reconstruction or restoration,
which under any provision of this Lease is required to be done by Tenant; and
the performance thereof by Landlord shall not constitute a waiver of Tenant's
default in failing to do the same.
22.2 Inconvenience to Tenant. Landlord may, during the progress of any
work on the Premises, keep and store upon the Premises all necessary materials,
tools and equipment. Provided that Landlord has taken all reasonable steps so as
not to interfere with Tenant's business, Landlord shall not be liable for
inconvenience, annoyance, disturbance, loss of business or quiet enjoyment, or
other damage or loss to Tenant by reason of making any such repairs or
performing any such work upon the Premises, or on account of bringing materials,
supplies and equipment into, upon or through the Premises during the course
thereof, and the obligations of Tenant under this Lease shall not thereby be
affected in any manner whatsoever. Landlord shall, however, in connection with
the
37
performance of such work, cause as little inconvenience, disturbance or other
damage or loss to Tenant as may be reasonably possible under the circumstances.
22.3 Right to Show the Premises. Landlord, and/or its authorized agents
and representatives, shall be entitled to enter the Premises at all reasonable
times for the purpose of exhibiting the same to prospective purchasers and,
during the final year of the Term of this Lease, Landlord shall be entitled to
exhibit the Premises for lease. Any such entry shall be effected, to the extent
reasonably practicable, so as not to interfere with Tenant's business.
ARTICLE 23
LANDLORD'S RIGHT OF PERFORMANCE
Whenever under any provision of this Lease, Tenant shall be obligated to
make any payment or expenditure, or to do any act or thing, or to incur any
liability whatsoever, and Tenant fails, refuses or neglects to perform as herein
required, Landlord shall be entitled, but shall not be obligated, to make any
such payment or to do any such act or thing, or to incur any such liability, all
on behalf of and at the cost and for the account of Tenant; provided that
Landlord shall first give Tenant reasonable notice of its intention to exercise
its right of performance hereunder. In such event, the amount thereof with
interest thereon at the Default Rate per annum shall constitute and be
collectable as additional rent on demand.
ARTICLE 24
ESTOPPEL CERTIFICATES
Tenant agrees that within ten (10) days of any demand therefor by
Landlord, Tenant will execute and deliver to Landlord or Landlord's designee a
recordable certificate stating that this Lease is in full force and effect, such
defenses or offsets as are claimed by Tenant, if any, the date to which all
rentals have been paid, and such other information concerning the Lease, the
Premises and Tenant as Landlord or said designee may reasonably request.
ARTICLE 25
TENANT'S DEFAULT
25.1 Events of Default. Landlord shall have all the rights and remedies
provided in this Section or elsewhere herein, in the event that any of the
following (sometimes referred to herein as an "Event of Default") shall occur:
(a) Tenant shall default in the payment of any sum of money
required to be paid hereunder and such default continues for ten
(10) days after written notice thereof from Landlord to Tenant; or
38
(b) Tenant shall default in the performance of any other
provision, covenant or condition of this Lease on the part of Tenant
to be kept and performed and such default continues for twenty (20)
days after written notice thereof from Landlord to Tenant; provided,
however, that if the default complained of in such notice is of such
a nature that the same can be rectified or cured, but cannot with
reasonable diligence be done within said twenty (20) day period,
then such default shall be deemed to be rectified or cured if Tenant
shall, within said twenty (20) day period, commence to rectify and
cure the same and shall thereafter complete such rectification and
cure with all due diligence, and in any event (but subject to
Section 29.3), within forty (40) days from the date of giving of
such notice; or
(c) Tenant should vacate or abandon the Premises during the
Term of this Lease; or
(d) Tenant should fail to obtain the discharge or release of
any lien as required by Article 15 hereof; or
(e) There is filed any execution, attachment, levy or seizure
against Tenant or the leasehold estate created by this Lease and the
same continues in effect for a period of thirty (30) days (except as
otherwise provided in this Lease); or
(f) There is filed any petition in bankruptcy or the Tenant is
adjudicated as a bankrupt or insolvent, or there is appointed a
receiver or trustee to take possession of Tenant or of all or
substantially all of the assets of Tenant, or there is a general
assignment by Tenant for the benefit of creditors, or any action is
taken by or against Tenant under any state or federal insolvency or
bankruptcy act, or any similar law now or hereafter in effect, and
any such proceeding (if involuntary) is not dismissed within
forty-five (45) days; or
(g) There shall occur any other event or condition which is
described in this Lease as an "Event of Default" and the same is not
remedied after notice and the expiration of any applicable cure
period set forth in this Lease.
25.2 Landlord's Remedies. Upon the occurrence of any Tenant Event of
Default, subject to Tenant's right to dispute the claim of default pursuant to
Article 30, and subject to the provisions of Article 30 which may allow for the
tolling of applicable cure periods, Landlord shall have the option to pursue any
one or more of the following remedies without any notice or demand whatsoever;
(1) Terminate this Lease, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails so to do, Landlord
may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take
39
possession of the Premises and expel or remove Tenant and any other person
who may be occupying the Premises, or any part thereof, by force if
necessary, without being liable to prosecution or for any claim for
damages; and Landlord may recover from Tenant:
(a) The worth at the time of award of any unpaid rent which
has been earned at the time of such termination; plus
(b) The worth at the time of award of any amount by which the
unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss Tenant proves
could have been reasonably avoided; plus
(c) The worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of the award
exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; plus
(d) Any other reasonable amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's
failure to perform its obligations under this Lease; and
(e) At Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by
applicable law.
All such amounts shall be computed on the basis of the monthly amount
thereof payable on the date of Tenant's default; except that Percentage Rent
shall be computed on the basis of the monthly average of all Percentage Rent
received by or payable to Landlord during the period that Tenant was conducting
Tenant's business in the Premises in the manner and to the extent required by
this Lease, or on the basis of the monthly amount thereof payable on the date of
Tenant's default, if greater. As used in paragraphs (a) and (b) above, the
"worth at the time of award" is computed by allowing interest in the per annum
amount equal to the Default Rate. As used in paragraph (c) above, the "worth at
the time of award" is computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one (1%)
percent per annum.
(2) Enter upon and take possession of the Premises and expel or
remove Tenant and other persons who may be occupying the Premises, or any
part thereof, by force if necessary, without being liable to prosecution
or for any claim for damages, and relet the Premises, as Tenant's agent,
and receive the rent therefor; and Tenant agrees to pay Landlord on demand
any deficiency that may arise by reason of such reletting; or
40
(3) Enter upon the Premises, without being liable to prosecution or
for any claim for damages, and do whatever Tenant is obligated to do under
the terms of this Lease; and Tenant agrees to reimburse Landlord on demand
for any reasonable and necessary expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations hereunder.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Landlord hereunder or of any damage accruing to Landlord by
reason of the violation of any of the terms, provisions and covenants herein
contained. Forbearance by Landlord to enforce one or more of the remedies herein
provided upon the occurrence of a Tenant Event of Default shall not be deemed or
construed to constitute a waiver of such default.
ARTICLE 26
QUIET POSSESSION
Tenant, upon paying the rentals and other payments herein required from
Tenant, and upon Tenant's performance of all of the terms, covenants and
conditions of this Lease on its part to be kept and performed, may quietly have,
hold and enjoy the Premises during the Term of this Lease without any
disturbance from Landlord or from any other person claiming through Landlord.
ARTICLE 27
SALE BY LANDLORD
27.1 Landlord's Right to Assign or Transfer. It is agreed that Landlord
may (in connection with a sale, transfer or financing of all or any substantial
part of the Hotel) at any time assign or transfer its interest as Landlord in
and to this Lease, or the rents payable hereunder, or at any time sell or
transfer its interest in the fee of the Premises, or its interest in and to the
Premises, without notice or obtaining any approval from Tenant.
27.2 Attornment. Tenant hereby agrees to attorn to the assignee,
transferee, or purchaser of Landlord under any provision of this Article 27 from
and after the date of notice to Tenant of such assignment, transfer or sale, in
the same manner and with the same force and effect as though this Lease were
made, in the first instance, by and between Tenant and such assignee, transferee
or purchaser.
27.3 Release of Landlord. In the event of any sale or exchange of the
Premises by Landlord and the assumption of Landlord's obligations under this
Lease by Landlord's transferee,
41
Landlord shall be and is hereby relieved of all liability under any and all of
its covenants and obligations contained in or derived from this Lease, arising
out of any act, occurrence or omission relating to the Premises occurring after
the consummation of such sale or exchange.
ARTICLE 28
DEFAULT BY LANDLORD
Except as otherwise expressly provided in this Lease, it is agreed that in
the event Landlord fails or refuses to perform any of the provisions, covenants
or conditions of this Lease on Landlord's part to be kept or performed, that
Tenant, prior to exercising any right or remedy Tenant may have against Landlord
on account of such default, shall give a thirty (30) day written notice to
Landlord of such default, stating in said notice the default with which Landlord
is charged. Tenant agrees that if the default complained of in the notice
provided for by this Section 28 is of such a nature that the same can be
rectified or cured by Landlord, but cannot with reasonable diligence be
rectified or cured within said thirty (30) day period, then such default shall
be deemed to be rectified or cured if Landlord within said thirty (30) day
period shall commence the rectification and curing thereof and shall continue
thereafter with all due diligence to cause such rectification and curing to
proceed, and so does complete the same, with the use of diligence as aforesaid.
ARTICLE 29
MISCELLANEOUS
29.1 Waiver of Jury Trial. The parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Premises, and/or any claim of injury or
damage.
29.2 Waiver. The waiver by Landlord or Tenant of any default or breach of
any of the terms, covenants or conditions hereof on the part of the other to be
kept and performed shall not be a waiver of any preceding or subsequent breach
of the same or any other term, covenant or condition contained herein. The
subsequent acceptance of rent or any other payment hereunder by Tenant to
Landlord shall not be construed to be a waiver of any preceding breach by Tenant
of any term, covenant or condition of this Lease other than the failure of
Tenant to pay the particular rental or other payment or portion thereof so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rental or other payment. No payment by Tenant or
receipt by Landlord of a lesser amount than therein provided shall be deemed to
be other than on account of the earliest rent due and payable hereunder, nor
shall any endorsement or statement on any check or any letter accompanying any
check or payment as rent be deemed an accord and satisfaction, and Landlord may
accept any such check or payment without prejudice to Landlord's right to
recover the balance of such rent or pursue any other remedy provided in this
Lease. This Section 29.2 may not be waived.
42
29.3 Force Majeure. Whenever a day is appointed herein on which, or a
period of time is appointed in which, either party hereto is required to do or
complete any act, matter or thing, the time for the doing or completion thereof
shall be extended by a period of time equal to the number of days on or during
which such party is prevented from the doing or completion of such act, matter
or thing because of labor disputes, civil commotion, war, warlike operation,
sabotage, governmental regulations or control, fire or other casualty, inability
to obtain any materials, or to obtain fuel or energy, weather or other acts of
God, or other causes beyond such party's reasonable control (financial inability
excepted); provided, however, that nothing contained herein shall excuse Tenant
from the prompt payment of any rent or charge required of Tenant hereunder.
Tenant agrees that a recognitional or informational picket line shall not be
deemed a force majeure event.
29.4 Delivery of Notices. Any and all notices and demands by or from
Landlord to Tenant, or by or from Tenant to Landlord, required or desired to be
given hereunder shall be in writing and shall be validly given or made if served
either personally during normal business hours or if deposited in the United
States mail, certified or registered, postage prepaid, return receipt requested
or if delivered by a nationally recognized, next business day delivery courier
service (such as Federal Express or Express Mail), or served by facsimile during
normal business hours (with an answer back and a duplicate copy sent by another
permitted method hereunder or by first class mail). If such notice or demand be
served by registered or certified mail or courier service in the manner
provided, service shall be conclusively deemed made the first business day
delivery is attempted or upon receipt, whichever is sooner. Service by personal
service or facsimile transmission shall be deemed made upon receipt. Any notice
or demand to Landlord shall be addressed to Landlord as follows:
William Sherlock
New York-New York Hotel
3790 Las Vegas Boulevard
Las Vegas, Nevada 89109
Telefax: (702)740-6510
With a copy to: Gary Primm
New York-New York Hotel
3790 Las Vegas Boulevard
Las Vegas, Nevada 89109
Telefax: (702)679-7222
Any notice or demand to Tenant shall be addressed to Tenant at:
43
c/o Ark Restaurants Corp.
85 Fifth Avenue
New York, New York 10003-3019
Attention: Michael Weinstein
Telefax: (212)206-8814
With a copy to: Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036
Attention: Donald D. Shack, Esq.
Telefax: (212)730-1964
Any party hereto may change its address for the purpose of receiving
notices or demands as herein provided by a written notice given in the manner
aforesaid to the other party hereto, which notice of change of address shall not
become effective,however, until the actual receipt thereof by the other party.
29.5 Remedies Cumulative. The various rights, options, elections and
remedies of Landlord contained in this Lease shall be cumulative and no one of
them shall be construed as exclusive of any other, or of any right, priority or
remedy allowed or provided for by law and not expressly waived in this Lease.
29.6 Successors and Assigns. The terms, provisions, covenants and
conditions contained in this Lease shall apply to, bind and inure to the benefit
of the heirs, executors, administrators, legal representatives, successors and
assigns (where assignment is permitted) of Landlord and Tenant, respectively.
29.7 Partial Invalidity. If any term, provision, covenant or
condition of this Lease, or any application thereof, should be held by a court
of competent jurisdiction to be invalid, void or unenforceable, all provisions,
covenants and conditions of this Lease, and all applications thereof, not held
invalid, void or unenforceable, shall continue in full force and effect and
shall in no way be affected, impaired or invalidated thereby.
29.8 Time of the Essence. Time is of the essence of this Lease and
all of the terms, provisions, covenants and conditions hereof.
29.9 Entire Agreement. This Lease contains the entire agreement
between the parties with respect to the leasing of the Restaurant and cannot be
changed or terminated orally.
29.10 No Partnership. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent or of partnership or of joint venture or of
any association between Landlord and Tenant. Neither the
44
method of computation of rent nor any other provisions contained in this Lease
nor any acts of the parties hereto shall be deemed to create any relationship
between Landlord and Tenant other than the relationship of landlord and tenant.
29.11 Brokers. Tenant warrants that it has had no dealings with any broker
or agent in connection with this Lease, and covenants to pay, hold harmless and
indemnify Landlord from and against any and all cost, expense or liability for
any compensation, commissions and charges claimed by any broker or agent with
respect to this Lease or the negotiation thereof.
29.12 Captions. The captions appearing at the commencement of the sections
hereof are descriptive only and for convenience in reference to this Lease and
in no way whatsoever define, limit or describe the scope or intent of this
Lease, nor in any way affect this Lease.
29.13 Usage. Masculine or feminine pronouns shall be substituted for the
neuter form and vice versa, and the plural shall be substituted for the singular
form and vice versa, in any place or places herein in which the context requires
such substitution or substitutions.
29.14 Governing Law. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Lease.
29.15 Covenants. Whenever in this Lease any words of obligation or duty
are used in connection with either party, such words shall have the same force
and effect as though framed in the form of express covenants on the part of the
party obligated.
29.16 Joint and Several Obligations. In the event Landlord or Tenant now
or hereafter shall consist of more than one person, firm or corporation, then
and in such event, all such persons, firms or corporations shall be jointly and
severally liable as Tenant or Landlord, as appropriate, hereunder.
29.17 Submission of Lease. The submission of this Lease for examination
does not constitute a reservation of or option for the Premises and this Lease
becomes effective as a Lease only upon execution and delivery thereof by
Landlord and Tenant.
29.18 Liens and Actions Affecting Property. Should any claim or lien be
filed against the Premises, or any action or proceeding be instituted affecting
the title to the Premises, Tenant shall give Landlord written notice thereof as
soon as Tenant obtains actual knowledge thereof.
29.19 Construction. This Lease shall not be construed either for or
against Landlord or Tenant, but this Lease shall be interpreted in accordance
with the general tenor of the language.
29.20 Authority. If Tenant is not a natural person, Tenant hereby
represents that it is qualified and authorized to enter into, and perform its
obligations under, this Lease.
45
ARTICLE 30
DISPUTE RESOLUTION
If any controversy or claim between the parties hereto arises out of this
Lease, other than a claim by Landlord arising from any failure by Tenant to pay
rent as and when such rent becomes due, and if the parties are unable to agree
by direct negotiations, the parties shall promptly mediate any such disagreement
or dispute under the Commercial Mediation Rules of the American Arbitration
Association. If the parties are unable to resolve such disagreement or dispute
through mediation, then such disagreement or dispute (excluding an action by
Landlord in unlawful detainer by reason of a default in the payment of rent, as
provided above) shall be submitted to binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association.
The arbitrators shall be appointed under the Commercial Arbitration Rules
of the American Arbitration Association. As soon as the panel has been convened,
a hearing date shall be set within twenty-one (21) days thereafter. Written
submittals shall be presented and exchanged by both parties ten (10) days before
the hearing date, including reports prepared by experts upon whom either party
intends to rely. At such time the parties will also exchange copies of all
documentary evidence upon which they will rely at the arbitration hearing and a
list of the witnesses whom they intend to call to testify at the hearing. Each
party shall also make its respective experts available for deposition by the
other party prior to the hearing date. The hearings shall be concluded no later
than five (5) days after the initial hearing date. The arbitrators shall make
their award within ten (10) business days after the conclusion of the hearing.
In the event of a three-member panel, the decision in which two (2) of the
members of the arbitration panel concur shall be the award of the arbitrators.
Except as otherwise specified herein, there shall be no discovery or
dispositive motion practice (such as motions for summary judgment or to dismiss
or the like) except as may be permitted by the arbitrators, who shall authorize
only such discovery as is shown to be absolutely necessary to insure a fair
hearing and no such discovery or motions permitted by the arbitrators shall in
any way conflict with the time limits contained herein. The arbitrators shall
not be bound by the rules of evidence or civil procedure, but rather may
consider such writings and oral presentations as reasonable businessmen would
use in the conduct of their day-to-day affairs, and may require the parties to
submit some or all of their presentation as the arbitrators may deem
appropriate. It is the intention of the parties to limit live testimony and
cross-examination to the extent absolutely necessary to insure a fair hearing to
the parties on the significant matters submitted to arbitration. The parties
have included the foregoing provisions limiting the scope and extent of the
arbitration with the intention of providing for prompt, economic and fair
resolution of any dispute submitted to arbitration.
If Landlord gives Tenant notice of a claimed default pursuant to Article
25 of this Lease, and if either (i) such claimed default can be cured by
Tenant's expenditure of an amount which is reasonably expected to be One Hundred
Thousand Dollars ($100,000) or less, or (ii) such claimed default arises under
Section 6.2 of this Lease, Tenant's election to dispute such claimed default
46
pursuant to the provisions of this Article 30 shall not extend or toll the
running of any cure period provided in Article 25; provided that the foregoing
is not intended to preclude or limit Tenant's right to perform under protest and
to retain any claim it may have against Landlord for reimbursement of the cost
of performance. However, if either (i) the out-of-pocket costs to Tenant of
curing such claimed default are reasonably expected to exceed One Hundred
Thousand Dollars ($100,000), or (ii) such claimed default cannot reasonably be
cured by Tenant's expenditure of money, then, unless such claimed default arises
under Section 6.2 of this Lease, any cure period provided in Article 25 for the
claimed default shall be tolled during the resolution of such dispute hereunder.
The arbitrators shall have the discretion to award the costs of
arbitration, arbitrators' fees and the respective attorneys' fees of each party
between the parties as they see fit.
Judgment upon the award entered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
Notwithstanding the parties' agreement to mediate or arbitrate their
disputes as provided herein, any party may seek emergency relief in a court of
law without waiving the right to arbitrate.
The arbitrators shall make their award in accordance with applicable law
and based on the evidence presented by the parties, and at the request of either
party at the start of the arbitration, shall include in their award findings of
fact and conclusions of law supporting the award.
47
Nothing contained herein is intended to, nor shall, limit Landlord's right
to pursue any action in unlawful detainer in the case of an Event of Default by
Tenant in the payment of Base Rent or Percentage Rent.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day
and year first above written.
LANDLORD
NEW YORK - NEW YORK HOTEL, LLC
a Nevada limited liability company
By: /s/ William Sherlock
------------------------------
Title: President & CEO
---------------------------
TENANT
LAS VEGAS STEAKHOUSE CORP.
a Nevada corporation
By: /s/ Michael Weinstein
------------------------------
Title: President
---------------------------
48
EXHIBIT "A"
PREMISES
[SCHEMATIC DRAWING]
A - 1
EXHIBIT "B"
WORK LETTER
FOR
GALLAGHER'S STEAK HOUSE
I. LANDLORD'S WORK - The following work is to be performed by Landlord and
Tenant where indicated:
A. COMMON AREA
1. Utilities:
a. Sanitary Sewer and Grease Waste Piping - The
Landlord will pay for the cost of below-slab
piping, stub ups, floor drains and floor sinks in
the Employee Cafeteria and for a proportionate
one-third cost in the Prep Kitchen area. The
Landlord will install sanitary sewer and grease
waste stubs to all other Tenant kitchen locations.
The Tenant will provide distribution piping, floor
drains and floor sinks in all other locations.
Invert and line size will be specified by JBA.
Tenant is responsible for payment of the sewer
hookup charges, as well as any similar fees and
charges levied on the Hotel for Tenant usage.
b. Grease Interceptors - The Landlord will provide at
its expense one or more grease interceptors that
will be shared by all grease producers. The cost of
maintaining the interceptor will be shared by all
grease producers. The cost sharing formula should
be based on grease production as determined by an
impartial engineer. The Tenant will maintain grease
lines that are used exclusively by the Tenant. The
Landlord will maintain all shared grease piping.
c. Domestic Water - The Landlord will stub into each
demised area cold water and 140 degrees softened
hot water. The Tenant will use the 120 degrees hard
hot water where it is practical for the Landlord to
provide it and for Tenant to use it. The size of
the supply taps will be specified by the Landlord's
engineer.
d. Rendering Management - The Landlord will provide
space for the Tenants rendering storage bins in the
loading dock area. The Tenant will maintain the
area. If the rendering bin area is shared with
other
B-1
Tenants, the Landlord will require all Tenants to
contribute a fair share to the maintenance of this
area.
e. Electrical Service - The Landlord will provide
conduit, conductors, and back boxes for all Tenant
circuit panels. Where a direct feed from the
Landlord's switchgear to the Tenant's equipment is
needed, the Landlord will provide conduit and
conductors to the equipment disconnect. Conductor
size panels, and voltages will be specified by the
Tenant's engineer. Final connection to Landlord's
switchgear will be done by the Landlord at the
Landlord's expense.
f. Gas - Landlord will provide, install and maintain a
main gas feed that is sufficient to operate
Tenant's equipment and business at a point within
the Premises to be determined by Tenant and
Landlord.
g. Sprinkler System - Landlord will install an
automatic fire sprinkler system to the Premises in
compliance with the requirements of local and state
agencies. Such sprinkler system will be based on a
specific grid and spacing plan for Tenant, provided
that Tenant delivers such plan to Landlord's
sprinkler contractor prior to the installation of a
standard grid and spacing. The cost to Tenant of
modifying the sprinkler system will be the cost of
relocation re-sizing or adding sprinkler mains or
heads to the specific grid and spacing for Tenant's
business. Modification of the sprinkler system
within the Premises will be subject to the review
and approval of the Landlord and its design
professionals and performed by Landlord's
contractor at Tenant's expense. Modifications
required by Tenant outside its Premises and related
to modifications of the existing system will be
done by Landlord at Tenant's expense. In
conjunction with the sprinkler system, Tenant will
install, at Tenant's expense, one smoke detector in
the Premises at a point to be determined by
Landlord. Where required by local code, Tenant
shall also install at Tenant's expense, life safety
equipment such as audiovisual horn devises or
additional smoke detector devices. Landlord
confirms fire hose cabinets are not required within
any Tenant spaces.
h. HVAC System - The Landlord is responsible for the
installation and maintenance of all HVAC equipment
and all main distribution ductwork to the demised
premise. The Tenant is responsible for connecting
to the taps provided, all VAV boxes and low
velocity distribution ductwork within the demised
premise. The Tenant will provide all local controls
and interface with the Landlord's EMS
B-2
system as needed. The Tenant will return air to the
return taps provided within the demised premise or
to the common plenum above the demised premise. The
Tenant will provide transfer grills and fans as
required within the demised premise as needed to
insure proper air balance.
i. Smoke Evacuation - Landlord will provide, install
and maintain a smoke evacuation system for the
premises. The Tenant understands that to the extent
that the smoke evacuations system and the Tenant's
kitchen exhaust system share the same control
sequence the Landlord will use the Tenant's kitchen
exhaust for smoke evacuation. The Landlord will pay
for any control wiring or relays that may be needed
to interlock these two systems.
j. Kitchen Exhaust System - The Landlord will install
all exhaust ductwork from the collars on the
Tenant's hoods to the roof, including all
fireproofing, clean-outs, roof curbs, and pitch
pockets. The Tenant will maintain all exhaust
ductwork in accordance with all codes and accepted
practice. The Tenant will supply and install all
hoods, exhaust fans, and related wiring. The
Landlord will provide all hard wire and low voltage
control interlocks between the Tenant's exhaust
system and the Landlord's make-up air system, smoke
evacuation system, fire control system, and energy
management system.
k. Fire Dampers - Landlord shall provide and install
fire dampers, in accordance with all codes.
Landlord shall also provide and install fire
dampers where the Landlord's ductwork passes
through service corridor or other fire separations.
Tenant shall provide all fire dampers required for
Tenant's toilet and dishwasher exhaust floor
penetrations, if any are required.
l. Supplemental Make-up Air - The Landlord will supply
and install the supplemental make-up air system.
Tenant will maintain all supplemental make-up air
fans dedicated solely to Tenant spaces.
m. Chilled Water for Refrigeration - The Landlord
agrees to stub chilled water into each demised
premise. Identification of equipment to use
water-cooled and air-cooled compressors will be the
joint effort of Landlord and Tenant.
B-3
B. BUILDINGS
1. Structure
a. Demising Partitions - The Landlord will construct
all demising partitions. All the finishes on the
common area side will be provided by the Landlord
and all of the finishes on the Tenant side will be
provided by the Tenant.
b. Landlord shall pour the floor slab designed for a
live load of not less than 120 lbs. PSF for the
Premises.
II. TENANT'S WORK - The following work required to complete and place the
Premises in finished condition ready to open for business is to be
performed by the Tenant at the Tenant's own expense. Tenant's Work
includes, but is not limited to the following:
A. GENERAL PROVISIONS
All work done by Tenant shall be governed in all respects by, and
be subject to the following:
1. Tenant shall deliver to Landlord within ten (10) days
after the execution of this Lease and prior to the
commencement of any of the Tenant Work, an irrevocable
Letter of Credit in the amount of One Million Dollars
($1,000,000) or the cost of the build out whichever is
less, issued by a surety company licensed to do business
in the State of Nevada and acceptable to Landlord, naming
Landlord as obligee, and guaranteeing completion of
Tenant's Work in accordance with the Lease, free and clear
of all mechanics' or other liens or security interests.
The form of such completion bond shall be subject to the
review and approval of Landlord, which approval may be
withheld by Landlord in its reasonable discretion.
Tenant's Work shall at all times be conducted consistent
with the labor agreement for the Hotel, if any.
2. All Tenant's Work shall conform to applicable statutes,
ordinances, regulations and codes and the requirements of
all rating bureaus and which by this reference is
incorporated into and made a part of this Lease. Tenant
shall obtain and convey to Landlord all approvals with
respect to electrical, water, sewer, heating, cooling, and
telephone work, all as may be required by any agency or
utility company.
3. Except for minor and routine matters, no approval by
Landlord shall be deemed valid unless in writing and
signed by Landlord.
B-4
4. Prior to commencement of Tenant's Work and until
completion thereof, or Tenant obtaining a Certificate of
Occupancy or Temporary Certificate, or commencement of the
Lease Term, whichever is the last to occur, Tenant shall
effect and maintain Builder's Risk Insurance covering
Landlord, Tenant, Tenant's contractors and Tenant's
subcontractors, as their interests may appear, against
loss or damage by fire, vandalism and malicious mischief
and such other risks as are customarily covered by a
standard "All Risk" policy of insurance protecting against
all risk of physical loss or damage to all Tenant's Work
in place and all materials stored at the site of Tenant's
Work and all materials, equipment, supplies and temporary
structures of all kinds incidental to Tenant's Work, and
equipment, all while forming a part of or contained in
such improvements or temporary structures, or while on the
Premises or within the Center all to the actual
replacement cost thereof at all times on a completed value
basis. In addition, Tenant agrees to indemnify and hold
Landlord harmless against any and all claims for injury to
persons or damage to property by reason of the use of the
Premises, except to the extent caused by Landlord or
Landlord's agents or contractor, for the performance of
Tenant's Work, and claims, fines, and penalties arising
out of any failure to Tenant or its agents, contractors
and employees to comply with any law, ordinance, code
requirement, regulations or other requirement applicable
to Tenant's Work and Tenant agrees to require all
contractors and subcontractors engaged in the performance
of Tenant's Work to effect and maintain and deliver to
Tenant and Landlord, certificates evidencing the existence
of, and covering Landlord, Tenant and Tenant's
contractors, prior to commencement of Tenant's Work and
until completion thereof, the following insurance
coverages:
a. Workmen's Compensation and Occupational Disease
Insurance in accordance with the laws of the State
of Nevada.
b. Comprehensive General Liability Insurance,
including independent contractors, contractual and
completed operations, including death resulting
therefrom, and personal injury in the limits of
$10,000,000 for the general contractor, $6,000,000
for the mechanical, electrical and plumbing
contractors, and $1,000,000 for all other
subcontractors, for any one occurrence and property
damage in the limits of $10,000,000 for any one
occurrence or a combined single limit policy of
$10,000,000 per occurrence.
c. Comprehensive Automobile Insurance, including
"non-owned" automobiles, against bodily injury,
including death resulting
B-5
therefrom, in the limits of $1,000,000 for any one
occurrence and $1,000,000 property damage or a
combined single limit of $1,000,000.
5. Tenant agrees that the contract of every contractor,
subcontractor, material supplier or entity performing
labor upon, or furnishing materials or equipment to the
Premises in connection with Tenant's Work shall contain
the following provision:
"Contractor acknowledges that this provision is
required under Tenant's lease (hereinafter the
"LEASE") of the Premises to be improved under this
Contract (the "LEASED PREMISES") from New York-New
York Hotel, LLC ("LANDLORD"). In consideration of
Tenant's engagement of Contractor to perform the
work hereunder, and as an inducement to Tenant to
enter into this Contract with Contractor,
Contractor acknowledges, covenants and agrees that
any mechanics' lien which it may hereafter file,
claim, hold or assert with respect to the work
hereunder (i) shall attach only to Tenant's
interest in the Premises under the Lease and (ii)
shall be subject, subordinate and inferior to the
lien of any mortgage(s) now or hereafter held upon
and against the Landlord by any lender(s) now or
hereafter providing funds for the financing for the
Premises or the Hotel in which the Premises is
located, notwithstanding that any such mortgage(s)
may be recorded after the commencement of work
hereunder and that Contractor's mechanics lien
otherwise might be entitled to priority over any
such mortgage(s).
6. If Landlord in its sole and absolute discretion determines
that the Hotel or the business conducted therein would
otherwise be adversely affected, any or all construction
work shall be done by recognized union labor.
B. FLOOR SLAB
All Tenant's with rest room facilities or food preparation areas
shall install a floor slab waterproofing membrane in the Premises
at Tenant's expense. All floor penetrations must be sleeved and
waterproofed, except slabs on grade.
C. STOREFRONT AND INTERIORS
1. Storefronts shall be designed within parameters of the
Landlord's schedule and constructed with the Landlord's
written approval. All storefronts must have a New York
City theme in keeping with the theme, quality and style of
B-6
the Hotel and must be approved by the Landlord before
construction commences.
2. All materials employed in the construction of storefronts
and interiors shall be as approved by Landlord and as
defined by applicable building codes.
3. Storefront and Interior color schemes must harmonize with
the color scheme of the surrounding building/storefront
types and must be approved by the Landlord.
4. All swinging entrance doors must be recessed in such a
manner that the door, when open, will not project beyond
the lease line.
D. CEILING
1. All ceilings and coves shall not exceed 14'0" above the
finished floor (excluding mezzanines) unless otherwise
approved by Landlord.
2. Tenant's ceilings shall be acoustic tile, gypsum board
and/or plaster, suspended by adequate suspension systems
to conform to final requirements of governing authorities
and Landlord.
3. The space above the ceiling line, which is not occupied or
allotted to Landlord's Work (structural members, duct
work, piping, etc.) may be used for the installation of
suspended ceiling, recessed lighting fixtures and duct
work. Under no circumstances will Tenant's Work be hung or
suspended from non-structural construction. Any Tenant
Work involving the hanging or suspension of construction
shall be accomplished only by methods, in locations and by
use of assemblies approved by Landlord and Landlord's
engineer.
E. WALLS.
All interior walls shall meet all applicable building codes.
Tenant shall install insulation on the demising walls and
interior walls as made necessary by building code, acoustics, or
design. Tenant shall provide any necessary bracing or blocking.
F. INTERIOR PAINTING.
All interior painting and decoration shall be Tenant Work.
B-7
G. FLOOR COVERING.
The Landlord and Tenant will jointly coordinate floor transitions
at all entrances. The Tenant's floor finishes will be applied
directly to the slab provided.
H. FURNITURE, FIXTURES AND SIGNS.
The Tenant will provide identification signage only. All decor
signage in the common area will be provided by the Landlord. All
furnishings, trade fixtures, and related parts, including
installation shall be Tenant Work.
I. SUBMITTALS.
Preliminary Submittal by the Tenant shall include storefronts and
interiors, plans, elevations, specifications, color and material
boards, and a colored elevation of the storefront facade.
J. PLUMBING.
All plumbing and plumbing fixtures are required by applicable
codes, except utility service to the area, shall be Tenant Work.
K. TOILET ROOM FIXTURES.
Furnishing and installation of wiring, lighting fixtures,
mechanical toilet exhaust systems, towel cabinets, soap dishes,
hand dryers, deodorizers, mirrors and other similar items in
toilet rooms within the Premises or as additionally required by
code shall be Tenant Work.
L. HEATING, VENTILATION AND AIR CONDITIONING.
1. Tenant's exhaust systems shall provide the required
exhaust air capacities and shall be independent of the
central cooling system. Tenant's exhaust systems shall be
inoperative during other than regular business hours.
Makeup or replacement air shall be provided by Landlord.
2. Tenant's HVAC systems shall be complete with air
distributions systems, ventilating systems, control
systems, insulation and all other components required to
make a complete system. Tenant's HVAC system components
shall be installed in locations as designated by the
Landlord.
B-8
3. The Tenant will install and maintain toilet exhaust fans
and ductwork for all Tenant installed bathrooms. The
Tenant's ductwork will terminate at a curb or sleeve
provided by the Tenant and installed by the Landlord. The
Landlord will provide a vertical chase and floor
penetration as needed en route between the Tenant's
bathroom and the roof or wall penetration. The Landlord
will locate the penetration as close as possible to the
Tenant's bathroom. In the event that a roof mounted fan is
used the Landlord will also provide a pitch pocket. The
Tenant will provide design information prior to the roof
pour.
4. In the basement and in the first floor spaces that fall
below the high rise structure, the Tenant will connect all
vents to the closest inverted T-Y if this has been
provided. In the food court, the Tenant will pipe all
vents into the roof sleeves provided by the Landlord above
each demised area.
5. The Tenant will install and maintain dishwasher fans and
ductwork for all Tenant installed kitchens. The Tenant's
ductwork will terminate at a curb or sleeve provided by
the Tenant and installed by the Landlord. The Landlord
will provide a vertical chase and floor penetration as
needed en route between the Tenant's kitchen and the roof
or wall penetration. The Landlord will locate the
penetration as close as possible to the Tenant's kitchen.
In the event that a roof mounted fan is used the Landlord
will also provide a pitch pocket. The Tenant will provide
design information prior to the roof pour.
6. Upon completion of all work, the Tenant will test and
prepare an air balance report for all HVAC and exhaust
equipment dedicated to the Tenant's demised premises. A
copy of that report will be forwarded to the Landlord. If
it is more practical to have one contractor balance the
Tenant and Landlord equipment together, then the Tenant
agrees to pay a fair share of that costs.
M. MECHANICAL EQUIPMENT.
All mechanical equipment including dumb-waiters, elevators,
escalators, freight elevators, conveyors, and their shafts and
doors, located within the Premises, including electrical work for
these items. Locations, size and design of roof vents, HVAC
equipment, units, hoods and caps shall be approved by Landlord.
Landlord reserves the right of disapproval of any equipment to be
placed on the roof, provided Landlord makes a suitable substitute
location available. Tenant shall install equipment at locations
where structural reinforcements are provided. The roof load is to
be determined by Landlord's structural engineer's load
requirements. Landlord approved changes in the structure as
necessary to accommodate Tenant's equipment shall be made by
Landlord at Tenant's expense.
B-9
Cuts, curbs and openings including any structural support and
steel, shall be provided and performed by a contractor designated
by Landlord at Landlord's expense. In addition, all cant strips,
base furnishings and other work necessary to complete the
permanent weather proofing of Landlord's roof as a result of roof
cuts or openings required by Tenant shall be performed by a
contractor designed by Landlord at Landlord's expense.
N. ELECTRICAL.
1. All interior distribution panels, lighting panels, power
panels, conduits, outlet boxes, switches, outlets and
wires within the Premises shall be Tenant Work. Tenant
shall provide electric conduit and boxes in the concrete
floor slab, ceiling and walls, including all electrical
service panels, pull boxes and equipment. Landlord will
provide all work outlined in Section I.1.e of this Work
Letter.
2. All electrical fixtures, including lighting fixtures and
equipment, and installation thereof shall be Tenant Work.
Lighting systems (except security and emergency lighting)
must be controlled by lighting contractors.
3. All conduit for necessary for telephone wires within the
Premises shall be Tenant Work.
4. Wiring connections to Tenant's equipment within the
Premises shall be Tenant Work.
O. POINT OF SALES SYSTEMS.
1. The Tenant will install a POS system that is fully
compatible with the Landlord's system. The Landlord will
supply the Tenant with compatibility criteria and make the
criteria part of this Work Letter. The Landlord will stub
a POS conduit into each demised premise.
P. TEMPORARY SERVICES.
Any temporary services required by Tenant during its construction
period, including heat, water or electrical service shall be
secured from Landlord or Landlord's contractor, as the case may
be, at Tenant's sole cost and expense.
Q. SUBSEQUENT REPAIRS AND ALTERATIONS.
B-10
Landlord reserves the right to require changes in Tenant's Work
when necessary by reason of code requirements.
R. DOORS AND EXITING REQUIREMENTS.
1. Tenant will be responsible for adherence to exiting codes.
2. Tenant will maintain a clear exiting path through the
stockroom to Tenant's rear door for those Premises that
contain a rear door.
S. CONSTRUCTION ACTIVITIES.
1. If the Tenant requires any roof penetrations in addition
to those already provided for in this lease then the
Landlord will provide such penetrations at the Tenant's
expense.
2. Any additional structural support necessitated by Tenant's
mezzanines and/or equipment, fixtures or inventory shall
be provided by Tenant at Tenant's expense and approved by
Landlord.
3. If Tenant will not open by the date the Hotel opens for
business and such date is after the Commencement Date,
Tenant shall be responsible for the installation and
expense of the temporary storefront or barricade shielding
the interior of the Premises from the Hotel as well as for
the removal and cost thereof after opening for business.
If Tenant is under construction prior to the date of Hotel
is open for business, such temporary storefront shall be
installed at least three (3) days prior to such opening
date.
4. All construction activities on site must be coordinated
directly with Mr. Randy Keiper, Superintendent for Marnell
Corrao Associates (MCA). General site rules to be observed
are:
a. Normal construction work hours are 6:00 A.M to
2:30 P.M.
b. All construction workers on site must belong to
trade unions. Those from outside the Las Vegas area
must check in with the local unions to comply with
their regulations. All employees on site must
receive a badge from MCA to enter the site.
c. Tenant contractors must schedule all deliveries
with Randy Kuiper, Marnell Corrao's Project
Superintendent. Tenant contractors must provide
their own forklifts and cranes for offloading.
B-11
d. Tenant contractors may use MCA man hoists free of
charge during normal working hours.
e. Tenant contractors may schedule the use of the
material hoist after normal working hours. Extra
cost of operators and mechanics will be shared by
all users.
f. All employee parking must be off site.
g. No space is available for offices for Tenant
contractors on site, except within their own
spaces. Landlord will make conduit available to
Tenant as soon as it is installed in the permanent
structure.
h. Temporary power and water is available to Tenant
spaces. Tenant electrical subcontractor may have to
pull wire to Tenant space.
i. Cutting of holes through existing walls or slabs
for equipment access requires Landlord's written
approval beforehand. Structural members must be
analyzed by structural engineer at Tenant's
expense.
j. A common trash container will be located on site to
be used by all Tenant contractors. Tenants will
share the cost of trash removal based on a fair
square footage formula.
k. Tenants will provide their own portable toilets on
site. Contacts should be made with "Mr. Potty" to
simplify maintenance and reduce costs.
l. All construction work performed within the Tenant's
demised premise, after it has been turned over to
the Tenant, must be coordinated with Terry Higgins
or his designated agent. Whenever possible,
Landlord or its Agent, will provide prior
notification to the Tenant or its Agent. Whenever
possible, both parties must schedule the work to
take place at a time that is mutually agreeable.
B-12