Lease Agreement With New York-new York Hotel

LEASE AGREEMENT


BETWEEN


NEW YORK - NEW YORK HOTEL, LLC
A NEVADA LIMITED LIABILITY COMPANY


"LANDLORD"


AND
IL FORNAIO (AMERICA) CORPORATION


"TENANT" 2
TABLE OF CONTENTS ARTICLE I DESCRIPTION AND LOCATION OF PREMISES............................... 1
1.1 Premises .......................................... 1
1.2 Relocation of Premises ............................ 1
1.3 Modification of Premises .......................... 2


ARTICLE 2 IMPROVEMENT OF PREMISES ........................................... 3
2.1 Landlord's Work ................................... 3
2.2 Tenant's Work ..................................... 3
2.3 Tenant's Obligations Before Commencement Date ..... 3
2.4 Failure of Tenant to Perform ...................... 4
2.5 Condition of Premises ............................. 4
2.6 Refurbishment ..................................... 5


ARTICLE 3 TERM .............................................................. 5
3.1 Lease Term ........................................ 5
3.2 Holding Over ...................................... 5
3.3 Option to Renew ................................... 5


ARTICLE 4 RENT .............................................................. 6
4.1 Base Rent ......................................... 6
4.2 Percentage Rent ................................... 6
4.3 Lease Year ........................................ 6
4.4 Gross Sales ....................................... 6
4.5 Percentage Rent Payments .......................... 7
4.6 Books and Records; Audit .......................... 8
4.7 Place for Payments ................................ 9
4.8 Interest .......................................... 9
4.9 Late Charge ....................................... 9
4.10 Failure to Achieve Minimum Sales .................. 9


ARTICLE 5 GUEST RELATIONS; COMPLIMENTARIES .................................. l0


5.1 Standard of Operations ............................ 10
5.2 Room Charges ...................................... 10
5.3 Room Charge Accountings ........................... 10
5.4 Collections ....................................... 11
5.5 Complimentaries ................................... 11 3 ARTICLE 6 EMPLOYEES; BONDING ....................................................... 11
6.1 Staffing .................................................... 11
6.2 Licenses .................................................... 11
6.3 Restricted Areas ............................................ 12
6.4 Bonding ..................................................... 12
6.5 Tenant's Employees .......................................... 12


ARTICLE 7 POSSESSION AND SURRENDER OF PREMISES ..................................... 12
7.1 Surrender .................................................. 12
7.2 Fixtures ................................................... 12
7.3 Removal of Trade Fixtures .................................. 12
7.4 Failure to Surrender ....................................... 13


ARTICLE 8 USE OF PREMISES
8.1 Permitted Use
8.2 Tenants' Trade Name......................................... 13
8.3 Liquor License.............................................. 13
8.4 Product Agreements.......................................... 14
8.5 Prohibited Uses............................................. 14
8.6 Approval of Fixtures and Equipment.......................... 15
8.7 Maintenance of Personal Property............................ 15
8.8 Compliance with Law......................................... 15
8.9 Rules and Regulations....................................... 15
8.10 Business Practices and Minimum Hours of Operation .......... 15
8.11 Private Parties............................................. 16
8.12 Photographic Services....................................... 16
8.13 Interference with Other Tenants............................. 16
8.14 Refunds and Settlements by Landlord......................... 16
8.15 Advertising and Signage..................................... 17
8.16 Intellectual Property....................................... 17
8.17 Security.................................................... 17
8.18 Conduct of Tenant........................................... 17
8.19 Emissions and Hazardous Materials........................... 18
8.20 Exclusive Use............................................... 20


ARTICLE 9 ALTERATIONS AND IMPROVEMENTS ............................................. 20


ARTICLE 10 LANDLORD'S REPAIR OBLIGATION ............................................. 20


ARTICLE 11 PARKING AND COMMON AREAS ................................................. 20


ii 4 ARTICLE 12 TAXES ...................................................................... 21
12.1 Personal Property Taxes ................................... 21
12.2 Other Taxes ............................................... 21
12.3 Statements Received by Landlord ........................... 21
12.4 Casino Entertainment Tax


ARTICLE 13 SERVICES TO THE PREMISES ................................................... 22
13.1 Utilities ................................................. 22
13.2 Limitation upon Landlord's Obligation ..................... 22


ARTICLE 14 INSURANCE .................................................................. 23
14.1 Liability Insurance ....................................... 23
14.2 Property Insurance ........................................ 23
14.3 Policy Reguirements ....................................... 24
14.4 Hazardous Activities ...................................... 24
14.5 Waiver of Subrogation ..................................... 25


ARTICLE 15 LIENS
15.1 Indemnity for Liens ....................................... 25
15.2 Prevention of Liens ....................................... 25
15.3 Release of Liens .......................................... 25
15.4 Notice of Nonresponsibility ............................... 25


ARTICLE 16 INDEMNIFICATION ............................................................ 26


ARTICLE 17 SUBORDINATION .............................................................. 26
17.1 Subordination of Tenant's Interest ........................ 26
17.2 Priority .................................................. 27
17.3 Attornment ................................................ 27
17.4 Nondisturbance ............................................ 27


ARTICLE 18 ASSIGNMENT AND SUBLETTING .................................................. 27
18.1 Assignment or Sublease without Consent Prohibited ......... 27
18.2 Notice of Proposed Sublease or Assignment ................. 27
18.3 Standards for Consent ..................................... 28
18.4 No Release of Tenant ...................................... 29
18.5 Assumption of Tenant's Obligations ........................ 29


ARTICLE 19 INSOLVENCY AND DEATH ....................................................... 30


iii 5 ARTICLE 20 CONDEMNATION ............................................................... 30
20.1 Awards ................................................ 30
20.2 Taking of the Premises ................................ 30
20.3 TAKING of the Hotel ................................... 30
20.4 Deed-in-Lieu .......................................... 30


ARTICLE 21 DESTRUCTION OF PREMISES .................................................... 31
21.1 Landlord's Right of Termination ....................... 31
21.2 Damage Caused by Tenant ............................... 31
21.3 Damage to Hotel ....................................... 31
21.4 Repair Obligations .................................... 31
21.5 Insurance Proceeds .................................... 31
21.6 Rental Abatement ...................................... 32


ARTICLE 22 RIGHT OF ACCESS ............................................................ 32
22.1 Right of Access ....................................... 32
22.2 Inconvenience to Tenant ............................... 32
22.3 Right to Show the Premises ............................ 33


ARTICLE 23 LANDLORD'S RIGHT OF PERFORMANCE ............................................ 33


ARTICLE 24 ESTOPPEL CERTIFICATES ...................................................... 33


ARTICLE 25 TENANT'S DEFAULT ........................................................... 33
25.1 Events of Default ..................................... 33
25.2 Landlord's Remedies ................................... 34


ARTICLE 26 QUIET POSSESSION ........................................................... 35


ARTICLE 27 SALE BY LANDLORD ........................................................... 36


27.1 Landlord's Right to Assign or Transfer ................ 36
27.2 Attornment ............................................ 36
27.3 Release of Landlord ................................... 36


ARTICLE 28 DEFAULT BY LANDLORD ........................................................ 36


iv 6 ARTICLE 29 MISCELLANEOUS .............................................................. 36
29.1 Waiver of Jury Trial ................................. 36
29.2 Waiver ............................................... 37
29.3 Force Majeure ........................................ 37
29.4 Delivery of Notices .................................. 37
29.5 Remedies Cumulative .................................. 38
29.6 Successors and Assigns ............................... 38
29.7 Partial Invalidity ................................... 38
29.8 Time of the Essence .................................. 39
29.9 Entire Agreement ..................................... 39
29.10 No Partnership ....................................... 39
29.11 Brokers .............................................. 39
29.12 Captions ............................................. 39
29.13 Usage ................................................ 39
29.14 Governing Law ........................................ 39
29.15 Covenants ............................................ 39
29.16 Joint and Several Obligations ........................ 39
29.17 Submission of Lease .................................. 39
29.18 Liens and Actions Affecting Property ................. 40
29.19 No Memorandum ........................................ 40
29.20 Construction ......................................... 40
29.21 Authority ............................................ 40


ARTICLE 30 DISPUTE RESOLUTION ......................................................... 40


v 7
EXHIBITS Exhibit "A" Site Plan Showing Premises


Exhibit "B" Work Letter


Exhibit "C" Memorandum of Commencement Date


vi 8
LEASE AGREEMENT


THIS LEASE is made and entered into this 15th day of April 1996, by and between NEW YORK-NEW YORK HOTEL, LLC, a Nevada limited liability company, herein referred to as "Landlord", and IL FORNAIO (AMERICA) CORPORATION, a California corporation, herein referred to as "Tenant".


RECITALS


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 Italian restaurant and bakery.


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 9400 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 (but not for the purpose of leasing the Premises originally demised hereunder to another restaurant) provided that the site to which the Premises is relocated (i) shall be approximately the same size as the original Premises; (ii) shall be on the casino level and shall be exposed to reasonably equivalent pedestrian traffic; and (iii) shall have an eighteen (18) foot separation from the Hotel's casino gaming and gaming machines (hereinafter, the "REQUIRED BUFFER"). Landlord shall notify Tenant of such relocation not less than sixty (60) days prior to the date thereof and shall specify in such notice (i) the location to which the Premises is to be relocated, and (ii) the approximate date of the relocation. Landlord shall reconstruct on the relocated Premises improvements substantially similar to those constructed by Tenant at the time of relocation. Rent shall be abated during any period that Tenant is required to cease business operations in the Premises originally demised hereunder prior to moving to the relocated Premises; provided that in no event shall Tenant be required to cease business operations for more than thirty (30) days prior to moving to the relocated Premises. As of the latter of the date specified in Landlord's notice to Tenant or ten (10) days after Landlord has notified Tenant that


1 9 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. In addition, Landlord shall be responsible for moving Tenant's furniture, fixtures or equipment as necessary to enable Tenant to use such items in the relocated Premises or replacing, modifying or reconstructing such items which cannot be moved. 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 that, promptly on demand, it shall execute an amendment to Exhibit A designating the location of the relocated Premises.


Notwithstanding the foregoing if Tenant is not satisfied with the location to which the Premises is to be relocated hereunder, Tenant may terminate this Lease by written notice to Landlord not later than ten (10) business days after Landlord's notice of an intended relocation. Such notice of termination shall be effective as of the date of Landlord's proposed relocation, as specified in Landlord's notice, unless Landlord rescinds its notice of relocation prior to such date. Upon any termination by Tenant hereunder, Landlord shall reimburse Tenant for the unamortized cost of Tenant's Work, together with the unamortized cost of refurbishment incurred by Tenant pursuant to Section 2.6 and the unamortized cost of Tenant's furniture, fixtures and equipment which are not removed from the Premises by Tenant (all amortized using the straight-line method over the initial Lease Term, or, in the case of refurbishment pursuant to Section 2.6 which occurs during a renewal term, over the applicable renewal term) (collectively, "TENANT'S UNAMORTIZED COSTS").


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. If a proposed reduction in the size of the Premises would result in the Premises being less than eighty-five percent (85%) of its original size, or if, as a result thereof, the remaining portion of the Premises would not be suitable for the conduct of Tenant's permitted business hereunder, Tenant shall have the right to terminate this Lease by written notice to Landlord given within thirty (30) days after Landlord notifies Tenant of Landlord's intention to remodel. A termination by Tenant hereunder shall be effective thirty (30) days after the notice of termination is given to Landlord unless, within such thirty (30) day period, Landlord elects to relocate the Premises pursuant to Section 1.2 hereof or to rescind its decision to remodel the Premises. In the event of any remodeling pursuant to this Section 1.3, Landlord shall repair any resulting damage to the Premises. In connection with any such remodeling, Landlord may require Tenant to cease conducting 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, and Base Rent shall be reduced in proportion to any reduction in the floor area of the Premises hereunder.


Upon any termination by Tenant hereunder, Landlord shall reimburse Tenant for Tenant's Unamortized Costs.


1.4 CASINO BUFFER. Without limiting the provisions of the preceding Section 1.3, if the Hotel's casino gaming or gaming machines encroach into the Required Buffer (other than


2 10 temporary encroachments during remodeling or repair work by Landlord) Tenant may elect, within six (6) months after the date of such encroachment either (i) to require Landlord to construct, at Landlord's expense, a demising wall for the Premises shielding it from such gaming activity; or (ii) to terminate this Lease as to Tenant's ["outside" eating areas]. In the event of any such partial termination by Tenant hereunder, the Base Rent shall be reduced in proportion to the reduction in the floor area of the Premises.


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 Landlord's Building Plans which have been made available to Tenant.


2.2 TENANT'S WORK. All work 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 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 One Hundred Seventy-Five Dollars ($175) per square foot of usable area in the Premises, not including Tenant's "in-house" costs or general and administrative overhead, for the construction of the Tenant' Work.


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 April 1, 1996, 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 conflicts with Landlord's Building Plans or the Work Letter or any other failure to meet with Landlord's approval. Tenant shall, not later than May 1, 1996, 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. Tenant shall not commence any of Tenant's Work until Landlord has approved Tenant's Final Construction Drawings in writing.


3 11
Subject to delays in Tenant's Work which are caused by Landlord's failure to complete the Landlord Work in a timely manner or by Landlord's failure to allow Tenant's contractors access to the Premises to construct the Tenant Work or a force majeure event described in Section 29.3 below which arises from an act or omission of Landlord or Landlord's contractors (hereinafter, "LANDLORD DELAYS"), Tenant shall complete Tenant's Work by the later of (i) the date that is one hundred eighty (180) days following the "DELIVERY DATE," as hereinafter defined, or (ii) December 10, 1996, which applicable date shall be 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. 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. If the Delivery Date does not occur on or before December 31, 1996, Tenant shall have the right to terminate this Lease by written notice to Landlord at any time prior to the Delivery Date.


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 for any reason other than Landlord Delays, such failure shall be a Tenant Event of Default and Landlord may, without notice or demand 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, and, provided that Tenant's failure is not the result of Landlord Delays or a force majeure event described in Section 29.3 below, together with an amount equal to fifty percent (50%) of 1/365ths of the Base Rent for each day that 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


4 12 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 to Landlord (hereinafter, "PUNCH LIST ITEMS"). 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 or the existence or non-existence of Hazardous Materials (hereinafter defined) in, on or about the Premises, no warranties or guarantees, expressed or implied, with respect to workmanship or any defects in material, and no promise to decorate, alte ...