**Exhibit 10.1**

 

Lease

 

By and Between

 

PM Realty, LLC

 

a Nevada limited liability company,

 

and

 

Hard Rock Hotel, Inc.,

 

a Nevada corporation

 

 

and

 

 

Mr. Chow of Las Vegas, LLC

 

a Nevada limited liability company

 

i

----

 

**LEASE**

 

**THISLEASE** (the *“*Lease*”*) is entered into as of December 24,2004, by and between PM Realty, LLC, a Nevada limited liability company (*“*PM Realty*”*)and Hard Rock Hotel, Inc., a Nevada corporation (*“*HRH*”*and, together with PM Realty, *“*Landlord*”*) and Mr. Chow of Las Vegas, LLC, aNevada limited liability company (*“*Tenant*”*):

 

**Recitals**

 

1.**                                      **HRHowns certain parcels of real property located at the northwest corner ofParadise Road and Harmon Avenue in Las Vegas, Nevada, identified as havingAssessor Parcel Numbers 162-22-201-001, 162-22-201-002 and 162-22-201-003 (the “Hotel/CasinoParcel”) consisting of approximately 16.65 acres and upon which the Hard RockHotel and Casino (the “Hotel/Casino”) is constructed and operated.

 

2.                                       PMRealty is affiliated with HRH and is the owner of approximately 23.29 acres ofreal property located adjacent to the Hotel/Casino Parcel and identified ashaving Assessor Parcel Numbers 162-21-602-003, 162-21-602-002, 162-22-103-004and 162-21-504-005 (the *“*DevelopmentProperty”).

 

3.                                       PMRealty, HRH and/or its or their developers intend to develop the DevelopmentProperty to include new construction of not less than Seven Hundred FiftyThousand (750,000) square feet of new structures inclusive of five (5) high-risestructures, the Restaurant Building, as defined below, and the New Pool, asdefined below.  Three (3) of thehigh-rise structures shall be developed as condominium units and locatedgenerally in the area depicted on Exhibit “B” as “The Condominiums.”  The remaining two (2) high-risestructures shall consist of condominium units which may be utilized for hotelpurposes and shall be located generally in the area depicted on Exhibit “B”as “The Hotel Condominiums.”  Theproposed development on the Development Property is collectively referred toherein as the “Development*”*.

 

4.                                       Itis anticipated that the Development shall take place in two phases.  “Phase I Development” shall consist of theconstruction of: (i) new retail/restaurant space of not less thanTwenty-five Thousand (25,000) square feet, which retail/restaurant space isdepicted on Exhibit “B” as the “Retail/Restaurant Space”, and

 

----

 

shall include facilitiesfor no less than three (3) restaurants of the type commonly described as “highend” or “destination” restaurants (the “New Restaurants”), each of which shallhave price points and standards of service and quality similar to the existingprice points and standards of service as exist in the “Simon” and “Nobu” restaurantslocated in the Hotel/Casino, (ii) meeting spaces, a spa, and a concertfacility, located in the Restaurant Building (as defined below); (iii) theHotel Condominium depicted on Exhibit “B” as the “Phase I HotelCondominium”; (iv) the Condominium depicted on Exhibit “B” as the “PhaseI Condominium”; (v) the New Pool (as defined below); and (vi) allCommon Areas necessary to service and provide access to all of the foregoing,including adequate parking facilities. The building in which the Retail/Restaurant Space are to be located ishereinafter referred to as the “Restaurant Building.”  “Phase II Development” shall consist of theremainder of the new construction and may or may not be built as determined byLandlord in its sole discretion.

 

5.                                       Itis anticipated that all or a portion of the Development Property will beconveyed to a joint venture entity (the “Development Entity”), which suchentity shall be owned by Peter Morton or an entity owned by Peter Morton, andother venturers in the Development.

 

6.                                       Additionally,it is contemplated that a portion of the Development Property will be conveyedeither by sale or lease from either PM Realty or the Development Entity to HRHsuch that HRH will ultimately own and/or manage that portion of the DevelopmentProperty consisting of the Retail/Restaurant Space to be contain in theRestaurant Building.  As used herein, theterm “Hotel Complex” shall collectively refer to the Hotel/Casino Parcel, theHotel/Casino, and, as portions of the Development and the Development Propertyare constructed and open for operation, such portions that open for operation.

 

**NOW,THEREFORE,** for valuable consideration, the receipt andsufficiency of which are acknowledged, Landlord and Tenant hereby agree asfollows:

 

2

----

 

ARTICLE I 

EXHIBITS

 

Section 1.1.                                                           Development

 

Landlordhereby represents and warrants to Tenant that (i) Landlord shall constructthe Phase I Development, and (ii) the Phase I Hotel Condominium and theRestaurant Building shall be physically connected to the Hotel/Casino withenclosed passageways.  The criteria forthe Phase I Development set forth in this paragraph and in Recital Paragraphs 3and 4 above, is referred to herein as the “Development Requirements.”

 

Section 1.2.                                                           Locationof Premises

 

Notlater than May 1, 2005, Landlord shall provide Tenant with dimensionedpreliminary site plans, elevations and sections concerning the Retail/RestaurantSpace (collectively, the “Preliminary Site Plan”) which Preliminary Site Planshall specify the locations, elevations, footprints and configurations of theNew Restaurants.  Tenant shall select, inits sole discretion, which of the New Restaurants shall be utilized by Tenantas the Premises (as defined below). Tenant shall notify Landlord of Tenant’s election within fifteen (15)days after receipt of the Preliminary Site Plan.  Upon Tenant’s selection of the location ofthe Premises, such location shall be depicted on a site plan and attachedhereto as Exhibit “B-1.”  Landlordshall reasonably cooperate with Tenant’s requests and recommendations regardingthe positioning and layout of the Premises in connection with Landlord’s designof the Development.  Without limiting thegenerality of the foregoing, to the extent Tenant delivers to Landlord anyplans or drawings depicting Tenant’s proposed layout of the Premises (the “Tenant’sPreliminary Layout”), including the location of the kitchen, Landlord shall useits best efforts to incorporate Tenant’s Preliminary Layout in Landlord’sConstruction Plans (as defined below).  Inthe event Tenant disapproves of the Preliminary Site Plan, Tenant shall havethe right, upon written notice to Landlord delivered within five (5) daysfrom the date Tenant receives the Preliminary Site Plan, to terminate thisLease, in which event this Lease shall terminate on the date such terminationnotice is delivered by Tenant and the parties shall have no continuingobligations hereunder (and, except as provided below, neither party shall beobligated to pay any termination fees, penalties, or other charges inconnection with such termination). Notwithstanding anything to the contrarycontained herein, in the event at least one (1) of

 

3

----

 

the New Restaurantsdepicted on the Preliminary Site Plan does not incorporate all three of theRequired Elements, as defined below, and Tenant terminates this Lease inaccordance with the foregoing, then Landlord shall, within ten (10) daysfollowing the date of Tenant’s termination notice, pay to Tenant a lease terminationfee in the amount of Two Hundred Fifty Thousand Dollars ($250,000) for eachRequired Element that was not incorporated into the Maximum Required ElementSpace (i.e. for a maximum termination fee pursuant to this paragraph of SevenHundred Fifty Thousand Dollars ($750,000)). The parties hereby acknowledge and agree that such lease termination feeis a payment in the nature of liquidated damages and not a penalty, and is fairand reasonable in light of all of the circumstances existing on the date of thisAgreement, including the parties’ estimation of the amount of lost opportunitycosts to Tenant.  As used herein, the “MaximumRequired Element Space” shall mean the one New Restaurant containing the greatestnumber of the Required Elements.  As usedherein, “Required Element(s)” shall mean premises: (i) containing a StoreFloor Area of not less than nine thousand (9,000) contiguous square feet, (ii) havinga slab-to-slab height of not less than twenty-five (25) feet throughout the premises(provided that if Landlord, despite its best efforts, cannot incorporate Tenant’sPreliminary Layout into the Landlord’s Construction Plans, and the layout asproposed by Landlord requires the installation of ducts or exhausts within thePremises, the twenty-five (25) feet height shall be measured from the slabfloor to the lowest point of any such ducts or exhausts), and (iii) havingglass windows/doors with unobstructed views of the New Pool, which glasswindows/doors shall be approximately fifty (50) feet of linear feet.

 

Section 1.3.                                                           PremisesDevelopment Criteria

 

Landlordrepresents and warrants to Tenant that the Premises selected by Tenant pursuantto Section 1.2 above shall be designed so as to (i) have slab-to-slabheight of not less than twenty-five (25) feet (provided Landlord shall use itsbest efforts to provide a slab-to-slab height of thirty (30) feet whereverpossible, and provided further that if Landlord, despite its best efforts,cannot incorporate Tenant’s Preliminary Layout into the Landlord’s ConstructionPlans, and the layout as proposed by Landlord requires the installation ofducts or exhausts within the Premises, the twenty-five (25) feet height shallbe measured from the slab floor to the lowest point of any such ducts orexhausts), (ii) have not less than fifty (50) feet of linear frontage onthe exterior Common Areas immediately adjoining and with unobstructed views of theNew Pool (as defined below)**,**

 

4

----

 

(iii) visibilityfrom the common areas of the interior of the Hotel Complex, (iv) belocated not less than one hundred (100) feet from any restroom facilities(other than restrooms inside of other retail establishments), (v) permitand accommodate the Tenant’s Terrace Area (as defined below) and (vi) complywith the provisions of Section 2.1 below. The Premises shall have primary entrance from the interior of the HotelComplex and, if feasible from a security perspective (as determined in Landlord’sreasonable discretion), an independent entrance from the exterior of the HotelComplex.  The Premises shall, at aminimum, accommodate a primary dining area adequate to provide seating for twohundred (200) people, a bar lounge area adequate to provide seating for fifty(50) people, a private dining facility adequate to provide seating for fifty(50) people, and contain adequate areas for storage, dishwashing, officerestrooms, employee lockers/lounge, kitchen, and other “back of the house” andancillary areas adequate to operate a restaurant consistent with other Mr. Chowrestaurants existing as of the date of this Lease.  The development criteria for the NewRestaurants and the Premises set forth herein are collectively referred toherein as the “Minimum Premises Development Criteria.”  Subject to the Development Requirements, theMinimum Premises Development Criteria and the Tenant Protections (as definedbelow), Tenant acknowledges that Landlord shall have the right to determine thenature and extent of the Common Areas of the Development and to make suchchanges, rearrangements, additions and reductions thereto as Landlordreasonably deems desirable, including, without limitation, the location,relocation, addition and/or elimination of driveway entrances and exits, thedirection and flow of traffic, landscaped areas and other facilities of theCommon Areas.

 

Section 1.4.                                                           Modificationsto Common Areas

 

Landlordreserves the right to change or modify the Common Areas (hereinafter defined)of the Hotel Complex or any part thereof, including the size and configurationof the parking areas, the configuration of the entrances, exits and parkingaisle alignments, dimensions of hallways, malls and corridors, and the size,shape, location and arrangement of such Common Areas, provided that any suchchanges or modifications do not (i) materially obstruct Tenant’s (or itsemployee’s, agents’, customers’, invitees’, suppliers’ and contractors’) rightof pedestrian ingress to and egress from the Premises, the Common Areas and theHotel Complex, (ii) interfere with Tenant’s use of utilities, (iii) adverselyaffect the visibility of the Premises to and from the Common Areas including

 

5

----

 

but not limited to thepool areas, (iv) adversely affect the view from the Premises and/or theTenant’s Terrace Area to the new pool area (the “New Pool”) to be developed aspart of the Phase I Development, or (v) otherwise materially interferewith Tenant’s operations in the Premises (subclauses (i) through (v) arecollectively referred to herein as “Tenant Protections”).  In addition to the Tenant Protections, anymodifications to the Common Areas shall not conflict with the provisions ofSections 1.2 and 1.3 above.

 

ARTICLE II

PREMISES AND TERM

 

Section 2.1.                                                           Premises

 

Landlordhereby leases to Tenant, and Tenant hereby rents from Landlord, the spaceselected by Tenant in accordance with the provisions of Article 1 above(hereinafter called the “Premises”).  ThePremises shall contain not greater than eleven thousand (11,000) square feet norless than nine thousand (9,000) square feet. The actual square footage of the Premises is hereinafter referred to asthe “Store Floor Area.” The Store Floor Area shall be measured to the interiorface of all party or adjacent tenant walls, to the interior faces of all otherwalls and to the building line where there is no wall. Tenant shall also havethe right to use the balconies and/or portion of the Common Area immediatelyadjacent to the Premises as designated on Exhibit “B-1” attached heretofor outdoor seating by Tenant’s customers (the “Tenant’s Terrace Area”).  The Tenant’s Terrace Area shall (i) consistof not less than eight hundred (800) square feet and, at a minimum, accommodatea dining area adequate to provide seating for a minimum of fifty (50) people,and (ii) be facing the New Pool and have an unobstructed view to such NewPool.  Tenant shall have the right toplace furniture and weather-related equipment, including, but not limited to,heaters, within the Tenant’s Terrace Area as reasonably determined by Tenant;provided that the selection of such furniture and equipment shall be subject tothe approval process for the approval of Tenant’s Exterior Plans set forth in Section 3.1below.  Tenant shall comply with allapplicable laws in connection with its use of the Tenant’s Terrace Area.  Tenant shall further have the right, but notthe obligation, to construct a mezzanine level within the Premises, andLandlord shall not object to any such proposed mezzanine level depicted on anyplans and specifications submitted to Landlord by Tenant, provided that suchproposed mezzanine shall comply with all applicable laws and codes. In no eventshall the square footage of Tenant’s Terrace Area

 

6

----

 

or any mezzanine levelwithin the Premises be included in determining the Store Floor Area of thePremises.

 

Section 2.2.                                                           Roofand Walls

 

Landlordreserves to itself the roof and exterior walls of the Restaurant Building, andall space above the ceiling within the Premises, to accommodate the building’sstructural, mechanical and electrical conduit piping, ducting and ventingrequirements in locations which will not materially interfere with Tenant’s useof the Premises.

 

Section 2.3.                                                           LeaseTerm

 

ThisLease shall be in full force and effect from the date of execution hereof saveand except that the initial term of this Lease (hereinafter called “Lease Term”)shall not begin to run, and no rent shall be due and payable, until the “CommencementDate,” as defined herein.  The Lease Termshall commence upon the date that Tenant opens for business to the public inthe Premises (the “Commencement Date”). Upon the determination of the Commencement Date, Landlord shall notifyTenant thereof in writing. The Lease Term shall end on the last day of thetenth (10th) Lease Year (hereinafter defined) after the Commencement Dateunless sooner terminated as herein provided.

 

Section 2.4.                                                           Optionto Extend Lease Term

 

Tenantshall have two (2) options (the “Option(s)”) to renew this Lease for anadditional term of five (5) years each (the “Renewal Term(s)”).  The terms and conditions of this Lease shallapply with full force and effect during the Renewal Terms as if it were theLease Term, except there shall be no Option for any further renewal term afterthe last Renewal Term.  Tenant shall,subject to Article XV of this Lease, exercise said Options by givingwritten notice thereof to Landlord not earlier than eighteen (18) months, andnot later than six (6) months (each an “Option Exercise Period”), prior tothe end of the then current term; provided, however, that Tenant shall not havethe right to exercise any Option if Tenant is in default beyond all applicablenotice and cure periods at the time of such exercise.

 

7

----

 

Section 2.5.                                                           LeaseYear Defined

 

“LeaseYear,” as used herein, means a period of twelve (12) consecutive months duringthe Lease Term commencing on the Commencement Date and each subsequentanniversary thereof; provided, however, that if the Commencement Date is notthe first day of a month, then the first Lease Year shall commence on theCommencement Date and end on the last day of the twelfth full calendar monththereafter and the second and each succeeding Lease Year shall commence on thefirst day of the next calendar month.

 

ARTICLE III

RESTAURANT DESIGN AND

LANDLORD’S WORK

 

Section 3.1.                                                           RestaurantDesign

 

Tenant shall, within ninety (90) days from the ConstructionPlan Approval Date (as defined in Section 3.2(A) below), submit plansand specifications for all structural components of Tenant’s Work to Landlord(the “Tenant’s Structural Plans”). Landlord shall have a period of ten (10) business days within whichto make reasonable comments and changes thereto, which comments and/or changesshall be limited to concerns regarding structural integrity or safety.  If Landlord does not respond to Tenant’ssubmission of Tenant’s Structural Plans within such ten (10) business dayperiod, then Landlord shall be deemed to have approved the same.  If Landlord responds with comments asdescribed above, then Tenant shall revise the Tenant’s Structural Plans takinginto consideration Landlord’s comments and resubmit them to Landlord forapproval within thirty (30) days from the date of receipt of suchcomments.  Landlord shall then have five (5) businessdays to approve such revised Tenant’s Structural Plans.  If Landlord does not respond to theresubmission of Tenant’s Structural Plans within such five (5) businessday period, Landlord shall be deemed to have approved the same.  Tenant shall also, prior to commencement ofTenant’s Work, submit plans for the exterior components of Tenant’s Work (the “Tenant’sExterior Plans”) to Landlord.  Landlordhereby appoints and authorizes Peter Morton (“Morton”) as Landlord’s sole andexclusive agent to review and approve the Tenant’s Exterior Plans, and Tenanthereby appoints and authorizes Michael Chow (“Chow”) as Tenant’s agent inconnection with the Tenant’s Exterior Plans. Morton and Chow shall personally work together to mutually agree uponthe Tenant’s Exterior Plans within thirty (30) days from the date of Tenant’ssubmittal of

 

8

----

 

Tenant’sExterior Plans to Landlord.  If Chow isnot personally available to work on the Tenant’s Exterior Plans within suchthirty (30) day period, or if Morton and Chow do not, in good faith, mutuallyagree upon Tenant’s Exterior Plans within such thirty (30) day period, then,the decision of Morton shall control with respect to any remaining items of theTenant’s Exterior Plans that have not been previously agreed to between Mortonand Chow.  If for any reason Morton isnot personally available to work on the Tenant’s Exterior Plans within suchthirty (30) day period, the Tenant’s Exterior Plans shall be designed by Tenantto be harmonious with the exterior theme of the Restaurant Building, whichexterior theme shall be determined in the reasonable discretion of Landlord.  As used herein, “Tenant’s Plans” shall refercollectively to the Tenant’s Structural Plans and Tenant’s Exterior Plans.  Notwithstanding the foregoing, Landlordacknowledges and agrees that all decisions regarding the interior design of thePremises, including, without limitation, all finish materials, color scheme,window treatments, furniture, fixtures and equipment, shall be made by Tenantin Tenant’s sole discretion, and Landlord shall have no approval rightsthereto.  Subject to the provisions of Section 24.17below, Landlord will provide complimentary hotel accommodations at the HotelComplex for Tenant’s representatives when in Las Vegas to participate in thedesign approval process.

 

Section 3.2.                                                           Landlord’sWork

 

A.                                   Landlordshall, at its sole expense, construct and perform all work being required ofLandlord (the “Landlord’s Work”) described in the work letter attached heretoas Exhibit “C”.  The Landlord’s Workshall be performed in accordance with the Construction Plans, as definedbelow.  On or prior to December 31,2005, Landlord shall submit to Tenant, for Tenant’s review and approval, afully detailed and dimensioned scale construction drawings for Landlord’s Workthe (“Construction Plans”), which shall be consistent with the approvedPreliminary Site Plan and include the following: (a) architecturaldrawings including plan views of the storefront, floor areas, and reflectedceiling; elevations of the storefront and interiors; sections through thestorefront, partitions, and along the longitudinal axis; (b) electricaldrawings including circuitry plans, panel schedules, riser diagrams, loadcalculations, and all calculations and forms required by applicable law; (c) allmechanical drawings, including but not limited to heating, ventilating, and airconditioning design calculations, an equipment schedule andspecifications, the design for the air distribution and make up duct worksystem, smoke exhaust system, exhaust fan(s), plumbing fixtures and pipingspecifications; and (d) fire

 

9

----

 

sprinkler plans includingdistribution piping to Landlord’s system stub-in point.  Tenant shall approve or disapprove of theConstruction Plans within ten (10) business days following receiptthereof.  If Tenant disapproves of anysubmittal, the parties shall promptly (but not later than ten (10) businessdays following Tenant’s disapproval notice) meet in an effort to agree upon therevisions to be made to the submittal, and Landlord shall, within ten (10) businessdays following such meeting, revise the submittal as agreed upon at suchmeeting and resubmit the same to Tenant. The foregoing process shall be repeated until the Construction Plans areapproved by Tenant; provided, however, that if Tenant disapproves of three resubmittalsby Landlord and the parties are unable to resolve the remaining issues withinfifteen (15) days following the date Tenant notifies Landlord of Tenant’sdisapproval of such third resubmittal, Tenant shall have the right to terminatethis Lease upon written notice to Landlord hereunder and the parties shall haveno continuing obligations hereunder (and neither party shall be obligated topay any termination fees, penalties, or other charges in connection with suchtermination).  As used herein the date onwhich Tenant notifies Landlord of Tenant’s final approval of the ConstructionPlans shall be referred to herein as the “Construction Plan Approval Date.”  Tenant’s approval of the Construction Plansshall not create any responsibility or liability whatsoever on the part ofTenant, including, without limitation, for their completeness, sufficiency,design, workability or compliance with applicable laws.  Upon approval of the Construction Plans byTenant, Landlord shall commence and thereafter diligently prosecute Landlord’sWork to completion without interruption or delay, in a first-class and good andworkerlike manner, using new materials, in compliance with all applicablelaws.  Any changes to the approvedConstruction Plans by Landlord shall be subject to Tenant’s approval.  Landlord, at Landlord’s expense, shallprocure all building and other permits and approvals necessary for performingLandlord’s Work.  The date on whichLandlord delivers the Premises to Tenant with the Landlord’s Work completedshall be referred to herein as the “Delivery Date.”  Landlord warrants that Landlord’s Work shallbe delivered free and clear of liens, encumbrances and violations or conditionswhich may constitute violations of any law relating to the use, occupancy andconstruction of the Premises and Restaurant Building.  No later than five (5) days prior to theDelivery Date, Landlord and Tenant, or their representatives, shall inspectLandlord’s Work and to the extent Tenant discovers any deviations ordeficiencies, then Tenant may deliver a list (“Punch List”) of such deviationsor deficiencies (“Punch List Items”) to Landlord.  The existence of a Punch List shall notpostpone the Delivery Date as long as (A) the Punch

 

10

----

 

List Items arecustomarily classified as “punch list” items in the construction industry, and (B) neitherthe failure to complete nor the process of completing any such Punch List Itemswill delay or interfere with Tenant’s Work or the operation of Tenant’sbusiness in the Premises.  Landlord shallcorrect or cure the Punch List Items within ten (10) days followingLandlord’s receipt of the Punch List, as the case may be, or such longer periodas may be reasonably necessary, provided Landlord is proceeding with duediligence to complete the Punch List Items. Landlord may enter the Premises at any reasonable time to correct orcure the Punch List Items, provided Landlord takes reasonable precautions toavoid interfering with Tenant’s Work or Tenant’s business at the Premises.  If Landlord has not corrected or cured anyremaining Punch List Items to Tenant’s reasonable satisfaction within sixty(60) days following Landlord’s receipt of the Punch List, then Tenant maycomplete the Punch List Items, and offset Tenant’s actual costs so expended,together with interest at twelve percent (12%) per annum, from the date suchcosts were incurred, against the rent next coming due.

 

B.            Landlordacknowledges and agrees that Tenant has foregone other opportunities to developand operate a restaurant in other hotels in Las Vegas based upon Landlord’s timelyconstruction and opening of the Phase I Development.  Subject only to delays caused byUncontrollable Delays (as defined below), in the event Landlord has not, on orbefore June 1, 2006, either (i) received all necessary permits toconstruct the Phase I Development or (ii) has not commencedground-breaking work on the Phase I Development, then in either such event,Tenant shall have the right, in Tenant’s sole discretion, to terminate thisLease upon written notice delivered to Landlord, in which event Landlord shall,within ten (10) days following the date of Tenant’s termination notice,pay to Tenant a lease termination fee in the amount of Two Hundred FiftyThousand Dollars ($250,000).  The partieshereby acknowledge and agree that such lease termination fee is a payment inthe nature of liquidated damages and not a penalty and is fair and reasonablein light of all of the circumstances existing on the date of this Agreement,including the parties’ estimation of the amount of lost opportunity costs toTenant.  As used herein, “UncontrollableDelays” shall mean and be limited to delays caused by acts of God or terrorism.  In the event of an Uncontrollable Delay whichactually delays the performance of Landlord’s obligations described insubclauses (i) and (ii) above, the June 1, 2006 date set forthabove shall be extended for a period equivalent to the period of such delay.  In the event the plans

 

11

----

 

for,and construction of, the Development permanently ceases (as opposed to beingdelayed, which shall be governed by the provisions relating to UncontrollableDelays) solely as a result of an act of God or act of terrorism occurring priorto June 1, 2006, which act is of such magnitude that makes theconstruction and operation of the Development commercially unfeasible, Landlordshall have the right, upon written notice to Tenant delivered on or prior to June 1,2006, terminate this Lease, in which event this Lease shall terminate on thedate such termination notice is delivered by Landlord and the parties shallhave no continuing obligations hereunder (and neither party shall be obligatedto pay any termination fees, penalties, or other charges in connection withsuch termination).  Landlord’stermination right set forth in this paragraph shall automatically become nulland void if not timely exercised on or prior to June 1, 2006, and Landlordshall no longer have the right to terminate this Lease pursuant to thisparagraph after June 1, 2006.

 

C.                                     As of the date of this Lease, Landlordestimates that the Restaurant Building shall be completed and open to thepublic on or before December 31, 2007 (the “Initial RB Scheduled OpeningDate”).  The date on which the RestaurantBuilding actually opens to the public shall be referred to herein as the “RBOpening Date.”  The parties acknowledgeand agree that Tenant shall hire and engage employees, staff and consultants,acquire perishable inventory and enter into contractual obligations in relianceupon the RB Opening Date occurring on or prior to the Initial RB ScheduledOpening Date.  In the event that the RBOpening Date does not occur on or prior to the Initial RB Scheduled OpeningDate, Landlord shall be responsible for and reimburse Tenant for allout-of-pocket costs and expenses incurred by Tenant by reason of such delay,including but not limited to salaries, benefits, the amount of gratuities whichwould have reasonably been earned by Tenant’s employees if the Premises wereopen to the public and which Tenant pays to such employees (the amount of whichshall be determined per local market amounts based on other “high end”destination restaurants in Las Vegas), lodging expenses for Tenant’s specialtychefs (Landlord hereby acknowledging that such specialty chefs may be retainedby Tenant approximately one year in advance, and that Tenant customarily providessuch employees lodging for a period of one year), replacing all perishableinventory not otherwise utilized by Tenant and reimbursement of all contractualobligations which cannot otherwise be utilized by Tenant in the operation ofTenant’s business (collectively, “Out-of-Pocket Costs”).  In

 

12

----

 

theevent that the RB Opening Date does not occur on or prior to the sixtieth (60th)day following the Initial RB Scheduled Opening Date, then in addition to, andnot in lieu of, the Out-of-Pocket Costs, Landlord shall also pay to Tenant, asliquidated damages attributable to such delay (it being agreed that Tenant’sactual damages attributable to such delay, including lost profits, would bedifficult or impossible to ascertain) the amount of Ten Thousand Dollars ($10,000)for each day that the RB Opening Date does not occur from and after thesixtieth (60th) day following the Initial RB Scheduled Opening Date(the “Lost Profits”).  In the eventLandlord fails to reimburse Tenant for any out-of-pocket costs, lost profits orother expenses to be reimbursed by Landlord pursuant to this paragraph withinthirty (30) days after demand therefor, Tenant may pursue all remedies at lawor in equity to recover payment of the same, and Tenant may further, at itselection but without any obligation to do so, offset such unreimbursed amountsagainst all amounts of Percentage Rent payable by Tenant hereunder untilapplied in full.  In the event that theRB Opening Date does not occur on or prior to December 31, 2008 (the “OutsideRB Opening Date”), then Tenant shall have the right to terminate this Leaseupon written notice to Landlord at any time after the Outside RB Opening Date,in which case (i) Landlord shall reimburse to Tenant, within fifteen (15)days after invoice therefor, all costs actually incurred by Tenant in preparingto open for business in the Premises, including, without limitation, theOut-of-Pocket Costs, legal fees architectural and space planning fees, costsincurred in negotiating and documenting this Lease, and costs incurred inconstructing, equipping, fixturing and furnishing the Premises (collectively,the “Termination Costs”); provided, however, that the Termination Costs shallnot include Lost Profits, and (ii) Landlord shall not lease, use orotherwise permit the use of the Premises for a restaurant at any time prior to December 31,2009.  Landlord may, from time to time,upon no less than forty-five (45) days notice prior to the Initial RB ScheduledOpening Date (or any Revised RB Scheduled Opening Date, as defined below),advise Tenant in writing of any change in the estimated date that theRestaurant Building shall be completed and open to the public (any such reviseddate shall be referred to herein as the “Revised RB Scheduled Opening Date”).  In the event Landlord delivers written noticeof a Revised RB Scheduled Opening Date, Tenant will use reasonable efforts tominimize any Out-of-Pocket Costs and expenses. In the event Landlord notifies Tenant of a Revised RB Scheduled OpeningDate occurring after the Outside RB Opening Date, then Tenant shall have theright, but not the obligation, to terminate this Lease upon written notice to

 

13

----

 

Landlorddelivered within fifteen (15) business days after receipt of Landlord’s noticeof such Revised RB Scheduled Opening Date, in which case Tenant shall beentitled to the Termination Costs as set forth above.

 

D.                                    Landlord shall cause the Delivery Date tooccur on or before the date (the “Scheduled Delivery Date”) which is no lessthan the two hundred tenth (210th) day prior to the earlier of the InitialRB Estimated Opening Date, or any Revised RB Scheduled Opening Date, asapplicable.  Landlord shall notify Tenantin writing (the “Landlord’s Pre-Delivery Notice”) not less than sixty (60) daysprior to the occurrence of the Delivery Date of the Scheduled Delivery Date soas to permit Tenant to prepare for the commencement of Tenant’s Work.  Tenant estimates that Tenant will open forbusiness in the Premises on or prior to the two hundred tenth (210th)day following the Delivery Date (the “Tenant’s Scheduled Opening Date”).  The date on which Tenant actually opens forbusiness in the Premises shall be referred to herein as the “Tenant’s OpeningDate.”  In the event that the Tenant’sOpening Date does not occur on or prior to the Tenant’s Scheduled Opening Date,then Tenant shall pay to Landlord, as a late opening fee, Five Thousand Dollars($5,000) per day for each of the first three days immediately following theTenant’s Scheduled Opening Date that Tenant fails to open for business.  In the event that the Tenant’s Opening Datedoes not occur on or prior to the fourth (4th) day following theTenant’s Scheduled Opening Date, then Tenant shall pay to Landlord, as a lateopening fee, One Thousand Three Hundred Thirty Three Dollars ($1,333) per dayfrom such fourth day to such day that Tenant opens for business.  In the event that the Tenant’s Opening Datedoes not occur on or prior to the sixtieth (60th) day following theTenant’s Scheduled Opening Date, then Tenant shall pay to Landlord, as a lateopening fee, Five Thousand Dollars ($5,000) per day from such sixty-first (61st)day to such day that Tenant opens for business. Tenant’s failure to open for business at the Premises on or prior to theninetieth (90th) day following the Tenant’s Scheduled Opening Dateshall not be a default hereunder.  In theevent that the Tenant’s Opening Date does not occur on or prior to theninetieth (90th) day following the Tenant’s Scheduled Opening Date,then Landlord may declare a default by Tenant hereunder and seek all remediesprovided herein.  The foregoing timeperiods set forth in this paragraph shall be extended for a period equivalentto any period of delay resulting from an Uncontrollable Delay.

 

14

----

 

E.                                      Allwork designated as Tenant’s Work in Exhibit “C” attached hereto (the “Tenant’sWork”) shall be performed by Tenant. Tenant’s Work shall be performed by Tenant at its sole cost and expense;provided, however, that Landlord shall contribute the sum (“ConstructionAllowance”) of up to Five Million Dollars ($5,000,000.00) as set forthbelow.  The Construction Allowance may beutilized by Tenant for all aspects of constructing, improving and developingthe Premises, and in connection with items needed to open for business at thePremises (collectively, “Permitted Expenses”), including, without limitation,expenses related to walls, floors, ceilings, lighting, ducting, venting,mechanical, engineering and plumbing systems, HVAC systems, furniture, fixtures,and equipment, including kitchen and service area equipment, point of saleregisters and computers, walk-in coolers, small appliances, tabletop items(inclusive of china, tableware and glasses), menus, uniforms, barware and otheritems necessary to initially open and operate Tenant’s business from thePremises, exclusive of perishable inventory and items bearing the permanentTrade Name of Tenant (provided that Tenant shall be entitled to utilize theConstruction Allowance in connection with its signage for the Premises).  Tenant shall be entitled to utilize up toThree Hundred Fifty Thousand Dollars ($350,000.00) of the ConstructionAllowance for pre-opening expenses typically incurred in connection with arestaurant of the size and nature of Tenant’s restaurant to be operated in thePremises, which shall include, without limitation, pre-opening salaries,employee benefits and training.  TheConstruction Allowance shall be made available to Tenant from and after Tenant’sapproval of the Preliminary Site Plan to utilize for such pre-opening expensesand deposits and any other Permitted Expenses. Tenant shall, from time to time (but not more than once during anyfifteen (15) day period), deliver to Landlord an invoice for Permitted Expensesincurred by Tenant.  Landlord shall,within fifteen (15) days from the delivery of each such invoice, deliver acheck(s) to Tenant made payable to Tenant in an amount of each such invoice.

 

Section 3.4.                                                           ObligationsDuring Design and Construction

 

Eachparty shall cooperate with the other party by fully participating, at nocharge, in the design and development process relating to the Premises.

 

Section 3.5.                                                           Tenant’sPersonal Property

 

All trade fixtures, decorations, signs and apparatus (asdistinguished from leasehold improvements) owned by Tenant and installed in thePremises (“Tenant

 

15

----

 

PersonalProperty”) other than Tenant Personal Property purchased with the ConstructionAllowance shall remain the property of Tenant and shall be removable at anytime, including upon the expiration or sooner termination of this Lease;provided Tenant shall not at such time be in default of any terms or covenantsof this Lease; and provided further that Tenant shall promptly repair any damageto the Premises caused by the removal of any Tenant Personal Property.  Any Tenant Personal Property not removed fromthe Premises by Tenant upon the expiration or within fifteen (15) days afterany sooner termination of this Lease may be construed by Landlord as abandonedby Tenant. Upon the expiration or earlier termination of this Lease, Landlordand Tenant shall, in good faith, coordinate the removal of Tenant’s PersonalProperty from the Premises to avoid unreasonably interfering with the operationsof Landlord or other tenants in the Hotel/Casino and other tenants andoccupants of the Development.  Tenantshall have the right, without Landlord’s consent, to finance any TenantPersonal Property and to grant security interests therein to secure suchfinancing. Upon request, Landlord shall subordinate any Landlord’s lien on anyTenant Personal Property to any such security interest, and Landlord agrees,upon request, to confirm such subordination in writing in a commerciallyreasonable form requested by Tenant and/or Tenant’s lender, within twenty (20)days after Landlord’s receipt of such form.

 

ARTICLE IV

RENT

 

Section 4.1.                                                           Rent

 

Landlordacknowledges that there shall be no minimum base rent payable by Tenant underthis Lease.  Tenant covenants and agreesto pay to Landlord, without notice or demand, at Landlord’s address for notice(Landlord’s and Tenant’s notice addresses being the addresses specified in Section 24.7  hereof), as rent for the Premisesthe amount equal to six percent (6%) of “Gross Sales” as defined herein duringeach month of the Lease Term payable in the manner, and under the terms, setforth in Section 4.2 of this Lease (hereinafter called “Percentage Rent”).

 

Section 4.2.                                                           Paymentof Percentage Rent

 

On orbefore the fifteenth (15th) day of each calendar month during theTerm (including the calendar month next succeeding the last month of the Term),Tenant

 

16

----

 

shall deliver to Landlorda written statement signed by Tenant or an officer of Tenant as being true andcorrect, setting forth the amount of Tenant’s Gross Sales during theimmediately preceding calendar month, and on the same date Tenant shall payLandlord the Percentage Rent for the immediately preceding calendar month.  Within ninety (90) days after the end of eachcalendar year during the Term (except for the calendar year in which this Leaseterminates), Tenant shall deliver to Landlord a written statement, signed andcertified by Tenant or an officer of Tenant to be true and correct, settingforth the amount of Tenant’s Gross Sales made during the immediately precedingyear (the “Yearly Reconciliation”). Within ninety (90) days after the termination of the Lease, Tenant shalldeliver to Landlord a written statement, signed and certified by Tenant or anofficer of Tenant to be true and correct, setting forth the amount of Tenant’sGross Sales made during the final year, or part thereof, of the Lease (the “FinalReconciliation”).  The authorizedexclusions from Percentage Rent shall be reconciled and the computation ofpayment of the actual Percentage Rent due hereunder shall be made on an annualbasis for each preceding year.  If theYearly Reconciliation or Final Reconciliation shows that additional PercentageRent is due to Landlord, Tenant shall pay that amount to Landlord within thirty(30) days of the date of the Yearly Reconciliation or FinalReconciliation.  If the YearlyReconciliation or Final Reconciliation shows that a credit is due to Tenant,Tenant shall receive a credit for that amount against the next accruingpayments of rent hereunder.  If anycredit due to Tenant exists at the expiration or termination of this Lease, theamount of such credit shall be paid in cash by Landlord to Tenant within three (3) daysfollowing such expiration or termination. Landlord’s obligation to refund any such credit to Tenant shall survivethe expiration or termination of this Lease.

 

Section 4.3.                                                           MiscellaneousRent Provisions

 

Theparties acknowledge and agree that (i) the Percentage Rent payable byTenant hereunder is inclusive of all real and personal property taxes; commonarea operating and maintenance costs; common area and general insurancepremiums for the Hotel Complex, or any portion thereof; all marketing,promotional and advertising fees or charges payable by tenants or occupants ofthe Hotel Complex; all parking fees or charges for guests and employees ofTenant; and all other charges or fees typically payable by tenants or occupantsof the Hotel Complex, and (ii) except for Tenant’s obligation to pay forits utilities, maintenance and insurance as set forth in Sections 7.1,

 

17

----

 

9.2, and 11.2,respectively, Tenant shall not be obligated to pay any other fees, rents or chargesto Landlord in connection with this Lease and Tenant’s occupancy of thePremises.  Any installment of PercentageRent or rents to be paid by Tenant which is not paid by the tenth (10th) dayafter the date when due shall bear interest as of the first day of the month onwhich any sum is due and owing at the rate of twelve percent (12%) per annumuntil paid.

 

Section 4.4.                                                           GrossSales Defined

 

Asused in this Lease, “Gross Sales” shall mean all receipts or revenues of Tenantat the Premises from all sources of any kind (subject to the limitations setforth in this Agreement), including, without limitation, the sale of food,beverage, and merchandise computed on an accrual basis in accordance with GAAP(except as expressly provided herein). Notwithstanding the foregoing, Gross Sales shall not include: (i) theamount of any city, county, state or federal sales, use, gross receipts, casinoentertainment, luxury or excise tax imposed by any governmental authority uponthe sale of merchandise or services or both, collected from customers fromreceipts which are included in Gross Sales or otherwise paid by Tenant, (ii) chargesof credit card companies with respect to all receipts which are included inGross Sales, (iii) gratuities paid to the staff (or paid to the Tenant andpaid by the Tenant to the staff) by patrons with respect to functions whichgenerate Gross Sales, (iv) amounts collected by Tenant from patrons forthe account of, and for direct payment to, unrelated third parties providingservices specifically for a patron’s function which generate Gross Sales, suchas flowers, music and entertainment, (v) proceeds paid as a result of aninsurable loss (unless paid for the loss or interruption of business andrepresenting payment for damage for loss of income and profits of thoserestaurant operations which are intended to generate Gross Sales), (vi) proceedsof condemnation and eminent domain awards, (vii) the exchange ofmerchandise between stores of Tenant and its affiliates when such exchanges aremade solely for the operation of Tenant’s business and properly accounted forto Landlord, (viii) sums or credit received by Tenant in settlement of anyclaims for loss of or damage to merchandise, (ix) merchandise returned forcredit to shippers, jobbers, wholesalers or manufacturers, (x) any amountcollectible by Tenant on behalf of any charity, club or similar organizationwhich Tenant pays over to such charity, club or similar organization, providedthat it is understood that Tenant must have the approval of Landlord to hostcharity functions where food and beverage is provided on a complimentary basis,(xi) merchandise

 

18

----

 

returned in the amount ofcash refunded, credit given, or discounts and allowance granted or exchangesmade, provided that the sale price of such items was originally included inGross Sales, (xii) revenue from sale of trade fixtures after use in thePremises, (xiii) revenue from vending machines for Tenant’s employee use only,(xiv) revenue from sales to employees of Tenant at an employee discount, not toexceed three percent (3%) of Gross Sales for any calendar year, (xv)redemptions of gift certificates (provided the revenues from the sale of anysuch gift certificates at the Premises were included in Gross Sales), (xvi)intentionally omitted, (xvii) uncollected accounts and bad debts, not to exceedone percent (1%) of Gross Sales for any calendar year, (xviii) reimbursementfor expenses incurred in assisting other restaurants operated by affiliates ofTenant in providing off-property catering services where such affiliates arethe originators of such catering services and are primarily responsible for theperformance of all functions related thereto, (xix) any discounted paymentsfrom Landlord to Tenant in connection with Complimentaries, as described in Section 8.5(C) below,and (xx) any other items specifically excluded from the computation of GrossSales per the terms of this Lease.

 

Section 4.5.                                                           RealEstate Taxes

 

Landlordshall pay or cause to be paid all Real Estate Taxes (as hereinafter defined)assessed or imposed upon the Hotel Complex, or any portion thereof, in additionto all Personal Property Taxes (as hereinafter defined), that become due orpayable during the Lease Term.  As used herein,the term Real Estate Taxes shall mean and include all real estate taxes, publicand governmental charges and assessments, including all extraordinary orspecial assessments, or assessments against any of Landlord’s personal propertynow or hereafter located in the Hotel Complex, all costs, expenses and attorney’sfees incurred by Landlord in contesting or negotiating with public authorities(Landlord having the sole authority to conduct such a contest or enter intosuch negotiations) as to any of the same. As used herein, “Personal Property Taxes” shall mean and include alltaxes or assessments levied, assessed or imposed by any governmental authorityupon or against the Premises, the use or occupancy of the Premises, the rentspayable by Tenant to Landlord, or otherwise with respect to the landlord-tenantrelationship hereunder, including, without limitation, taxes and assessments onthe machinery, equipment, inventory or other personal property or assetspurchased or leased by Tenant with a portion of the Construction Allowance inconnection with the Premises; provided, however, that Personal Property Taxesshall not include

 

19

----

 

taxes and assessments onmachinery, equipment, inventory or other personal property or assets purchasedby Tenant without any contribution to the purchase price thereof from theConstruction Allowance (the “Excluded Personal Property Taxes”).  Tenant shall pay, as and when due, theExcluded Personal Property Taxes.

 

Section 4.6.                                                           AdditionalRent

 

Allamounts required or provided to be paid by Tenant to Landlord under this Leaseother than Percentage Rent shall be deemed additional rent, and Percentage Rentand additional rent shall in all events be deemed rent.

 

ARTICLE V

PARKING AND COMMON AREAS AND FACILITIES

 

Section 5.1.                                                           CommonAreas

 

Allparking areas, access roads and facilities furnished, made available ormaintained by Landlord in or near the Hotel Complex,  including employee parking areas, truck ways,driveways, loading docks and areas, delivery areas, multi-story parkingfacilities, package pickup stations, elevators, escalators, pedestriansidewalks, malls, including the enclosed mall, courts and ramps, landscapedareas, retaining walls, stairways, Monorail, first-aid and comfort stations,lighting facilities, sanitary systems, utility lines, water filtration andtreatment facilities, those areas within and adjacent to the Hotel Complex foringress and egress to and from the Hotel Complex,  which from time to time may be provided byLandlord or others for the convenience, use or benefit of the tenants of theHotel Complex, Landlord, the occupants and visitors of the Hotel Complex andtheir respective concessionaires, agents, employees, customers, invitees andlicensees, those areas, if any, upon which temporary or permanent off-siteutility systems or parking facilities serving the Hotel Complex, may from timeto time be located and other areas and improvements provided by Landlord forthe general use in common of tenants and their customers in the HotelComplex  (all herein called “Common Areas”)shall, subject to the Tenant Protections, at all times be subject to theexclusive control and management of Landlord and Landlord shall have the right,from time to time, to establish, modify and enforce reasonable rules,regulations and requirements with respect to all Common Areas.  Tenant agrees to comply with, and to causeits employees and contractors to comply with, all such rules, regulations andrequirements set forth by

 

20

----

 

Landlord, providedLandlord agrees to apply all such rules, regulations and requirements on areasonable, uniform basis and in good faith.

 

Subjectto the Tenant Protections, Landlord shall have the right from time to time to:change or modify and add to or subtract from the sizes, locations, shapes andarrangements of parking areas, entrances, exits, parking aisle alignments andother Common Areas; designate parking areas for Landlord, its employees and tenants*,* restrict parking by Tenant and Tenant’s employees todesignated areas; construct surface, sub-surface or elevated parking areas andfacilities; establish and from time to time change the level or grade ofparking surfaces; add to or subtract from the buildings in the Hotel Complex;eliminate such access as may, from time to time, be available to the HotelComplex;  and do and perform such otheracts in and to said Common Areas as Landlord in its reasonable discretion,uniformly applied, deems advisable for the use thereof by tenants and theircustomers.  Notwithstanding theforegoing, if Landlord institutes a charge or fee to users of any parking areasor facilities of the Hotel Complex, such charge or fee shall not be applicableto Tenant, its employees or agents nor, subject to appropriate validation,Tenant’s customers.

 

Section 5.2                                                              Useof Common Areas

 

Tenantand its business invitees, employees and customers shall have the nonexclusiveright, in common with Landlord, and all others to whom Landlord has granted ormay hereafter grant rights, to use the Common Areas for ingress, egress andparking subject to such reasonable regulations as Landlord or such other personmay from time to time impose and the rights of Landlord set forth above.  Tenant and Tenant’s customers shall also havea non-exclusive right to walk through the Hotel Complex in order to gainingress to and egress from the Premises. Tenant shall abide by all reasonable rules and regulationsestablished by Landlord as described above, and cause its officers, employees,and agents to abide thereby.  Landlordmay at any time close temporarily any Common Areas to make repairs or changes,prevent the acquisition of public rights therein, discourage non-customerparking, or for other reasonable purposes (provided, however, that inconnection therewith, Landlord shall use commercially reasonable efforts tominimize any interference with Tenant’s use of the Premises or with access toor visibility of the Premises from the Common Areas adjacent to the Premises).  Upon Landlord’s request, Tenant shall furnishLandlord with license numbers and

 

21

----

 

descriptions of cars usedby Tenant’s employees of the Premises. Tenant shall not unreasonably interfere with Landlord’s or otherpermitted users’ rights to use any part of the Common Areas.

 

ARTICLE VI 

COST AND MAINTENANCE OF COMMON AREAS

 

Landlordwill, at its sole cost and expense, operate, manage, maintain, replace andrepair or cause to be operated, managed, maintained, replaced or repaired, theCommon Areas of the Hotel Complex, including, but not limited to, all parkingfacilities, in first-class condition throughout the Term and any extensionsthereof.  Tenant shall have no obligationwhatsoever to pay any portion of such costs.

 

ARTICLE VII

UTILITIES AND SERVICES

 

Section 7.1.                                                           Utilities

 

Landlordshall, as part of Landlord’s Work, provide utility lines for water, gas,telephone, electricity, and sewer stubbed to the Premises in locationsdesignated by Tenant.  Landlord shall, atLandlord’s expense, provide and install separate meters or submeters for allsuch utilities (provided that if the applicable utility company does not permitthe installation of separate meters or submeters to the Premises, then (i) Landlordshall provide such utility services, and (ii) Tenant shall pay toLandlord, within thirty (30) days after written invoice therefor, Tenant’sequitable share of the cost of such services as reasonably determined byLandlord based on Tenant’s actual usage thereof, provided that Landlord shallnot charge Tenant at a rate in excess of the rate the service providers chargeLandlord).  Landlord shall, as part ofLandlord’s Work, pay for all connection fees (including user connection fees),impact fees, set up fees, and other similar fees and assessments in connectionwith the provision of all such utilities to the Premises.  Tenant shall directly contract with andpromptly pay all charges for the use by Tenant of water, gas, telephone,electricity, and sewer at the Premises. In the event (i) Tenant fails to pay when due charges for Tenant’suse of water, gas, telephone, electricity or sewer at the Premises, (ii) Landlordhas the ability to pay the same on Tenant’s behalf, and (iii) Landlordpays such charges on Tenant’s behalf, then Tenant shall, as additional rent,

 

22

----

 

reimburse Landlord forsuch charges actually paid by Landlord within thirty (30) days after invoiceand evidence of such payment is submitted to Tenant from Landlord.

 

Section 7.2.                                                           AirConditioning of Premises

 

Landlord,at Landlord’s cost, shall provide Tenant with heating and air conditioning forthe Premises during the customary periods of the year and during normalbusiness hours when, and to the same extent, as furnished to other portions ofthe Hotel Complex.

 

Section 7.3.                                                           Interruptionof Service

 

Exceptto the extent caused by Landlord’s negligence or intentional misconduct,Landlord shall not be liable to Tenant in damages or otherwise if anyutilities, whether or not furnished by Landlord hereunder, are interrupted orterminated because of repair, installation or improvements, or any cause beyondLandlord’s reasonable control, nor shall any such termination relieve Tenant ofany of its obligations under this Lease.

 

ARTICLE VIII

CONDUCT OF BUSINESS BY TENANT

 

Section 8.1.                                                           Useof Premises

 

ThePremises shall be occupied and used by Tenant solely for the purpose ofconducting thereon the operation of a fine dining restaurant, together with arelated bar and/or cocktail lounge, with standards of service and food that areconsistent with the standards currently existing at the existing Mr. Chowrestaurant in Los Angeles, subject to such variations as may be required due tomarket conditions, availability of product and desire of clientele (the “PermittedUse”).  The Permitted Use shall alsoinclude the preparation and sale of food for carry out, delivery and offsitecatering, as well as the retail sale of merchandise bearing the logo of orrelated to the business operated by Tenant in the Premises.  Tenant shall also have the right, but not theobligation, to have, from time to time, live entertainment and/or dancing atthe Premises in connection with the Permitted Use, including such entertainmentand dancing in connection with special events for customers and guests ofTenant; provided that the noise from such activities do not unreasonablydisturb other tenants and guests of the Hotel Complex outside of the Premises.  Tenant shall, at Tenant’s sole discretion,determine the food and beverage items to be offered in the Premises, whichshall not conflict with the exclusive use rights

 

23

----

 

set forth on Exhibit “D”attached hereto.  Except as set forth in Exhibit “D”,Landlord represents and warrants that as of the date of this Lease, theLandlord has not entered into any agreement with any other tenant or otheroccupant of the Hotel Complex which would in any way conflict with, ordetrimentally affect, the Tenant’s use of the Premises for the PermittedUse.  Tenant shall not conduct gamingactivities at the Premises without the prior written consent of Landlord, whichconsent may be withheld in Landlord’s sole discretion.

 

Exceptfor the Nobu restaurant existing as of the date of this Lease, Landlord agreesthat throughout the Term hereof, as such Term may be extended, Landlord willnot lease, sublease or otherwise operate or contract for, by conveyance orotherwise, any space in the Hotel Complex as and for any restaurant servingprimarily Asian cuisine.  This covenantmay not be waived without Tenant’s express written consent.  Anything in this Lease to the contrarynotwithstanding, Tenant may enforce this covenant by injunctive and/or other equitablerelief, and, in addition, may seek damages, at law or in equity, arising from aviolation thereof.

 

Section 8.2.                                                           Conductof Business

 

Tenant’sbusiness at the Premises shall be conducted under the name “Mr. Chow,” orsuch other name as may be mutually agreed to in writing by Landlord and Tenant(the “Trade Name”).  Landlordacknowledges Tenant’s proprietary rights in and to the trademarks, servicemarks, tradenames and other intellectual property rights of Tenant’s Trade Nameand logo.  In that regard, Tenant shallhave the right to prohibit any advertising, promotion or display by Landlordutilizing Tenant’s Trade Name or logo which, in Tenant’s sole opinion, impairsor would tend to impair the reputation of Tenant or its affiliates.  Prior to utilizing Tenant’s Trade Name orlogo on any advertising by Landlord, Landlord shall submit to Tenant forwritten approval a tangible specimen of advertising material proposed to beutilized by Landlord.  Tenant shalleither approve or disapprove such usage within twenty (20) days of suchsubmission.  Tenant’s failure todisapprove within such twenty (20) day period shall be deemed approval.  The rights granted to Landlord pursuant tothis Section 8.2 shall terminate upon the expiration of the Lease Term orthe earlier termination for breach of this Lease or Tenant’s cessation of theuse of the Trade Name or termination of Tenant’s right to use the TradeName.  Tenant represents and warrants toLandlord that Tenant has the legal right to use the 

 

24

----

 

Trade Name, and Tenantshall indemnify and hold Landlord harmless from and against any claims, lossesor damages incurred by Landlord to the extent arising from a breach of suchrepresentation and warranty.

 

Subjectto the provisions of this Section 8.2, Tenant’s restaurant at the Premisesshall be and remain open for dinner nightly from 6:00 p.m. through 11:00 p.m.(Tenant hereby agreeing to accept last orders up to 11:00 p.m.).  The parties acknowledge and agree that theforegoing hours of operation are minimum hours, and Tenant shall have theright, but not the obligation, to open for longer hours on any day or days asdetermined in Tenant’s sole discretion, including opening for breakfast and/orlunch.  Tenant shall further have theright to close on not more than two (2) days per calendar year for anyreason, or no reason, as Tenant may elect in its sole discretion; provided,however, that (i) such two (2) day limitation shall not apply to anyperiod of closure resulting from casualty, eminent domain, temporary closuresfor repairs or alterations, and such other reasons beyond the reasonablecontrol of Tenant, (ii) Tenant shall provide Landlord with no less thansixty (60) days’ prior notice of any such closure, and (iii) Tenant shallnot close on the following days: New Year’s Eve, Super Bowl weekend, the NCAAFinal Four weekend, or any national or state three-day weekend (i.e. Labor Day,Memorial Day, etc.).

 

Section 8.3.                                                           Operationby Tenant

 

A.                                   Subjectto Section 8.4 below, Tenant covenants and agrees that it will: not placeor maintain any vending machines in any vestibule or entry of the Premises oroutside the Premises, not permit any gaming or gaming devices in the Premiseswithout the prior written consent of Landlord (which consent may be withheld inLandlord’s sole discretion); dispose of garbage, trash, rubbish and otherrefuse in containers provided outside the Premises by Landlord and remove thesame regularly, as needed; keep all mechanical equipment within the Premisesfree of unreasonable vibration and noise and in good working order andcondition; not commit or permit waste or a nuisance upon the Premises; notpermit or cause objectionable odors to emanate or be dispelled from thePremises (provided that normal restaurant odors shall not be deemed a violationof the foregoing); not distribute advertising matter in or upon any CommonAreas; not permit the loading or unloading or the parking or standing ofdelivery vehicles outside any area designated therefor; comply with all laws,recommendations, ordinances, rules and

 

25

----

 

regulations ofgovernmental authorities and agencies with respect to the specific use oroccupancy of the Premises by Tenant, including but not limited to theOccupational Safety and Health Act and the Americans with Disabilities Act of1990 (provided that Landlord shall, at Landlord’s expense, be responsible forcomplying with all laws of general applicability, without regard to Tenant’sspecific use); and not permit any noxious, toxic or corrosive fuel or gas onthe Premises.

 

B.                                     Tenantacknowledges that Landlord’s security department and security officers are notresponsible for providing security services in the Premises and that all such responsibilityis the obligation of Tenant.  Tenantshall exercise its reasonable business judgment as to whether it shall employits own security personnel.  In no eventshall Landlord be liable to Tenant or any third-party for the securitydepartment’s failure to respond to a request for aid or assistance by Tenant.

 

Section 8.4.                                                           VendingMachines

 

Tenantshall not, without Landlord’s prior written approval, operate or permit to beoperated on the Premises any coin or token operated vending machines or similardevice for the sale or leasing to the public of any goods, wares, merchandise,food, beverages, and/or service including, without limitation, pay lockers, paytoilets, scales and amusement devices; provided, that Tenant shall have theright (i) to operate not more than two (2) public pay phones on thePremises, and (ii) to operate such vending machines in the employee-onlyareas of the Premises.

 

Section 8.5.                                                           GuestRelations

 

A.                                   Tenantacknowledges that the Hotel Complex is a first class hotel and that themaintenance of Landlord’s and the Hotel Complex’s reputation and the goodwillof all of Landlord’s guests and invitees is absolutely essential to Landlordand that any impairment thereof whatsoever will cause great damage toLandlord.  Tenant therefore shall operatethe Premises in accordance with the standards of honesty, integrity, qualityand courtesy so as to maintain the reputation and goodwill of Landlord and theHotel Complex.

 

B.                                     Tenantshall permit guests of the Hotel/Casino and the Hotel/Condominium to chargepurchases from Tenant to their room account. Tenant shall be solely

 

26

----

 

responsible forascertaining that any persons purporting to be guests of the Hotel/Casino orthe Hotel/Condominium are in fact guests. Tenant shall adhere to any and all procedures established by Landlordfor authorizing guest room charges. Landlord shall collect any charges by Tenant’s customers to their hotelrooms. Tenant agrees to comply with all rules and regulations thatLandlord may, in its reasonable discretion, adopt from time to time tofacilitate charges to rooms and/or to minimize uncollected charges.  Tenant shall use Landlord’s point of salecash register or another compatible register, as the parties may mutuallyagree, to record all guest charges.  IfTenant follows all procedures established by Landlord for processing roomcharges (to the extent such procedures, and all changes thereto, have beenprovided to Tenant in writing) then Landlord shall assume the risk ofnon-payment by hotel guests.  If Tenantfails to follow Landlord’s procedures, then Tenant shall assume the risk ofnonpayment with regard to the charges by the hotel guests for whom suchprocedures were not followed.

 

(i)                                     Landlordshall cause to be prepared and delivered to Tenant a weekly accounting of allcharges to Hotel/Casino and the Hotel/Condominium guest accounts by Tenant’scustomers. Landlord shall pay to Tenant all charges to such guest accounts onthe second (2nd) business day after each such weekly accounting (except forsuch charges that cannot be reconciled until such date that the guest checksout, in which case Landlord shall include such charges in the weekly accountingimmediately following the date on which such guest checks out).  Landlord shall provide a weeklyreconciliation of payments made under this paragraph, and Landlord and Tenantshall make any necessary adjustment payments due in connection with suchreconciliation.  If any customer accountwas paid to Landlord by credit card, Landlord shall deduct from the amounts dueto Tenant such charges as the credit card company may assess against, or withrespect to, the account.

 

(ii)                                  Subjectto the provisions of this Section 8.5(B), Landlord agrees to assume therisk of non-payment by Hotel/Casino and the Hotel/Condominium guests and to payTenant the full amount charged by such guests to their room accounts (less anydeductions credit card companies assess against or with respect to theaccounts).  If a Hotel/Casino or Hotel/Condominiumguest charges purchases from Tenant to its room account and thereafter pays anyportion of its

 

27

----

 

billbut refuses to pay all or any portion of the charges of Tenant, then Landlordshall assume the risk of non-payment and pay Tenant the full amount charged bysuch guest to the room account.  Tenantagrees to use its reasonable efforts to address any concerns or complaintsraised by Hotel/Casino and the Hotel/Condominium guests which such guests mayuse as justification of a proposed non-payment of a charge by such guest at thePremises.  If Landlord, in its reasonablediscretion, determines an excessive number of Hotel/Casino and theHotel/Condominium guests are refusing to pay the portion of the billattributable to charges of Tenant, then Landlord may, upon ten (10) days’prior written notice, advise Tenant that Tenant shall no longer permit Hotel/Casinoand the Hotel/Condominium guests to charge purchases from Tenant to their roomaccounts unless Landlord and Tenant thereafter establish additional proceduresand restrictions concerning processing and accepting room charges.

 

(iii)                               In the event Landlordwrongfully fails to remit any funds due to Tenant pursuant to this section 8.5,then Tenant shall have the right to offset any amount owed to Tenant againstthe next rent(s) becoming due to Landlord, provided that Tenant shall firsthave provided Landlord with ten (10) days’ prior written demand in whichto cure the delinquency.  Landlordacknowledges that the amount of Hotel/Casino and the Hotel/Condominium guestcharges may be significant and the failure to remit the same to Tenant maycause significant damages to Tenant.  Inlight of the significant amounts which may be due to Tenant pursuant to theprovisions of this Section 8.5, Tenant shall have the right to bring legalaction against Landlord if Landlord fails to remit any funds duehereunder.  In such action, Tenant shallhave the right to seek recovery of all amounts due, including reasonableattorneys’ fees, together with interest thereon at the rate that would havebeen charged to Tenant if Tenant were delinquent in paying amounts due underthis Lease, and Tenant shall further have the right to seek recovery of alldamages arising from Landlord’s failure to timely remit such funds to Tenant,including all consequential and additional damages.  In the event Tenant, in its reasonablediscretion, determines that Landlord is refusing to pay charges payable to Tenantpursuant to the provisions hereof, then Tenant may, upon ten (10) days’prior written notice to Landlord, advise Landlord that Tenant

 

28

----

 

shallno longer permit Hotel/Casino and the Hotel/Condominium guests to chargepurchases from Tenant to their accounts.

 

C.                                     Landlordmay desire to provide designated persons with complimentary food and beverages(“Complimentaries”) at the Premises. From time to time Landlord and Tenant shall develop procedures forauthorization of Complimentaries and for reimbursement by Landlord of ninetypercent (90%) of the full retail cost thereof. Any discounted payments to Tenant pursuant to the foregoing sentenceshall not be included in the computation of Gross Sales.  Landlord may, in its sole discretion, provideComplimentaries to a guest of the Hotel/Casino or the Hotel/Condominium uponsuch guest’s checking out of the Hotel/Casino or the Hotel/Condominium, asapplicable, for meals already charged to such guest’s room account.  Landlord shall pay one hundred percent (100%)of all taxes applicable to such Complimentaries. The initial procedures forauthorization of Complimentaries and for reimbursement by Landlord shall be asfollows:  Landlord shall designatepersons who are entitled to receive Complimentaries either by (a) givingTenant reasonable advance notice of the person’s visit to the Premises (whichnotice shall be given by employees authorized to do so in writing by Landlordand shall set forth any limitations on Complimentaries to such person), or (b) withregard to room charges, by giving Tenant written notice after the guest’svisit, in which event Landlord and Tenant shall make the appropriate adjustmentto any room charge made by such person. Tenant shall cause to be prepared and delivered to Landlord a weeklyaccounting of Complimentaries.  Uponrequest, Tenant shall supply Landlord with such information as may be necessaryto calculate these amounts.  Landlordshall pay to Tenant any amount required under this Section on or beforethe fifth (5th) business day after Landlord’s receipt of weekly accountingrecords.

 

D.                                    Landlordacknowledges Tenant may desire to provide complimentary food or beverages orboth to selected patrons.  Tenant mayprovide such complimentary food or beverages provided Tenant shall provide asales receipt or sales record in the same manner as any other charges at thePremises in order to keep a record of the complimentary services provided byTenant.  In no event may suchcomplimentary services exceed two percent (2%) of Gross Sales per year.  Such complimentary services, as limitedherein, shall not be included in computation of Gross Sales.  Tenant shall keep sales records of such mealsand beverage service in the same manner as

 

29

----

 

other sales and shall, ona monthly basis, provide records of such complimentary services toLandlord.  Such sales of food andbeverages shall not be included in the computation of Gross Sales.

 

Section 8.6.                                                           Storage

 

Tenantshall store in the Premises only merchandise which Tenant intends to sell at,in or from the Premises, within a reasonable time after receipt thereof.

 

Section 8.7.                                                           Painting,Decorating, Displays, Alterations

 

Tenantwill not paint, decorate or change the architectural treatment of any part ofthe exterior of the Premises nor make any structural alterations, additions orchanges in the Premises without Landlord’s written approval thereto, whichapproval shall not be unreasonably withheld, conditioned or delayed.

 

Tenantwill install and maintain at all times the general appearance of displays inthe interior of the Premises which are visible from the exterior, including,but not limited to, advertising matter, signs, merchandise and store fixtures,which shall be maintained in keeping with the character and standards of the Mr. Chowrestaurant located in Los Angeles, California.

 

Section 8.8.                                                           OtherOperations

 

Fromthe full execution date of this Lease and continuing through the Lease Term andRenewal Term, if any, Tenant shall be prohibited from operating anotherrestaurant under the Trade Name of “Mr. Chow” in the Clark County, Nevada(the “Non-Compete Territory”).  After thethird (3rd) anniversary of the Rent Commencement Date, Tenant shall have theright to open or operate other retail operations in the Non-Compete Territory,including, without limitation, other restaurant operations under names otherthan the Trade Name of “Mr. Chow” (for example, Tenant will have the rightafter the third (3rd) anniversary of the Rent Commencement Date to operateanother restaurant under the name “Eurochow” within the Non-Compete Territory).  The provisions of the Section 8.8 shallbecome null and void and shall be of no further force and effect on theexpiration or earlier termination of this Lease for any reason whatsoever.

 

30

----

 

Section 8.9.                                                           Emissionsand Hazardous Materials

 

Tenantshall not, without the prior written consent of Landlord, knowingly cause orpermit any Hazardous Material (hereinafter defined) to be brought or remainupon, kept, used, discharged, leaked, or emitted in or about, or treated at thePremises or the Hotel Complex, except for ordinary and customary types ofoffice and restaurant supplies and cleaning solutions in nominal quantitiestypically used in the ordinary course of Tenant’s business and customarily usedin similar businesses or activities expressly permitted to be undertaken in theHotel Complex by Landlord provided that Tenant’s use and storage of suchproducts complies with all applicable laws and regulations.  As used in this Lease, “Hazardous Material(s)”shall mean any hazardous, toxic or radioactive substance, material, matter orwaste which is or becomes regulated by any federal, state or local law,ordinance, order, rule, regulation, code or any other governmental restrictionor requirement, and shall include asbestos, petroleum products and the terms “HazardousSubstance” and “Hazardous Waste” as defined in the Comprehensive EnvironmentalResponse, Compensation and Liability Act, as amended 42 U.S.C. § 9601 etseq. (“CERCLA”), and the Resource Conservation and Liability Act, asamended 42 U.S.C. § 9601 etseq. (“RCRA”).  Tenant shall (i) report to any and allapplicable governmental authorities any release of reportable quantities of anyHazardous Material(s) as required by any and all federal, state or local laws,ordinances, orders, rules, regulations, codes or any other governmentalrestrictions or requirements; (ii) within ten (10) days of receipt,send to Landlord a copy of any notice, order, inspection report, or otherdocument issued by any governmental authority relevant to Tenant’s compliancestatus with environmental or health and safety laws; and (iii) at thetermination of this Lease, remediate all Hazardous Materials introduced ontothe Premises by Tenant in accordance with applicable law.

 

Inaddition to, and in no way limiting Tenant’s obligations as set forth in Section 11.6of this Lease, should Tenant breach any of its duties and obligations as setforth in this Section 8.9 of this Lease, or if any Hazardous Material(s)introduced on the Premises by Tenant results in contamination of the Premisesor the Hotel Complex, Tenant shall indemnify, save harmless and defendLandlord, and its 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 ofaction, and losses caused by or arising directly out of Tenant’s breach of itsobligations

 

31

----

 

under this Section 8.9or the presence of such Hazardous Materials introduced on the Premises byTenant.  Without limiting the foregoing,if the presence of any Hazardous Material(s) on or about the Premises or theHotel Complex caused by Tenant results in any contamination of the Premises orthe Hotel Complex, Tenant shall, at its sole expense, promptly take all actionsto remediate such contamination as required by applicable law.

 

Landlordrepresents and warrants to Tenant that as of the Delivery Date, the Premisesare free of any Hazardous Materials.  Inaddition to, and in no way limiting Landlord’s obligations as set forth in Section 11.6of this Lease, Landlord shall indemnify, save harmless and defend Tenant, andits contractors, agents, employees, partners, officers, directors, andmortgagees, if any, from any and all claims, demands, damages, expenses, fees,costs, fines, penalties, suits, proceedings, actions, causes of action, andlosses caused by or arising directly out of the presence of any HazardousMaterials at or emanating from the Premises and/or the Hotel Complex, whichHazardous Materials were in existence prior to the Delivery Date.  Without limiting the foregoing, if anyHazardous Material(s) exist on or about the Premises or the Hotel Complex as ofthe Delivery Date, Landlord shall, at its sole expense, promptly take allactions to remediate such contamination as required by applicable law.

 

Section 8.10.                                                     Salesand Dignified Use

 

Nopublic or private auction or any fire, “going out of business,” bankruptcy orsimilar sales or auctions shall be conducted in or from the Premises and thePremises shall not be used in violation of national, state or local laws.

 

Section 8.11                                                        GamingAuthorities

 

Tenantacknowledges that Landlord and affiliates of Landlord are businesses that areor may be subject to and exist because of privileged licenses issued bygovernmental authorities relating to casino gaming (“Gaming Authorities”).  Tenant shall provide information reasonablyrequested by Landlord’s compliance committee within five (5) business daysof Landlord’s written request.  If acorporation, Tenant shall disclose the names of all officers and directors ofTenant, and unless a publicly traded corporation on a national stock exchange,Tenant shall disclose to Landlord all ownership interests in Tenant and alllenders or sources of financing.  Ifrequested to do so by Landlord, Tenant

 

32

----

 

shall obtain any license,qualification, clearance or the like which shall be requested or required ofTenant by any Gaming Authority or any regulatory authority having jurisdictionover Landlord or any affiliate of Landlord. If Tenant fails to satisfy such requirement or if Landlord or anyaffiliate of Landlord is directed to cease business with Tenant by any suchauthority, or Tenant, or any of its officers, directors, employees, agents,designees or representatives, or partner, owner, member, or shareholder, or anylender or financial participant (a) is or might be engaged in, or is aboutto be engaged in, any activity or activities, or (b) was or is involved inany relationship, either of which could or does jeopardize Landlord’s business,reputation or such licenses, or those of its affiliates, or if any such licenseis threatened to be, or is, denied, curtailed, suspended or revoked, thenTenant shall immediately (i) terminate any relationship with theindividual or entity which is the source of the problem, or (ii) cease theactivity creating the problem. If Tenant does not comply with item (i) or (ii) above,then Landlord (x) may require Tenant to specifically perform such obligation(the parties recognizing that damages or other remedies would be inadequateunder the circumstances) or (y) may terminate this Lease without liability toeither party; provided, however, if any matter described herein can be appealedor is reasonably susceptible to cure, Tenant shall have a reasonable timewithin which to make such appeal or effect such cure (but in no event longerthan the time available to fully comply with any requirement imposed by anyGaming Authority or any other law) and Landlord shall not have the right toterminate this Lease during such appeal or cure period unless required by theGaming Authorities.

 

Section 8.12.                                                     Tenant’sEmployees

 

A.                                   Tenantshall staff the Premises with such number of Tenant’s employees as arereasonably required for the proper and efficient operation thereof.

 

B.                                     Tenantshall not cause or permit its employees to enter upon those areas of the Hotel Complexwhich are designated “Employees Only” as the parties acknowledge that for thepurpose of this Section 8.12, “Employees” refers to the employees ofLandlord and not to the employees of Tenant. At Landlord’s request, Tenant’s employees shall obtain, at no cost toTenant, a name badge (“Badge”) from Landlord’s Human Resources Department priorto working at the Premises.  If requestedby Landlord in writing, Tenant’s employees shall wear their Badge at all timeswhile in the Hotel

 

33

----

 

Complex, excluding thePremises unless employees of all other fine dining restaurants in the HotelComplex are also required to wear their Badge within such fine dining premises.

 

C.                                     Tenantshall, in its sole discretion, fix the salary rate and provisions of employeebenefits of its employees and shall be responsible for all such salaries,employee benefits, social security taxes, federal and state unemploymentinsurance and any and all similar taxes relating to its employees and forworkers’ compensation coverage with respect thereto pursuant to applicablelaw.  Tenant’s employees shall not beentitled to participate in, or to receive, any of Landlord’s employee benefitor welfare plans, and they shall not be deemed agents of Landlord for purposesof this Lease.

 

D.                                    Landlordrepresents and warrants to Tenant that as of the date hereof, the Hotel Complexis not subject to any recognized labor union and that Landlord shall notrequire Tenant to use any union labor in connection with the operations ofTenant in the Premises.

 

Section 8.13.                                                     EntertainmentZone

 

Tenantacknowledges that the Premises is located in an entertainment zone within acasino and that Landlord may, in its discretion, offer or provide, or allowother persons to offer or provide, entertainment in the Hotel Complex outsidethe Premises, but Landlord agrees to use reasonable efforts to prevent any suchentertainment being conducted near the Premises from materially and adverselyaffecting Tenant’s use of the Premises as allowed herein.

 

Section 8.14.                                                     Landlord’sStandard of Operations

 

Landlordshall operate the Hotel Complex under the name “Hard Rock” and in a first-classmanner consistent with the operation of the existing Hotel/Casino.  Landlord acknowledges that the continuousoperation by Landlord of the Hotel Complex under the “Hard Rock” name and insuch first-class manner are material terms to this Lease for Tenant, and thatbut for such agreement, Tenant would not have entered into this Lease.  As such, Tenant shall have the right toterminate this Lease if the Hotel Complex is no longer operated under the name “HardRock” or its operating standard falls below the standard referenced above.  Landlord shall provide Tenant with notice ofan anticipated change in the name of the Hotel Complex from “Hard Rock” toanother name not later

 

34

----

 

than ninety (90) days ofthe date on which such change actually occurs. Tenant shall give Landlord written notice of its election, if any, toterminate this Lease within nine (9) months after Tenant’s receipt of suchwritten notice from Landlord.  In theevent the operating standard for the Hotel Complex falls below the standardreferenced above, Tenant may deliver a written notice to Landlord of Tenant’sintent to terminate this Lease based upon such failure, and if Landlord failsto raise the Hotel Complex standard to at least the standard referenced abovewithin thirty (30) days following the date of such notice from Tenant, Tenantshall have the right to terminate this Lease upon delivering a terminationnotice to Landlord at any time after the expiration of such 30-day period.  Landlord represents and warrants to Tenantthat Landlord has the legal right to operate the Hotel Complex under the “HardRock” name, and Landlord shall indemnify and hold Tenant harmless from andagainst any claims, losses or damages incurred by Tenant to the extent arisingfrom a breach of such representation and warranty.  All representations and warranties containedherein regarding the use of the “Hard Rock” name or the operation of theHotel/Casino shall be deemed to be made only by HRH.

 

ARTICLE IX

MAINTENANCE OF PREMISES

 

Section 9.1.                                                           Maintenanceby Landlord

 

Landlordshall, at no cost to Tenant, keep or cause to be kept the foundations, roof andstructural portions of the Premises, the exterior portions of the Premiseswithin the Common Area of the Hotel Complex, all grease traps and relatedfacilities serving the Premises, all exhaust ducts and make up air fans to theextent located outside of the Premises, all utility systems to the extentlocated outside of the Premises (regardless of whether such systems exclusivelyserve the Premises), including, without limitation, the plumbing, electrical,sewer, HVAC and water systems, and all Common Areas of the Hotel Complex ingood order, repair and condition; provided that to the extent the need for suchrepair is attributable to the negligence or misconduct of Tenant, its agents oremployees, then subject to the waiver of subrogation provision set forth in Section 11.3below, Tenant shall reimburse Landlord for the reasonable and actual costincurred by Landlord with respect to such repairs.  Landlord shall commence required repairs assoon as reasonably practicable after receiving written notice from Tenantthereof (but no later than five (5) days after such notice, or in theevent of an emergency, no later than twenty-

 

35

----

 

four (24) hours aftersuch notice), and diligently pursue such repairs to completion.  Upon Landlord’s failure to make such repairsfollowing such notice and the expiration of such period, Tenant may (if suchfailure has a material adverse effect on Tenant’s use of the Premises ascontemplated herein) upon five (5) days additional notice to Landlord makesuch repairs on Landlord’s behalf and at Landlord’s expense, and Tenant maydeduct the cost of such repairs from its next installments of Percentage Rentuntil reimbursed in full if Landlord shall fail to reimburse Tenant for suchcosts within thirty (30) days following Tenant’s written demand therefor. Asused herein, “emergency” shall mean any event or condition causing or likely tocause imminent (i) injury or damage to person or property, or (ii) interruptionof Tenant’s operations in the Premises. This Section 9.1 shall not apply in case of damage or destructionby fire or other casualty or condemnation or eminent domain, in which eventsthe obligations of the parties shall be controlled by Article XVI andXVII.

 

Section 9.2.                                                           Maintenanceby Tenant

 

Tenantshall, at its expense, keep the interior, non-structural portions of thePremises (including all entrances and vestibules), including all partitions,window and window frames and moldings, glass, store fronts, doors, dooropeners, fixtures, equipment, the exhaust ducts and make up air fans but onlyto the extent located within the Premises, and the utility systems but only tothe extent located within the Premises (including plumbing, electrical, sewer,HVAC and water systems), in good order, condition and repair; provided,however, that to the extent the need for such repair is attributable to thenegligence or misconduct of Landlord, its agents or employees, then subject tothe waiver of subrogation provision set forth in Section 11.3 below,Landlord shall, at its expense, perform such repairs.  This Section shall not apply in case ofdamage or destruction by fire or other casualty or condemnation or eminentdomain, in which events the obligations of the parties shall be controlled by Article XVIand XVII.

 

Section 9.3.                                                           Surrenderof Premises

 

At theexpiration or earlier termination of the Lease Term, Tenant shall surrender thePremises in good and clean condition, reasonable wear and tear and damage byunavoidable casualty excepted, and deliver all keys for, and all combinationson locks, safes and vaults in, the Premises to Landlord at Landlord’s noticeaddress as specified in Section 24.

 

36

----

 

# ARTICLE X

SIGNS, AWNINGS, CANOPIES, FIXTURES, ALTERATIONS

 

Section 10.1.                                                     TenantDirectories; Advertising

 

Landlordshall include Tenant on any signs Landlord elects to erect in the Hotel Complexshowing the location of all restaurants within the Hotel Complex.  Landlord shall also include promotionalmaterials, including a representative menu, for Tenant’s restaurant in thein-room directories and service guides in the hotel rooms.  Landlord agrees that it will provide, at aminimum, levels and types of exposure for the Premises to its guests as it doesfor other fine dining restaurants in the Hotel Complex and the Hotel Complex’spromotional and check–in materials, room books, internal signage and otherinternal marketing materials, web sites, directional signage, dining guides,dining advertisements, Hotel Complex pamphlets, maps, concierge materials,phone “on hold” messaging and Hotel Complex intercom messaging (parking garage,walkways, etc.).  Tenant’s name on allsuch signs and in such directories shall be no less prominent than that of anyother restaurant operator thereon or therein. Landlord shall also, at no cost to Tenant, prepare promotional videosfor the Hotel Complex’s in-room television system, and shall permit Tenant tohave a promotional spot on the in–room television systems in the Hotel Complex.Tenant shall not be charged for running such promotional spot.  All promotional materials described hereinshall be approved in advance by Tenant, and to the extent Tenant approves anysuch promotional material, Tenant shall be deemed to have granted Landlord arevocable license to utilize Tenant’s trademarks and service marks inconnection with such approved promotional material.  Landlord and Tenant shall cooperate in goodfaith in preparing the design and content for all such advertising andpromotional materials, and Tenant shall, upon Landlord’s request, provideLandlord with information and logos, in a form appropriate for the intendedadvertising medium (i.e. in-room directories, phone “on hold” messaging, etc.)for Landlord’s use in developing and preparing such advertising and promotionalmaterials.

 

Section 10.2.                                                     Removaland Restoration by Tenant

 

Tenantshall make no exterior or structural alterations, changes, additions orimprovements without obtaining Landlord’s prior written consent, which consentshall not be unreasonably withheld, conditioned or delayed.  All alterations, changes and additions

 

37

----

 

and all improvements,including leasehold improvements, made by Tenant, or made by Landlord on Tenant’sbehalf, whether or not paid for wholly or in part by Landlord, shall be leasedto Tenant for the Lease Term.  Anyalterations, changes, additions and improvements shall immediately, upon thetermination of this Lease, no longer be leased to Tenant, be considered part ofthe Premises, and not be removed at or prior to the end of the Lease Term withoutLandlord’s written consent.  Tenant shallhave the right, without the prior consent of Landlord, to make interior,non-structural alterations, changes, additions and improvements to thePremises.

 

Section 10.3.                                                     Tenant’sLiens

 

A.  Tenant acknowledges that Landlord is theOwner of the Hotel Complex and the Premises and that Tenant neither has, nor atanytime hereunder will have, any fee ownership interest in the Hotel Complex orthe Premises.  Tenant shall not sufferany mechanics’ or materialmen’s lien to be filed against the Premises or theHotel Complex by reason of work, labor, services or materials performed orfurnished to Tenant or anyone holding any part of the Premises underTenant.  If any such lien shall at anytime be filed as aforesaid, Tenant may contest the same in good faith, but,notwithstanding such contest, Tenant shall, within thirty (30) days after thefiling thereof, cause such lien to be released of record by payment, bond,order of a court of competent jurisdiction, or otherwise in a mannersatisfactory to Landlord and its mortgagee. In the event of Tenant’s failure to release of record any such lienwithin the aforesaid period, Landlord may remove said lien by paying the fullamount thereof or by bonding, and Tenant, upon demand, shall pay Landlord theamount so paid out by Landlord in connection with the discharge of said lien,which amount shall be due and payable in full to Landlord as additional rent onthe first day of the next following month. Nothing contained in this Lease shall be construed as a consent on thepart of Landlord to subject Landlord’s estate in the Premises to any lien orliability under the lien laws of the State of Nevada.  Tenant’s obligation to observe and performany of the provisions of this Section 10.3 shall survive the expiration ofthe Lease Term or the earlier termination of this Lease. Landlord shall havethe right to record, post and maintain on the Premises any notices ofnon-responsibility provided for under applicable law.

 

B.                                     Tenantshall not create or suffer to be created a security interest or other lienagainst any improvements, additions or other construction made by Tenant in orto

 

38

----

 

the Premises (other thana purchase money security interest in favor of a lender and relative to Tenant’strade fixtures, equipment or furniture), and should any security interest becreated in breach of the foregoing, Landlord shall be entitled to discharge thesame by exercising the rights and remedies afforded it under paragraph A ofthis section.

 

Section 10.4.                                                     Signs,Awnings and Canopies

 

Tenantshall have the right to install signage on the exterior of the Premises,including the right to install its name sign on the exterior façade and allentrances to the Premises, in such locations and of such size and design asshall be permitted by law and as approved by Landlord, which approval shall notbe unreasonably withheld, conditioned or delayed.  Landlord shall not have the right todisapprove the design of any signage which consists of the prototypical orclassic “Mr. Chow” signage.  Landlordshall respond to any such signage submittal by Tenant within twenty (20) daysafter submittal thereof, and Landlord’s failure to respond within such twenty(20) day period shall be deemed Landlord’s consent thereto.  Notwithstanding the foregoing, Landlordacknowledges and agrees that Tenant shall, at a minimum, be entitled to installsuch exterior signage at levels, sizes and types not less prominent than theexterior signs for other fine dining restaurants in the Hotel Complex.  Tenant shall be entitled to place signs orother advertising material in the interior of the Premises without Landlord’sconsent.

 

ARTICLE XI

INSURANCE

 

Section 11.1.                                                     ByLandlord

 

Landlordcovenants and agrees that from and after the Delivery Date, and during the Termof this Lease, Landlord will carry and maintain, with regard to the HotelComplex, the following types of insurance, in the amounts specified and in theform hereinafter provided, with insurance companies authorized to do businessin the state in which the Premises is located and rated A-/VIII or better inthe most current edition of Best’s Insurance Report:

 

A.                                   Landlordshall keep and maintain in full force and effect commercial general liabilityinsurance in an amount not less than $2,000,000, adjusted annually forinflation,

 

39

----

 

written on a combinedsingle limit per occurrence basis for property damage and personal and bodilyinjury or death of one or more persons.

 

B.                                     Landlordshall, at all times, keep and maintain in full force and effect all riskpolicy(s) of insurance, including coverage for sprinkler damage, vandalism andmalicious mischief, covering the roof, demising walls, structural portions andperimeter walls of the Hotel Complex and equipment (excluding Tenant’s personalproperty, furniture, fixtures, and equipment) in an amount not less than fullreplacement cost (exclusive of the cost of excavations, foundations and footings)updated from time to time during the Term of this Lease or the amount of suchinsurance which Landlord’s mortgage lender may require Landlord to maintain,whichever is the greater.

 

C.                                     Landlordmay maintain any of its required insurance under blanket policies of insurancecovering the Premises and any other premises of Landlord or companiesaffiliated with Landlord, provided that the coverage afforded will not bereduced or diminished by reason of the use of such blanket policy of insurance.

 

Section 11.2.                                                     ByTenant

 

Tenantcovenants and agrees that from and after the Delivery Date, and during the Termof this Lease, Tenant will carry and maintain, at its sole cost and expense,the following types of insurance, naming as insureds Tenant, Landlord, Landlord’slenders (to the extent Landlord notifies Tenant of the identities of suchlenders in writing) and other parties with an insurable interest as designatedby Landlord, in the amount specified and in the form hereinafter provided forwith insurance companies authorized to do business in the state in which thePremises is located and rated A-/VIII or better in the most current edition ofBest’s Insurance Report.

 

A.                                   Tenantshall keep in full force and effect commercial general liability insurance,which shall include broad form property damage liability coverage, extendedbodily injury coverage, advertising injury liability coverage, contractualliability coverage and independent contractors coverage, in the amount not lessthan two million dollars ($2,000,000.00), adjusted annually for inflation,written on a combined single limit per occurrence basis for property damage,personal injury and bodily injury or death of one or more persons.

 

40

----

 

B.                                     IfTenant sells, serves or furnishes alcoholic beverages in the ordinary course ofits business at the Premises, then Tenant shall maintain and keep in full forceand effect throughout the Term of this Lease, Liquor Liability Insurance in anamount not less than $1,000,000 written on a combined single limit peroccurrence basis.

 

C.                                     Tenantshall at all times during the Term hereof maintain in full force and effect apolicy(s) of all risk insurance including coverage for sprinkler damage,vandalism and malicious mischief, covering all Tenant personal property,including alterations, improvements and betterments to the Premises nowexisting or to be added, to the extent of their full replacement costs asupdated from time to time during the Term of this Lease.  Tenant shall maintain a policy covering suchitems of personal property that were purchased by Tenant with funds from theConstruction Allowance (the “Allowance Policy”), and a separate policy coveringall such other items of personal property (the “Non-Allowance Policy”).  Landlord shall be the named loss payee underthe Allowance Policy, and Tenant shall be the named loss payee under theNon-Allowance Policy.

 

D.                                    Tenantmay maintain any of its required insurance coverages under blanket policies ofinsurance covering said Premises and any other premises of Tenant, or companiesaffiliated with Tenant, provided that the coverage afforded will not be reducedor diminished by reason of the use of such blanket policy.

 

Section 11.3.                                                     MutualWaiver of Subrogation Rights

 

Landlordand Tenant and all parties claiming under them mutually release and dischargeeach other from all claims and liabilities arising from or caused by anycasualty or hazard covered or required hereunder to be covered in whole or inpart by insurance on the Premises or in connection with property on oractivities conducted on the Premises to the extent of such insurance coverageor required coverage, and waive any right of subrogation which might otherwiseexist in or accrue to any person on account thereof to the extent of suchinsurance coverage or required coverage and evidence such waiver by endorsementto the required insurance policies, provided that such release shall notoperate in any case where the effect is to invalidate or increase the cost of suchinsurance coverage (provided, that in the case of increased cost, the otherparty shall

 

41

----

have the right, withinthirty (30) days following written notice, to pay such increased cost, therebykeeping such release and waiver in full force and effect).

 

Section 11.4.                                                     Indemnification.

 

A.                                   Subjectto Section 11.3 above, and except for Landlord’s negligence andintentional acts and omissions, Tenant covenants and agrees to indemnify andsave and hold harmless Landlord, its parent, subsidiaries and affiliates, andtheir officers, directors, shareholders and employees, from and against any andall claims and demands for damages to persons or property or for loss of life,including but not limited to any and all claims or demands against Tenant andall loss, cost, damages, charges, fines, penalties, causes of action, suits andjudgments, including reasonable legal expenses in connection with defending anysuch action arising from any matter or thing growing out of Tenant’s occupationor use of the Premises and/or in connection with Tenant’s obligations hereunderincluding, but not limited to, the sale of alcoholic beverages from thePremises.

 

B.                                     Subjectto Section 11.3 above, and except for Tenant’s negligence and intentionalacts and omissions, Landlord covenants and agrees to indemnify and save andhold harmless Tenant, its parent, subsidiaries and affiliates, and theirofficers, directors, shareholders and employees, from and against any and allclaims and demands for damages to persons or property or for loss of life,including but not limited to any and all claims or demands against Landlord andall loss, cost, damages, charges, fines, penalties, causes of action, suits andjudgments, including reasonable legal expenses in connection with defending anysuch action arising from any matter or thing concerning or growing out of theoccupation or use of any portion of the Hotel Complex prior to the DeliveryDate and/or in connection with Landlord’s obligations hereunder, including, butnot limited to, the performance of Landlord’s Work

 

ARTICLE XII

ESTOPPEL CERTIFICATE, ATTORNMENT, SUBORDINATION

 

Section 12.1.                                                     EstoppelCertificate

 

Uponthe written request of either party (the “Requesting Party”), the other party(the “Responding Party”) shall, within twenty (20) days following the writtenrequest of the Requesting Party, deliver a executed written statementcertifying: (a) the commencement

 

42

----

 

and termination dates; (b) thatthis Lease is in full force and effect and has not been assigned, modified,supplemented or amended (except by such writings as shall be stated), (c) thatall conditions under this Lease to be performed by the Requesting Party havebeen satisfied (stating exceptions, if any), (d) that no defenses oroffsets against the enforcement of this Lease by the Requesting Party exist (orstating those claimed); (e) as to advance rent, if any, paid by Tenant, (f) thedate to which rent has been paid, (g) as to the amount of securitydeposited with Landlord, and (h) such other factual information as theRequesting Party reasonably requires. Persons receiving such statements shall be entitled to rely upon them.

 

Section 12.2.                                                     Subordination

 

ThisLease and the estate of Tenant hereunder shall be subject and subordinate toany ground lease, deed of trust, or mortgage lien which now encumber or whichat any time hereafter may encumber the Premises (such ground lease, deed oftrust or mortgage lien, and any replacement, renewal, modification,consolidation or extension thereof being hereinafter referred to as an “Encumbrance”).  Any Encumbrance shall be prior and paramountto this Lease and to the right of Tenant hereunder and all persons claimingthrough and under Tenant, or otherwise, in the Premises.  Tenant’s acknowledgment and agreement ofsubordination provided for in this Section 12.2 shall be self-operativeand no further instrument of subordination shall be required.  However, Tenant, on Tenant’s behalf, and onbehalf of all persons claiming through and under Tenant, covenants and agreesthat, from time to time at the request of Landlord or the holder of anyEncumbrance, Tenant will execute and deliver any necessary or properinstruments or certificates reasonably necessary to acknowledge or confirm thepriority of the Encumbrance over this Lease and the subordination of this Leasethereto or to evidence Tenant’s consent to any Encumbrance.  Notwithstanding the foregoing, any holder ofan Encumbrance may elect to the extent possible that this Lease shall havepriority over such Encumbrance and, upon notification of such election by theholder of such Encumbrance, this Lease shall be deemed to have priority oversuch Encumbrance, whether this Lease is dated prior to or subsequent to thedate of such Encumbrance. Notwithstanding the foregoing, the subordination of this Lease to anyEncumbrance under this Section 12.2 shall only be effective if the holderof such Encumbrance (a “Superior Mortgagee”) executes and delivers to Tenant anon-disturbance agreement, the form of which shall be (a) the SuperiorMortgagee’s standard form if the Superior Mortgagee is an

 

43

----

 

institution, or (b) acommercially reasonable form if the Superior Mortgagee is not aninstitution.  Tenant shall execute anddeliver to any Superior Mortgagee any such non-disturbance agreement requestedby such Superior Mortgagee within twenty (20) days of such Superior Mortgagee’srequest therefor.

 

Section 12.3.                                                     Attornment

 

Tenantagrees that if the holder of any Encumbrance or any person claiming under saidEncumbrance shall succeed to the interest of Landlord in this Lease, Tenantshall recognize and attorn to said holder as Landlord under the terms of thisLease. Tenant agrees that it will, upon the request of Landlord, execute,acknowledge and deliver any and all instruments necessary or reasonablyrequested by Landlord or its lender to give effect or notice of such attornmentand failure of Tenant to execute any such document or instrument on demandshall constitute a default by Tenant under the terms of this Lease.

 

ARTICLE XIII

ASSIGNMENT, SUBLETTING AND CONCESSIONS

 

Section 13.1.                                                     ConsentRequired

 

Exceptas expressly provided in Section 13.2 of this Lease, Tenant shall notmortgage, pledge, encumber, franchise, assign or in any manner transfer thisLease, voluntarily or involuntarily, by operation of law or otherwise, norsublet all or any part of the Premises for the conduct of any business by anythird person or business entity, or for any purpose other than is hereinauthorized without Landlord’s prior written consent, which shall not be unreasonablywithheld or delayed by Landlord. Landlord shall approve or disapprove any proposed assignment orsubletting within twenty (20) days after Tenant’s request for the same.  If Landlord disapproves any proposedassignment or subletting, Landlord shall inform Tenant of the specific reasonsfor such disapproval upon Tenant’s request. Any consent by Landlord to any assignment or subletting, or otheroperation by a concessionaire, or licensee, shall not constitute a waiver ofthe necessity for such consent under any subsequent assignment or subletting oroperation by a concessionaire or licensee.

 

44

----

 

Section 13.2.                                                     Consentnot Required

 

Notwithstandinganything to the contrary contained in this Lease, Tenant shall have the rightto assign this Lease or sublet the Premises to a parent, subsidiary or otheraffiliate of Tenant without Landlord’s consent but with notice toLandlord.  As used herein, “affiliate”shall mean a person or entity which controls, is controlled by or is undercommon control with Tenant. In addition and notwithstanding the foregoing, solong as no default then exists under this Lease, Tenant may assign this Lease,without Landlord’s consent but with notice to Landlord (A) in connectionwith a merger, consolidation, reorganization, restructuring or sale of Tenantor Tenant’s parent company or of all or substantially all of the assets ofTenant or Tenant’s parent company, or (B) in connection with the sale ofTenant’s restaurant business at the Premises, provided that the followingrequirements are met: (i) the sale of Tenant’s restaurant business at thePremises is made together with the sale of two (2) or more of Tenant’s orits affiliates’ restaurant businesses at other locations, (ii) the networth of the purchasing entity is not less than Three Million Dollars($3,000,000.00) at the time of the proposed transfer, (iii) the purchasingentity has at least three (3) years’ experience in operating otherfirst-class restaurants comparable to that of Tenant’s restaurant operations atthe Premises, (iv) the purchasing entity shall have an ongoing obligationto operate the Premises in a first-class manner consistent with the operationof the Premises prior to such transfer throughout the remainder of the Term and(v) the purchasing entity satisfies the requirements of Section 8.11above.  Any assignee of this Lease shallexpressly assume the obligations of Tenant under this Lease.  Furthermore, notwithstanding anythingcontained in this Lease to the contrary, (a) any sale or issuance ofTenant’s stock in connection with a private or public offering, or (b) anytransfer of the outstanding voting stock of Tenant registered under applicablesecurities laws which are traded on a recognized national securities exchangeor over-the-counter shall not require Landlord’s consent, notwithstanding thatany such sale, issuance or transfer may result in a change of voting control ofTenant.  Notwithstanding any assignmentor subletting pursuant to this Section, Tenant shall remain fully liable onthis Lease and for the performance of all terms, covenants and provisions ofthis Lease.

 

45

----

 

ARTICLE XIV

PROMOTION OF HOTEL COMPLEX

 

Tenantshall refer to the Hotel Complex under the name “Hard Rock Hotel and Casino”(the “Hotel Name”), or such other names as Landlord may designate from time totime in writing, in designating the location of the Premises in all newspaperand other advertising of the Premises and in all other references to thelocation of the Premises.  Tenantacknowledges Landlord’s proprietary rights in and to the Hotel Name and otherintellectual property right’s of the “Hard Rock” logo.  In that regard, Landlord shall have the rightto prohibit any advertising, promotion or display by Tenant utilizing Landlord’sHotel Name or logo which, in Landlord’s sole opinion, impairs or would tend toimpair the reputation of Landlord.  Priorto utilizing Landlord’s Hotel Name or logo on any advertising by Tenant, Tenantshall submit to Landlord for written approval a tangible specimen ofadvertising material proposed to be utilized by Tenant.  Landlord shall either approve or disapprove ofsuch usage within twenty (20) days of such submission.  Landlord’s failure to disapprove within suchtwenty (20) day period shall be deemed approval.  In the event Tenant utilizes the Hotel Nameor the “Hard Rock” logo in violation of this paragraph, then Landlord shallhave the right to seek an injunction to cease such violation.  The rights granted to Tenant pursuant to this Section 14shall terminate upon the expiration of the Lease Term or the earliertermination for breach of this Lease or Landlord’s cessation of the use of theHotel Name or termination of Landlord’s right to use the Hotel Name.  The rights granted herein shall not beassigned or sublicensed to any third party, other than in accordance with theprovisions of this Section 14 or to the assignee or sublessee of Tenant’sinterest in this Lease pursuant to a permitted assignment or sublease.

 

ARTICLE XV

DAMAGE AND DESTRUCTION

 

If thePremises are hereafter damaged or destroyed or rendered partially untenantablefor their accustomed use by fire or other casualty insured under the coveragewhich Landlord is obligated to carry pursuant to Section 11.1 hereof,Landlord shall promptly repair the same to substantially the condition whichthey were in immediately prior to the happening of such casualty (excludingstock in trade) provided, however, that Landlord shall not be obligated torepair and restore if such casualty is not

 

46

----

 

covered by the insurancewhich Landlord is obligated to carry pursuant to Section 11.1 hereof, andprovided, further, that Landlord shall not be obligated to expend for anyrepair or restoration an amount in excess of the insurance proceeds recoveredtherefore, and provided, further, that if the Premises be damaged, destroyed orrendered untenantable for their accustomed uses by fire or other casualty tothe extent of more than fifty percent (50%) of the cost to replace the Premisesduring the last three (3) years of the Lease Term, then either Landlord orTenant shall have the right to terminate this Lease effective as of the date ofsuch casualty by giving to the other party written notice of such terminationwithin sixty (60) days after the occurrence of such casualty; provided,however, that if Landlord elects to terminate this Lease and Tenant then hasany remaining Renewal Terms, Tenant may nullify Landlord’s termination bydelivering written notice to Landlord within ten (10) days after receiptof Landlord’s termination notice that Tenant elects to exercise such RenewalTerm, in which case this Lease shall continue in full force and effect and Landlordshall repair and restore the Premises as set forth herein.  If this Lease shall terminate, Landlord shallpromptly repay to Tenant any rent theretofore paid in advance which was notearned at the date of such casualty.  Ineach instance that Landlord repairs or restores the Premises after damage ordestruction, Landlord shall promptly repair or replace the fixtures,furnishings, furniture, leasehold improvements, carpeting, wall covering, floorcovering, drapes, ceiling and equipment to the same condition as they were inimmediately prior to the casualty, and if Tenant has closed its store, Tenantshall promptly open for business upon the completion of such repairs.  Should Landlord not repair the Premises tosubstantially the condition which they were in immediately prior to thecasualty, as herein above described, within one hundred eighty (180) daysfollowing the date of the casualty, Tenant shall have the right to: (i) terminatethis Lease upon written notice to Landlord delivered at any time prior toLandlord’s completion of all such repairs, or (ii) upon written notice toLandlord, complete such repairs on Landlord’s behalf and at Landlord’s expense,and Tenant may deduct the cost of such repairs from its next installments ofRent until reimbursed in full if Landlord shall fail to reimburse Tenant forsuch costs within thirty (30) days following Tenant’s written demand therefor.

 

Notwithstandinganything to the contrary set forth herein, in the event all or any portion ofthe Hotel/Casino and the Hotel/Condominium shall be damaged or destroyed byfire or other cause (notwithstanding that the Premises may be unaffectedthereby), to

 

47

----

 

the extent the cost ofrestoration thereof would exceed thirty percent (30%) of the amount it wouldhave cost to replace the Hotel/Casino and the Hotel/Condominium in its entiretyat the time such damage or destruction occurred, then Landlord may terminatethis Lease by giving Tenant thirty (30) days prior notice to Landlord’selection to do so, which notice shall be given, if at all, within ninety (90)days following the date of such occurrence. In the event of the termination of this Lease as aforesaid, this Leaseshall cease thirty (30) days after such notice is given, and the rent and othercharges hereunder shall be adjusted as of that date.

 

ARTICLE XVI

EMINENT DOMAIN

 

Section 16.1.                                                     Condemnation

 

If tenpercent (10%) or more of the floor area of the Premises or fifteen percent(15%) or more of the Hotel/Casino and the Hotel/Condominium shall be acquiredor condemned by right of eminent domain for any public or quasi public use orpurpose, then either Landlord or Tenant may terminate this Lease by givingnotice to the other party of its election. If the Lease shall not be terminated as aforesaid, then it shallcontinue in full force and effect, and Landlord shall, at Landlord’s expense,within a reasonable time after possession is physically taken (subject todelays due to shortage of labor, materials or equipment, labor difficulties,breakdown of equipment, government restrictions, fires, other casualties orother causes beyond the reasonable control of Landlord) repair or rebuild whatremains of the Premises for Tenant’s occupancy. To the extent such repairs physically affect the Premises, Landlordshall submit plans and specifications for such repairs to Tenant for Tenant’sprior approval.

 

Section 16.2.                                                     Damages

 

Landlordreserves, and Tenant assigns to Landlord, all rights to damages on account ofany taking or condemnation or any act of any public or quasi public authorityfor which damages are payable.  Tenantshall execute such instruments of assignment as Landlord requires, join withLandlord in any action for the recovery of damages, if requested by Landlord,and turn over to Landlord any damages recovered in any proceeding.  If Tenant fails to execute instrumentsrequired by Landlord, or undertake such other steps as requested, Landlordshall be deemed the duly authorized irrevocable

 

48

----

 

agent andattorney-in-fact of Tenant to execute such instruments and undertake such stepson behalf of Tenant.  Notwithstanding theforegoing, Landlord does not reserve, and Tenant shall have the right to claim,such compensation as may be separately awarded or allocated by reason of (i) tradefixtures and equipment installed by Tenant at its own cost, and (ii) thecost or loss to which Tenant might be incurred in removing Tenant’smerchandise, fixtures, leasehold improvements and equipment.

 

ARTICLE XVII

DEFAULT BY TENANT

 

Section 17.1.                                                     Rightto Re-Enter

 

Thefollowing shall be considered for all purposes to be defaults under andbreaches of this Lease:  (a) anyfailure of Tenant to pay any rent or other amount due hereunder within ten (10) daysafter written notice of such failure; (b) any failure by Tenant to performor observe any other of the terms, provisions, conditions and covenants of thisLease for more than thirty (30) days after written notice of such failure,excepting such defaults that cannot be cured completely within such thirty (30)day period providing Tenant, within said thirty (30) day period, has promptlycommenced to proceed with diligence and in good faith to remedy such default;or (c) the bankruptcy or insolvency of Tenant or the filing by or againstTenant of a petition in bankruptcy or for reorganization or arrangement or forthe appointment of a receiver or trustee of all or a portion of Tenant’sproperty, or Tenant’s assignment for the benefit of creditors.  In the event of a default which is not curedby Tenant within the applicable cure period, Landlord, in addition to all otherrights or remedies it may have, shall have the right thereupon or at any timethereafter to terminate this Lease, and shall have the right, after any suchtermination, to re-enter and take possession of the Premises, remove allpersons and property from the Premises, store such property at Tenant’sexpense, and sell such property if necessary to satisfy any deficiency inpayments by Tenant as required hereunder, all without being deemed guilty oftrespass or constructive eviction.  Inthe event that Tenant fails to pay any rent or other amount due hereunderwithin ten (10) days after written notice of such failure from Landlordmore than three (3) times in any consecutive twelve (12) month period,then, commencing with the fourth (4th) such non-payment by Tenant,Tenant shall pay Landlord a late charge equal to five percent (5%) of thedelinquent amount.

 

49

----

 

Section 17.2.                                                     Rightto Relet

 

IfLandlord re-enters the Premises as above provided, or if it takes possessionpursuant to legal proceedings or otherwise, it may either terminate this Leaseor it may, from time to time, without terminating this Lease, make suchalterations and repairs as it deems advisable to relet the Premises, and reletthe Premises or any part thereof for such term or terms (which may extendbeyond the Lease Term) and at such rentals and upon such other terms and conditionsas Landlord in its sole discretion deems advisable; upon each such relettingall rentals received by Landlord therefrom shall be applied, first, to anyindebtedness other than rent due hereunder from Tenant to Landlord; second, topay any costs and expenses of reletting, including without limitation, brokersand attorneys’ fees and costs of advertising, alterations and repairs; third,to rent due hereunder, and the residue, if any, shall be held by Landlord andapplied in payment of future rent as it becomes due hereunder.

 

Ifrentals received from such reletting during any month are less than that to bepaid during that month by Tenant hereunder, Tenant shall immediately pay anysuch deficiency to Landlord.  No re-entryor taking possession of the Premises by Landlord shall be construed as anelection to terminate this Lease unless a written notice of such termination isgiven by Landlord.

 

Notwithstandingany such reletting without termination, Landlord may at any time thereafterterminate this Lease for any prior breach or default.  If Landlord terminates this Lease for anybreach, or otherwise takes any action on account of Tenant’s breach or defaulthereunder, in addition to any other remedies it may have, it may recover fromTenant all damages incurred by reason of such breach or default, includingreasonable attorney’s fees at the trial and appellate levels, all costs ofretaking the Premises and including the excess, if any, of the total rent andcharges reserved in this Lease for the remainder of the Lease Term, all ofwhich shall be immediately due and payable by Tenant to Landlord.

 

Indetermining the rent payable by Tenant hereunder subsequent to default, thePercentage Rent for each year of the unexpired portion of the Lease Term shallequal the average Percentage Rent which Tenant was obligated to pay from thecommencement of

 

50

----

 

the Lease Term to thetime of default, or during the three (3) full calendar years, whichever isshorter.

 

Section 17.3.                                                     Bankruptcy

 

A.                                   Assumptionof Lease.  In the event Tenant shallbecome a Debtor under Chapter 7 of the Bankruptcy Code (“Code”) or a petitionfor reorganization or adjustment of debts is filed concerning Tenant underChapters 11 or 13 of the Code, or a proceeding is filed under Chapter 7 and istransferred to Chapters 11 or 13, the Trustee or Tenant, as Debtor and asDebtor-In-Possession, may not elect to assume this Lease unless, at the time ofsuch assumption, the Trustee or Tenant has:

 

(i)                                     Curedor provided Landlord “Adequate Assurance” (as defined below) that:

 

(a)                                  Withinten (10) days from the date of such assumption the Trustee or Tenant willcure all monetary defaults under this Lease and compensate Landlord for anyactual pecuniary loss resulting from any existing default, including withoutlimitation, Landlord’s reasonable costs, expenses, accrued interest at twelvepercent (12%) per annum, and attorneys’ fees incurred as a result of thedefault;

 

(b)                                 Withinthirty (30) days from the date of such assumption the Trustee or Tenant willcure all non-monetary defaults under this Lease; and

 

(c)                                  Theassumption will be subject to all of the provisions of this Lease.

 

(ii)                                  Forpurposes of this Section 17.6, Landlord and Tenant acknowledge that, inthe context of a bankruptcy proceeding of Tenant, at a minimum “AdequateAssurance” shall mean:

 

51

----

 

(a)                                  TheTrustee or Tenant has and will continue to have sufficient unencumbered assetsafter the payment of all secured obligations and administrative expenses toassure Landlord that the Trustee or Tenant will have sufficient funds tofulfill the obligations of Tenant under this Lease, and to keep the Premisesstocked with merchandise and properly staffed with sufficient employees toconduct a fully operational, actively promoted business in the Premises; and

 

(b)                                 TheBankruptcy Court shall have entered an Order segregating sufficient cashpayable to Landlord and/or the Trustee or Tenant shall have granted a valid andperfected first lien and security interest and/or mortgage in property ofTrustee or Tenant acceptable as to value and kind to Landlord, to secure toLandlord the obligation of the Trustee or Tenant to cure the monetary and/ornon-monetary defaults under this Lease within the time periods set forth above;and

 

(c)                                  TheTrustee or Tenant at the very least shall deposit a sum,  equal to one (1) month’s rent to be heldby Landlord (without any allowance for interest thereon) to secure Tenant’sfuture performance under the Lease.

 

B.                                     Assignmentof Lease.  If the Trustee or Tenanthas assumed the Lease pursuant to the provisions of this Section 17.6 forthe purpose of assigning Tenant’s interest hereunder to any other person orentity, such interest may be assigned only after the Trustee, Tenant or theproposed assignee have complied with all of the terms, covenants and conditionsof Section 13.1 herein, including, without limitation, those with respectto additional rent and the use of the Premises only as permitted in Article VIIIherein; Landlord and Tenant acknowledging that such terms, covenants andconditions are commercially reasonable in the context of a bankruptcyproceeding of Tenant.  Any person orentity to which this Lease is assigned pursuant to the provisions of the Codeshall be deemed without further act or deed to have assumed all of theobligations arising

 

52

----

 

under this Lease on andafter the date of such assignment.  Anysuch assignee shall upon request execute and deliver to Landlord an instrumentconfirming such assignment.

 

C.                                     AdequateProtection.  Upon the filing of apetition by or against Tenant under the Code, Tenant, as Debtor and asDebtor-in-Possession, and any Trustee who may be appointed agree to adequatelyprotect Landlord as follows:

 

(i)                                     Toperform each and every obligation of Tenant under this Lease until such time asthis Lease is either rejected or assumed by Order of the Bankruptcy Court; and

 

(ii)                                  Topay all monetary obligations required under this Lease, including withoutlimitation, the payment of the rent payable hereunder, and such otheradditional rent charges payable hereunder, which is considered reasonablecompensation for the use and occupancy of the Premises; and

 

(iii)                               Provide Landlord aminimum thirty (30) days prior written notice, unless a shorter period isagreed to in writing by the parties, of any proceeding relating to anyassumption of this Lease or any intent to abandon the Premises, whichabandonment shall be deemed a rejection of this Lease; and

 

(iv).                           To perform to the benefit ofLandlord otherwise required under the Code.

 

Thefailure of Tenant to comply with the above shall result in an automaticrejection of this Lease.

 

D.                                    AccumulativeRights.  The rights, remedies andliabilities of Landlord and Tenant set forth in this Section 17.6 shall bein addition to those which may now or hereafter be accorded, or imposed upon,Landlord and Tenant by the Code.

 

53

----

 

ARTICLE XVIII

DEFAULT BY LANDLORD

 

Section 18.1.                                                     DefaultDefined, Notice

 

Exceptas expressly set forth herein to the contrary, Landlord shall in no event becharged with default in any of its obligations hereunder unless and untilLandlord shall have failed to perform such obligations within thirty (30) daysafter written notice to Landlord by Tenant, specifically describing suchfailure; provided that if the nature of such default is such that it cannot becured within said thirty (30) -day period, Landlord shall have such additionaltime as may be reasonably necessary to complete its performance so long asLandlord has proceeded with diligence after receipt of Tenant’s notice to curesuch default.  If Landlord defaults inthe performance of any of its obligations, covenants and warranties hereunder,then Tenant may, at its option, cure the same on behalf of the Landlord,whereupon the cost of such curing and any out-of-pocket expenses reasonably andnecessarily arising as a consequence thereof, shall be due and payable toTenant from Landlord upon demand therefor by Tenant along with interest at therate of twelve percent (12%) per annum. Upon failure of Landlord to so remit to Tenant within thirty (30) daysof Landlord’s receipt of such notice, Tenant may deduct such costs from themonthly installments of Percentage Rent next coming due under the Lease untilTenant has been fully reimbursed for such costs.  The foregoing shall not limit or precludeTenant from exercising any other rights and remedies available at law or inequity.

 

Section 18.2.                                                     Noticeto First Mortgagee

 

If theholder of the first mortgage covering the Premises shall have given writtennotice to Tenant of the address to which notices to such holder are to be sent,Tenant shall give such holder written notice simultaneously with any noticegiven to Landlord of any default of Landlord, and such holder shall have theright to cure any default asserted in said notice within the time provided toLandlord herein.

 

54

----

 

ARTICLE XIX

NO SECURITY DEPOSIT

 

Section 19.1.                                                     SecurityDeposit

 

Thereshall be no security deposit, guaranty or other form of security required to beprovided by Tenant in connection with this Lease.

 

ARTICLE XX

ACCESS BY LANDLORD

 

Section 20.1.                                                     Rightof Entry

 

Landlordand his agents and employees shall have the right to enter the Premises fromtime to time at reasonable times, upon not less than twenty-four (24) hoursprior written notice to Tenant, to examine the same, to post notices asLandlord may deem reasonably necessary or appropriate for protection ofLandlord’s interest in the Premises and, during the last six (6) months ofthe Term, to show the Premises to prospective purchasers.  Landlord and its respective agents and employeesshall have the further right to enter the Premises from time to time atreasonable times, upon not less than twenty-four (24) hours prior writtennotice to Tenant, to make such repairs, alterations, improvements or additionsto the Premises or other portions of the Hotel Complex as Landlord reasonablydeems necessary; provided, however, that in the event of an emergency, Landlordshall have the right to enter the Premises upon such reasonable notice as ispracticable under the circumstances giving rise to such emergency (or if priornotice is not reasonable under such circumstances, Landlord shall notify Tenantof such entry as soon as possible following such entry).  As used herein, “emergency” shall mean anyevent or condition causing or likely to cause imminent and substantial injuryor damage to person or property.

 

ARTICLE XXI

HOLDING OVER, SUCCESSORS

 

Section 21.1.                                                     HoldingOver

 

IfTenant holds over or occupies the Premises beyond the Lease Term (it beingagreed there shall be no such holding over or occupancy without Landlord’swritten

 

55

----

 

consent), with or withoutLandlord’s written consent, Tenant shall occupy the Premises on a tenancy atsufferance but all other terms and provisions of this Lease shall be applicableto such period.

 

Section 21.2.                                                     Successors

 

Allrights and liabilities herein given to or imposed upon the respective partieshereto shall bind and inure to the several respective heirs, successors,administrators, executors and assigns of the parties and if either party ismore than one (1) person, they shall be bound jointly and severally bythis Lease.  Landlord, at any time andfrom time to time, may make an assignment of its interest in this Leaseprovided (i) such assignee has the right and authority to obligate andbind the entire Hotel Complex and, (ii) the Hotel Complex will continue tobe operated under the Hotel Name and “Hard Rock” tradename.  In the event of such assignment, Landlord andits successors and assigns (other than the assignee of Landlord’s interest inthis Lease) shall be released from any and all liability thereafter.

 

ARTICLE XXII

QUIET ENJOYMENT

 

Section 22.1.                                                     Landlord’sCovenant

 

IfTenant pays the rents and other amounts herein provided, observes and performsall the covenants, terms and conditions hereof, Tenant shall peaceably andquietly hold and enjoy the Premises for the Lease Term without interruption byLandlord or any person or persons claiming by, through or under Landlord.

 

ARTICLE XXIII

BOOKS AND RECORDS

 

Section 23.1.                                                     Booksand Records

 

Tenantagrees that it will keep complete books and records reflecting GrossSales.  Said books and records shallinclude:

 

A.                                   Datedand time stamped cash register tapes (customer receipt and detail audit) whichprovide a non-resetable, non-clearing gross sales total and/or consecutively

 

56

----

 

numbered duplicate salestickets which are to be dated and time stamped. Documentation of voided sales must be kept with regular sales ticketsand tapes and originals of voided tickets must be retained;

 

B.                                     Dailysales summaries showing sales from the Premises;

 

C.                                     Monthlysales journals showing breakdown of sales by day; and

 

D.                                    Bankdeposit slips showing deposits of sales. If deposits are not made on a daily basis, then the number of days’receipts deposited should be shown on the deposit slip.

 

Landlord shall have theright to examine such books and records at any reasonable time at Tenant’scorporate office or the Premises.  All suchrecords shall be retained by Tenant for examination by Landlord for a period ofeighteen (18) months following the end of the calendar year for which suchrecords apply.  Landlord shall have theright at any time during the one hundred twenty (120) day period following thedate Tenant delivers the Yearly Reconciliation to Landlord, to have an auditconducted of Tenant’s books and records by Landlord’s employees or auditors ofits choice for such preceding calendar year. Landlord shall promptly deliver a copy of the results of any such auditto Tenant.  If any audit reveals GrossSales were understated by more than three percent (3%), the reasonable cost andexpense of such audit shall be borne by Tenant, and any additional PercentageRent found due and owing as a result of said audit shall be immediately paid byTenant to Landlord upon demand, together with interest at the rate of twelvepercent (12%) per annum on such amount due from the date such amount shouldhave been paid by Tenant.  If theexamination discloses that Tenant has overreported Gross Revenue and that, as aresult of said overreporting, Tenant has overpaid Percentage Rent, Landlordshall give Tenant credit against the next due installment of rent due and owingby Tenant for the overpaid Percentage Rent (or, if at the end of the Term,Landlord shall pay such amount to Tenant within thirty (30) days after Tenanthas delivered its certified statement of Gross Revenues to Landlord).

 

57

----

 

ARTICLE XXIV

MISCELLANEOUS

 

Section 24.1.                                                     Waiver

 

Nowaiver by Landlord or Tenant of any breach of any term, covenant or conditionhereof shall be deemed a waiver of the same or any subsequent breach of thesame or any other term, covenant or condition. The acceptance of rent by Landlord shall not be deemed a waiver of anyearlier breach by Tenant of any term, covenant or condition hereof, regardlessof Landlord’s knowledge of such breach when such rent is accepted.  No covenant, term or condition of this Leaseshall be deemed waived by Landlord or Tenant unless waived in writing.

 

Section 24.2.                                                     Accordand Satisfaction

 

Landlordis entitled to accept, receive and cash or deposit any payment made by Tenantfor any reason or purpose or in any amount whatsoever, and apply the same atLandlord’s option to any obligation of Tenant and the same shall not constitutepayment of any amount owed except that to which Landlord has applied thesame.  No endorsement or statement or anycheck or letter of Tenant shall be deemed an accord and satisfaction orotherwise recognized for any purpose whatsoever.  The acceptance of any such check or paymentshall be without prejudice to Landlord’s right to recover any and all amountsowed by Tenant hereunder and Landlord’s right to pursue any other availableremedy.

 

Section 24.3.                                                     EntireAgreement

 

Thereare no representations, covenants, warranties, promises, agreements, conditionsor undertakings, oral or written, between Landlord and Tenant other than hereinset forth.  Except as herein otherwiseprovided, no subsequent alteration, amendment, change or addition to this Leaseshall be binding upon Landlord or Tenant unless in writing, signed by them andapproved by Landlord’s mortgagee.

 

Section 24.4.                                                     NoPartnership

 

Landlorddoes not, in any way or for any purpose, become a partner, employer, principal,master, agent or joint venturer or of with Tenant.

 

58

----

 

Section 24.5.                                                     ForceMajeure

 

Ifeither party hereto shall be delayed or hindered in or prevented from theperformance of any act required hereunder by reason of strikes, lockouts,failure of power, restrictive governmental laws or regulations, riots,insurrection, war or other reason of a like nature not the fault of the partydelayed in performing work or doing acts required under this Lease, the periodfor the performance of any such act shall be extended for a period equivalentto the period of such delay.

 

Section 24.6.                                                     Submissionof Lease

 

Submissionof this Lease to Tenant does not constitute an offer to lease; this Lease shallbecome effective only upon execution and delivery thereof by Landlord andTenant.  The effective day of this Leaseshall be the date filled in on Page 1 hereof by Landlord, which shall bethe date of execution by the last of the parties to execute the Lease.

 

Section 24.7.                                                     Notices

 

Allnotices from Tenant to Landlord required or permitted by any provision of thisAgreement shall be directed to Landlord as follows:

 

Noticeto PM Realty:

 

Mr. PeterMorton, President

PMRealty, LLC

510 North Robertson Boulevard

Los Angeles, California 90048

(310) 652-8747 – Telecopier

 

Notice to HRH:

 

Kevin Kelley, President

Hard Rock Hotel, Inc.

4455 Paradise Road

Las Vegas, Nevada 89109

(702) 693-5557 – Telecopier

 

59

----

 

ineach case with a copy to:

 

KathrynGraitge Noall, Esq.

Gordonand Silver, Ltd.

3960Howard Hughes Parkway, Ninth Floor

LasVegas, Nevada  89109

(702)369-2666 - Telecopier

 

Allnotices from Landlord to Tenant required or permitted hereunder shall bedirected as follows:

 

Mr. MichaelChow

President

Mr. Chowof Las Vegas, LLC

9538Brighton Way

Suite 316

BeverlyHills, California 90210

(310)385-8345 - Telecopier

 

with acopy to:

 

StevenG. Wolff, Esq.

Rosenfeld,Wolff, Aronson & Klein

1901Avenue of the Stars, Suite 500

LosAngeles, California 90067

(310)556-0401 - Telecopier

 

Allnotices to be given hereunder by any person shall be written and sent byregistered or certified mail, return receipt requested, postage pre-paid or byan express mail delivery service, addressed to the person, intended to benotified at the address set forth above. Any person may, at any time, or from time to time, notify the otherpersons named herein in writing of a substitute address for that above setforth, and thereafter notices shall be directed to such substituteaddress.  Notice given as aforesaid shallbe sufficient service thereof and shall be deemed given as of the datereceived, as evidenced by the return receipt of the registered or certifiedmail or the express mail delivery receipt, as the case may be.

 

60

----

 

Section 24.8.                                                     Captionsand Section Numbers

 

ThisLease shall be construed without reference to titles of Articles and Sections,which are inserted only for convenience of reference.

 

Section 24.9.                                                     Numberand Gender

 

Theuse herein of a singular term shall include the plural and use of themasculine, feminine or neuter genders shall include all others.

 

Section 24.10.                                               Representationby Corporate Tenant

 

IfTenant is or will be a corporation, the persons executing this Lease on behalfof Tenant hereby covenant and warrant that Tenant is a duly qualifiedcorporation authorized to do business in the State of Nevada, that allfranchise and corporate taxes have been paid to date and all future forms,reports, fees and other documents necessary to comply with applicable laws willbe filed when due, and the person signing this Lease on behalf of thecorporation is an officer of Tenant, and is duly authorized to sign and executethis Lease.

 

Section 24.11.                                               Landlord’sLimitation of Liability

 

Anythingto the contrary herein contained, notwithstanding, there shall be absolutely nopersonal liability on persons, firms or entities who constitute Landlord withrespect to any of the terms, covenants, conditions and provisions of thisLease, and Tenant shall, subject to the rights of any first mortgagee, looksolely to the interest of Landlord, its successors and assigns, in the HotelComplex for the satisfaction of each and every remedy of Tenant in the event ofdefault by Landlord hereunder; such exculpation of personal liability isabsolute and without any exception whatsoever.

 

Section 24.12.                                               Broker’sCommission

 

Eachparty represents and warrants that it has caused or incurred no claims forbrokerage commissions or finder’s fees in connection with the execution of thisLease, and each party shall indemnify and hold the other harmless against andfrom all liabilities arising from any such claims caused or incurred by it(including without limitation, the cost of attorney’s fees in connectiontherewith).

 

61

----

 

Section 24.13.                                               PartialInvalidity

 

If anyprovision of this Lease or the application thereof to any person orcircumstance shall to any extent be invalid or unenforceable, the remainder ofthis Lease, or the application of such provision to persons or circumstancesother than those as to which it is invalid or unenforceable, shall not beaffected thereby and each provision of this Lease shall be valid andenforceable to the fullest extent permitted by law.

 

Section 24.14.                                               ApplicableLaw

 

ThisLease shall be construed under the laws of the State of Nevada.  Landlord and Tenant hereby acknowledge thatthe courts situated in Clark County, Nevada shall have exclusive jurisdictionover any action in connection with this Lease. In the event any action is commenced in connection with this Lease, theprevailing party thereto shall be entitled to recover its costs and expenses(including reasonable attorneys’ fees) of such action.

 

Section 24.15.                                               Definitionof Days

 

Exceptas otherwise expressly provided herein, the term day shall mean a singlecalendar day, whether or not a working or business day.

 

Section 24.16.                                               Recordationof Lease

 

ThisLease shall not be recorded without the prior written consent of Landlord,except that a memorandum of lease in the form attached hereto as Exhibit “E”shall be executed and delivered by the parties concurrently with the executionof this Lease and may be placed of record by either party.

 

Section 24.17.                                               HotelRooms Provided by Landlord

 

A.                                   Landlordshall provide to Tenant, at no charge to Tenant, for use by Tenant’sprincipals, Michael Chow and Eva Chow, bedroom suite accommodations at theHotel Complex for a maximum of fifty (50) room nights during any Lease Yearthroughout the Term of this Lease when such parties are in Las Vegas, Nevada onbusiness related to the Hotel Complex or the Premises.  Landlord shall further provide to Tenant, atno charge to Tenant, a reasonable number of bedroom suite accommodations at theHotel Complex during the period prior to the opening date of the Premises andcontinuing until sixty (60) days immediately following the initial opening of thePremises, as may be

 

62

----

 

required by Michael Chowand Eva Chow to coordinate the initial opening of the restaurant (up to amaximum of an additional one hundred (100) total room nights).

 

B.                                     Landlordshall provide to Tenant, at no charge to Tenant, for use by Tenant’sexecutives, employees and consultants, room accommodations at the Hotel Complexfor a maximum of fifty (50) room nights during any Lease Year throughout theTerm of this Lease when such parties are in Las Vegas, Nevada on businessrelated to the Hotel Complex or the Premises. Landlord shall further provide to Tenant, at no charge to Tenant, areasonable number of room accommodations at the Hotel Complex during the periodprior to the opening date of the Premises and continuing until sixty (60) daysimmediately following the initial opening of the Premises, as may be requiredby Tenant’s executives, employees and consultants to coordinate the initialopening of the restaurant (up to a maximum of an additional fifty (50) totalroom nights).  All room accommodationsfor Tenant’s executives shall be deluxe accommodations, and all roomaccommodations for Tenant’s employees and consultants shall be standard roomaccommodations.

 

C.                                     Inthe event Tenant requests accommodations at the Hotel Complex in excess of themaximum room nights specified in Subparagraphs A and B above, then Landlordshall provide such requested accommodations to Tenant at the prevailing mostfavorable “player” or “casino” rates applicable to the class of such requestedaccommodations.

 

D.                                    Tenantshall designate a representative of Tenant to coordinate with Landlord theprovision of room accommodations by Landlord under this Section.  Notwithstanding any other provision hereof,Landlord shall not be required to provide room accommodations to any Tenantemployee, consultant or principal of whom Landlord has not been notified bysuch representative of Tenant.

 

63

----

 

**INWITNESS WHEREOF,** Landlord and Tenant have signed and sealedthis Lease as of the day and year first above written.

 
| **Landlord:**                       | **Tenant:**                         |
|-------------------------------------|-------------------------------------|
|                                |                                |
| PM Realty, LLC,                     | Mr. Chow of  Las Vegas, LLC    |
| a Nevada limited  liability company | a Nevada limited  liability company |
|                                |                                |
| By:                                 |                                |   | By: |   |   |
|                                |                                |
| Name:                               |                                |   | Name: |   |   |
|                                |                                |
| Its:                                |                                |   | Its: |   |   |
|                                |                                |
|                                |                                |
| Hard Rock Hotel, Inc.          |                                |
| a Nevada  corporation               |                                |
|                                |                                |
| By:                                 |                                |   |   |
|                                |                                |
| Name:                               |                                |   |   |
|                                |                                |
| Its:                                |                                |   |   |
|                                     |                                     |  |  |  |  |  |  |  |  |

 

64

----

 

EXHIBIT “A-1”

 

Description of Development Property

(To Be Attached)

 

----

 

EXHIBIT “A-2”

 

Description of Hotel/Casino Parcel

(To Be Attached)

 

----

 

EXHIBIT “B”

 

Site Plan of Development

 

[Depict:

The Condominiums

The Hotel Condominiums

The Retail/Restaurant Space

The Phase I Hotel Condominium

The Phase I Condominium]

 

----

 

EXHIBIT “B-1”

 

Site Plan of Premises

 

[Depict:

Premises

Tenant’s Terrace Area]

 

 

(To Be Attached)

 

----

 

EXHIBIT “C”

 

Work Letter

 

I.                                         LANDLORD’SWORK.   The following work is to beperformed exclusively by Landlord at Landlord’s sole expense (collectively, “Landlord’sWork”):

 

A.                                   Structure.  Landlord shall design and construct thebuilding in which the Premises are located. Said building shall be constructed in accordance with local and statebuilding codes.   Landlord shall providethe structural framing, columns, beams, roof deck, and exterior walls of thePremises, all of which shall be constructed of non-combustible framing inaccordance with local and state building codes. Landlord to provide full height demising studs from floor to deck fordemising walls within the Premises (and Tenant shall install such demisingstuds for such demising walls within the Premises).  Landlord to provide and install full heightdemising studs from floor to deck for all perimeter and exterior walls of the Premises.

 

B.                                     Roof.  Landlord to provide roof, consisting of aweather-resistant layer, thermal insulation and all structural componentsthereof.  Any and all roof top screeningrequired by local or governing authorities shall be the Landlord’sresponsibility.

 

C.                                     Partitions.  Landlord shall provide interior demisingpartitions and perimeter demising partitions. The demising partitions shall include drywall which shall be sanded,taped and ready to receive paint; provided, however, that the partition betweenthe Premises and the view of the New Pool shall consist of glass windows/doors,which glass windows shall consist of not less than fifty (50) linear feet.

 

D.                                    Floor.  Landlord shall provide reinforced concretefloor slab throughout all portions of the Premises, and such floor slab shallhave a smooth finish.   Landlord shallprovide a 20 feet diameter x 2 feet deep clear pit for a revolving stage to beinstalled by Tenant, and the floor slab must be able to house approximately 24light fixtures of 8 1⁄2” deep x 5” diameter. The precise locations of the pit andthe light fixtures to be called out and directed by Tenant, provided that thelocation of the pit shall not adversely affect the structural integrity of theRestaurant Building.  Tenant shall beresponsible for the installation of Tenant’s floor finishes.

 

----

 

E.                                      Sewer.  Landlord shall provide a 4” (or larger ifrequired by applicable building codes) sanitary sewer connection stubbed to thePremises at a location and depth as and where directed by Tenant.  Landlord shall also provide one (1) 4”(or larger if required by applicable building codes) grease waste stubbed tothe Premises as and where directed by Tenant. This work shall include a grease trap for grease storage appropriatelysized as and where required by local governing authorities.  All sanitary and waste lines shall haveinverts sufficiently low to preclude the use of sump pumps and/or sewage liftsor ejectors.  Landlord shall provideminimum of 3” plumbing vent pipes within Tenant’s Premises.

 

F.                                      Sprinklers.Landlord shall supply a connection point to Landlord’s main sprinkler systemtogether with an interior hydraulically calculated system with fire protectionmains and breakers within the Premises as and where directed by Tenant.

 

G.                                     Electrical.  Landlord shall provide electrical powersufficient for Tenant’s needs, three phase master electric service stubbed tothe Premises as and where directed by Tenant, together with any transformers tothe extent required to step down voltage.

 

H.                                    HVAC.Landlord shall design and install a HVAC system providing not less than one (1) tonof air-conditioning per 150 square feet of the Premises, inclusive of thekitchen.  Landlord shall provide alldistribution (return and supply) ducting for such HVAC system to the Premises.  Such system shall minimally be capable ofsupplying the kitchen make-up air, kitchen bar, and four (4) dining roomzones for a total of six (6) zones.

 

I.                                         Exhaust.  Landlord shall provide (i) shaft and allductwork for kitchen exhaust at a minimum of 12,000 CFM (cubic feet per minute)(including all code required access and clean-outs and fire ratings), (ii) shaftand ductwork for dishwasher and kettle exhaust at a minimum of 1,000 CFM(including all code required access and clean-outs), (iii) toilet exhaustproviding a minimum of 1,000 CF M stubbed to the Premises, (iv) make-upair stubbed to the Premises providing a minimum of 10,000CFM of outside air ata minimum temperature of 75 degrees Fahrenheit and a maximum humidity of 60%RH, and (v) flue(s) and combustion air for 30,000 BTU input gas fired hotwater heater(s) stubbed to the Premises (including all required fireshafts).  All shafts and ductwork shallbe stubbed to the Premises and run to and through the roof.  All shafts shall include fire dampers andfire protection if and as required by local governing authorities.  Exhaust

 

----

 

work shall include fanexhaust assemblies appropriately sized, as determined by Tenant’s engineers,for the required exhaust set forth in this paragraph and any and all fitters,scrubbers or other exhaust filtration or cleaning systems required byapplicable codes or requested by Landlord or other occupants or owners of theHotel Complex.

 

J.                                        FireProtection.  Landlord to provide a 2”fire/life safety conduit from the main fire/life safety system stubbed to thePremises as and where directed by Tenant. Landlord to provide any and all required fire hydrants, Siamese valvesand/or enunciator-type shut-off valves.

 

K.                                    Gas.  Landlord to provide a 4,000 MBTU gasconnection stubbed to the Premises as and where directed by Tenant.

 

L.                                      Water.  Landlord to provide domestic water stubbed tothe Premises as and where directed by Tenant with minimally sized water serviceat 2” with sufficient pressure to preclude the use of booster pumps.  Minimum capacity shall be no less than 50 PSIand 200 GPM.

 

M.                                 CommunicationServices.  Landlord to provide two 1”television conduits from the main television panel brought to the Premises at alocation as and where directed by Tenant. Landlord to further provide three (3) 1 1⁄2” rigid PVC conduits notto exceed 3 turns and maximum 60 degree sweep, and one (1) 2” rigid PVCpipe, and a 1 1⁄2” rigid PVC telephone conduit from the main telephone panelstubbed to the Premises as and where directed by Tenant, with a minimum capacityfor 10 telephone and data lines.

 

N.                                    CommonArea.  Landlord to construct allexterior improvements and systems (including all utility systems), CommonAreas, buildings and structures in the Development required for the use andoperation of the Premises by Tenant.

 

O.                                    Storefront.  N/A

 

P.                                      SeparateUtilities.  Landlord to installseparate meters or submeters for all utilities to the Premises, includingwater, gas, telephone, electricity, sewer and HVAC, except to the extent theapplicable utility company does not permit the installation of separate metersor submeters to the Premises.  Landlordshall also provide separate shut off valves for all such utilities within thePremises.

 

----

 

Q.                                    Miscellaneous.  Landlord to provide any code required smokeevacuation control system requirements for the building in which Tenant’srestaurant will be located.  If Landlord’sbuilding will have a chilled water system to service the building in whichTenant’s restaurant will be located, the same shall be made available for usefor Tenant’s kitchen refrigeration units including walk-in refrigerator.

 

II.                                     STANDARDSFOR LANDLORD’S WORK.  Landlord shallconstruct the Landlord’s Work in a first-class and good and workerlike manner,using new materials, and in compliance with all applicable laws.  Landlord shall, at Landlord’s expense,procure all building and other permits and approvals necessary for performingLandlord’s Work.

 

III.                                 TENANT’SWORK.  Except as otherwise specified asincluded in Landlord’s Work as set forth above or in the Lease, “Tenant’s Work”shall consist of all other work to be done in the interior of the Premisespursuant to Tenant’s Plans.  Tenant’sWork shall not include the work to the shell and core of the Premises, whichare to be provided by Landlord as part of Landlord’s Work.  Except as to the Tenant’s Plans which are tobe approved by Landlord pursuant to the terms of the Lease, Tenant shall havethe right to construct the restaurant and other improvements within thePremises as Tenant may elect in its sole discretion as may be necessary ordesirable to Tenant for Tenant’s business at the Premises.  Landlord may impose covenants, conditions andrestrictions (“CC&Rs”) and reasonable rules and regulations relatingto Tenant’s Work (provided that no such CC&Rs or rules and regulationsshall dictate any aspects of Tenant’s interior aesthetics or design) to theextent necessary to prevent the unreasonable interference with the use of theadjoining premises by other tenants and occupants of the Hotel Complex, includingCC&Rs and rules and regulations designed to prevent unreasonable noiseor vibrations from emanating from the Premises; provided, however, that (i) suchCC&Rs shall not require Tenant to pay premium off-hours rates or overtimein order to cause the completion of Tenant’s Work, and (ii) such CC&Rsand rules and regulations shall be non-discriminatory and shall not beapplied against Tenant in a discriminatory manner.  During the performance of Tenant’s Work,Tenant shall remove trash and debris from the Premises as is reasonable underthe circumstances and deposit the same in trash receptacles to be provided byLandlord (at no cost to Tenant) in a location mutually agreed to betweenLandlord and Tenant, and Landlord shall cause such receptacles to be emptiedand trash removed.  The Tenant’s Workshall be performed by

 

----

 

licensed contractorsselected by Tenant, and constructed in a first-class and good and workerlikemanner, using new materials, and in compliance with all applicable laws.

 

----

 

EXHIBIT “D”

 

Exclusive Use Rights

 

Nobu- Landlord shall not allow another tenant of the Resort to operate a restaurantwith a menu consisting primarily of Japanese cuisine during the Lease Term.

 

----

 

EXHIBIT “E”

 

Memorandum Of Lease

 

MEMORANDUMOF LEASE

 

This Memorandum of Leaseis dated the       day of                         ,200    and is by and between PM Realty LLC, a Nevada limitedliability company and Hard Rock Hotel, Inc., a Nevada corporation(collectively, “Landlord”) and Mr. Chow of Las Vegas, LLC, a Nevadalimited liability company (“Tenant”).

 

WITNESSETH

 

WHEREAS,on the 24th day of December, 2004, Landlord and Tenant entered intoa Lease (the “Lease”) for certain Premises situated in the City of Las Vegas,State of Nevada, as more particularly set forth in the Lease and which Premisescomprise a portion of the land described on Exhibit “A” attached heretoand made a part hereof as if fully rewritten herein; and

 

WHEREAS,the parties are desirous of placing their interests therein as a matter ofrecord.

 

NOW,THEREFORE, in consideration of the mutual covenants herein contained and theparties intending to be legally bound thereby, the parties hereto hereby agreeas follows:

 

1.                                       Theterm of the Lease is ten (10) years commencing on the Commencement Date,as defined in the Lease, and terminating on the anniversary of the CommencementDate ten (10) years thereafter.

 

2.                                       Tenanthas the right and option to renew the Lease for two (2) additionalperiod(s) of five (5) years each upon the terms, covenants and conditionsset forth therein.

 

3.                                       Pursuantto the terms of the Lease, Landlord grants to Tenant (and to its businessinvitees, employees and customers), the nonexclusive right to use the CommonAreas, as defined in the Lease.

 

----

 

INWITNESS WHEREOF, the parties have executed this Memorandum of Lease the day andyear first above written.

 

 
|    |   | Landlord:                                                             |
|---------|--------|-----------------------------------------------------------------------|
|    |   |                                                                  |
|    |   | PM Realty LLC,  a Nevada limited liability company                    |
|    |   |                                                                  |
|    |   |                                                                  |
|    |   | By:                                                                   |   |   |
|    |   |                                                                  |
|    |   | Name:                                                                 |   |   |
|    |   |                                                                  |
|    |   | Title:                                                                |   |   |
|    |   |                                                                  |
|    |   |                                                                  |
|    |   |                                                                  |
|    |   | Hard Rock Hotel, Inc.,  a Nevada corporation By: Name:           |
|    |   |                                                                  |
|    |   |                                                                  |
|    |   | By:                                                                   |   |   |
|    |   |                                                                  |
|    |   | Name:                                                                 |   |   |
|    |   |                                                                  |   |
| Witness |   | Title:                                                                |   |   |
|    |   |                                                                  |
|    |   | Tenant:                                                               |
|    |   |                                                                  |
|    |   | Mr. Chow of  Las Vegas, LLC,  a Nevada limited liability company |
|    |   |                                                                  |
|    |   |                                                                  |
|    |   | By:                                                                   |   |   |
|    |   |                                                                  |
|    |   | Name:                                                                 |   |   |
|    |   |                                                                  |
|    |   |                                                                  | Title: |   |   |
| Witness |   |                                                                  |
|         |        |                                                                       |  |  |  |  |

 

2

----

 

STATE OF 

 

COUNTY OF 

 

BEFORE ME personallyappeared                                                        tome well known and known to me to be the person(s) described therein and whoexecuted the foregoing instrument, and acknowledged to and before me that (he)(she) (they) executed said instrument for the purposes therein expressed.

 

WITNESSmy hand and official seal, this         dayof                                         ,200   .

 

Notary Public, State of 

 

 
|                            |   |
|---------------------------------|--------|
|                            |
| Commission  Expiration and Seal |

 

 

 

STATE OF 

 

COUNTY OF 

 

BEFORE ME personallyappeared                                                            tome well known and known to me to be the person(s) described therein and whoexecuted the foregoing instrument, and acknowledged to and before me that (he)(she) (they) executed said instrument for the purposes therein expressed.

 

WITNESSmy hand and official seal, this         dayof                           ,200   .

 

Notary Public, State of 

 
|                            |   |
|---------------------------------|--------|
|                            |
| Commission  Expiration and Seal |

 

3

----

 

STATE OF 

 

COUNTY OF 

 

BEFORE ME personallyappeared                                                         tome well known and known to me to be the person(s) described therein and whoexecuted the foregoing instrument, and acknowledged to and before me that (he)(she) (they) executed said instrument for the purposes therein expressed.

 

WITNESSmy hand and official seal, this        dayof                                 ,200   .

 

Notary Public, State of 

 
|                            |   |
|---------------------------------|--------|
|                            |
| Commission  Expiration and Seal |

 

4

----