<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
------------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-22378
MOVADO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-2595932
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
125 CHUBB AVENUE, LYNDHURST, NEW JERSEY 07071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (201) 460-4800
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the Issuer's classes
of Common Stock, as of the latest practicable date.
As of August 31, 1998 the Registrant had 3,533,529 shares of Class A Common
Stock, par value $0.01 per share, outstanding and 9,387,361 shares of Common
Stock, par value $0.01 per share, outstanding.
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MOVADO GROUP, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
JULY 31, 1998
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I Financial Information
Item 1. Consolidated Balance Sheets at July 31, 1998, January 31, 1998 and July
31, 1997 3
Consolidated Statements of Income for the six months
ended July 31, 1998 and 1997 and the three months
ended July 31, 1998 and 1997
4
Consolidated Statements of Cash Flows for the six months ended July 31,
1998 and 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
Part II Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
</TABLE>
2
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOVADO GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
JULY 31, JANUARY 31, JULY 31,
1998 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash $ 4,767 $ 10,874 $ 1,493
Trade receivables, net 98,766 92,386 89,549
Inventories 118,885 98,183 105,819
Other 23,511 18,206 22,698
--------- --------- ---------
Total current assets 245,929 219,649 219,559
--------- --------- ---------
Plant, property and equipment, net 22,546 18,909 16,738
Other assets 11,658 10,511 10,005
--------- --------- ---------
$ 280,133 $ 249,069 $ 246,302
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable to banks $ 36,055 $ -- $ 47,605
Current portion of long-term debt 5,000 10,000 5,000
Accounts payable 27,039 25,286 21,822
Accrued liabilities 13,349 16,920 18,543
Deferred and current taxes payable 8,944 10,340 6,615
--------- --------- ---------
Total current liabilities 90,387 62,546 99,585
--------- --------- ---------
Long-term debt 35,000 35,000 40,000
Deferred and non-current foreign income taxes 3,798 3,460 3,368
Other liabilities 2,460 2,530 2,944
Shareholders' equity:
Preferred Stock, $0.01 par value,
5,000,000 shares authorized; no shares issued -- -- --
Common Stock, $0.01 par value,
20,000,000 shares authorized; 9,386,611, 9,317,007
and 6,508,618, shares issued, respectively 94 93 65
Class A Common Stock, $0.01 par value,
10,000,000 shares authorized; 3,533,529, 3,556,793 and
4,810,495 shares issued and outstanding, respectively 35 36 48
Capital in excess of par value 64,792 64,475 34,451
Retained earnings 89,213 86,194 72,934
Accumulated other comprehensive income (5,521) (5,137) (6,965)
Treasury Stock, 16,819, 17,251 and 17,251 shares (125) (128) (128)
at cost, respectively --------- --------- ---------
148,488 145,533 100,405
--------- --------- ---------
$ 280,133 $ 249,069 $ 246,302
========= ========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, THREE MONTHS ENDED JULY 31,
------------------------- ---------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $110,584 $ 91,912 $ 68,934 $ 56,994
Costs and expenses:
Cost of sales 46,305 39,785 29,369 24,768
Selling, general and administrative 57,173 47,050 33,663 27,717
-------- -------- -------- --------
Operating income 7,106 5,077 5,902 4,509
-------- -------- -------- --------
Net interest expense 2,516 2,283 1,504 1,368
-------- -------- -------- --------
Income before income taxes 4,590 2,794 4,398 3,141
Provision for income taxes 1,056 699 1,012 786
-------- -------- -------- --------
Net income $ 3,534 $ 2,095 $ 3,386 $ 2,355
======== ======== ======== ========
Basic net income per share $ 0.27 $ 0.19 $ 0.26 $ 0.21
======== ======== ======== ========
Diluted net income per share $ 0.26 $ 0.18 $ 0.25 $ 0.20
======== ======== ======== ========
Dividends declared per share $ 0.04 $ 0.04 $ 0.02 $ 0.02
======== ======== ======== ========
Average shares outstanding 12,885 11,302 12,896 11,302
Dilutive effect of stock options 676 386 704 458
-------- -------- -------- --------
Average shares outstanding assuming
dilution 13,561 11,688 13,600 11,760
======== ======== ======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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MOVADO GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31,
-------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,534 $ 2,095
Adjustments to reconcile net income to net cash used in operating
activities:
Depreciation and amortization 1,810 1,989
Deferred and non-current foreign income taxes 681 117
Provision for losses on accounts receivable 491 221
Changes in current assets and liabilities:
Trade receivables (7,234) (14,966)
Inventories (21,174) (21,259)
Other current assets (5,838) (8,585)
Accounts payable 2,514 (3,052)
Accrued liabilities (3,511) 5,588
Deferred and current taxes payable (1,665) 197
Increase in other non-current assets (932) (1,669)
Increase(decrease) in other non-current liabilities 105 (22)
-------- --------
Net cash used in operating activities (31,219) (39,346)
-------- --------
Cash flows used for investing activities:
Capital expenditures (5,140) (2,586)
Goodwill, trademarks and other intangibles (374) (800)
-------- --------
Net cash used in investing activities (5,514) (3,386)
-------- --------
Cash flows from financing activities:
Net proceeds from debt facilities 31,055 40,056
Principal payments under capital leases (166) (135)
Exercise of stock options 310 --
Dividends paid (515) (455)
-------- --------
Net cash provided by financing activities 30,684 39,466
-------- --------
Effect of exchange rate changes on cash (58) (126)
-------- --------
Net decrease in cash (6,107) (3,392)
Cash at beginning of period 10,874 4,885
-------- --------
Cash at end of period $ 4,767 $ 1,493
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
MOVADO GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
by Movado Group, Inc. (the "Company") in a manner consistent with that used in
the preparation of the financial statements included in the Company's fiscal
1998 Annual Report filed on form 10-K. In the opinion of management, the
accompanying financial statements reflect all adjustments, consisting of only
normal and recurring adjustments, necessary for a fair presentation of the
financial position and results of operations for the periods presented. These
consolidated financial statements should be read in conjunction with the
aforementioned annual report.
NOTE 1 - INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
JULY 31, JANUARY 31, JULY 31,
1998 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Finished goods $ 73,888 $ 61,960 $ 66,678
Work-in-process and component parts 44,997 36,223 39,141
-------- -------- --------
$118,885 $ 98,183 $105,819
======== ======== ========
</TABLE>
NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
The following is provided as supplemental information to the consolidated
statements of cash flows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JULY 31,
--------------------
1998 1997
------ ------
<S> <C> <C>
Cash paid during the period for:
Interest $3,241 $2,539
Income taxes 2,164 505
</TABLE>
NOTE 3 - COMPREHENSIVE INCOME
As of February 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, (SFAS 130), "Reporting Comprehensive Income". SFAS 130
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. Under SFAS
130, foreign currency translation adjustments, which had been reported
separately in shareholders' equity prior to adoption, are included in other
comprehensive income. No provision has
6
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been made for taxes on foreign subsidiaries' undistributed earnings, because it
is management's intention to permanently reinvest the earnings of foreign
subsidiaries within the business of those companies. Amounts in prior year
financial statements have been reclassified to conform to SFAS 130.
The components of comprehensive income (loss) are as follows (in thousands):
<TABLE>
<CAPTION>
SIX MONTHS ENDED JULY 31, THREE MONTHS ENDED JULY 31,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income $ 3,534 $ 2,095 $ 3,386 $ 2,355
Foreign currency translation adjustment (384) (5,109) 864 (2,132)
------- ------- ------- -------
Comprehensive income/(loss) $ 3,150 $(3,014) $ 4,250 $ 223
======= ======= ======= =======
</TABLE>
NOTE 4 - SUBSEQUENT EVENT
On August 3, 1998, the Company began to repurchase its common stock under its
Corporate Repurchase Program. Through September 3, 1998 the Company has
repurchased approximately 80,000 shares at an average cost of $20.11 per share.
NOTE 5 - ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133) in June 1998. SFAS 133 requires all derivatives to be
recorded on the balance sheet at fair value and establishes new accounting
practices for hedge instruments. SFAS 133 is required for the fiscal years
beginning after June 15, 1999. Management of the Company is currently analyzing
the effect SFAS 133 will have on the Company's statement of position and results
of operations.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
Statements included under Management's Discussion and Analysis of Financial
Condition and Results of Operations, in this report, as well as statements in
future filings by the Company with the Securities and Exchange Commission
("SEC"), in the Company's press releases and oral statements made by or with the
approval of an authorized executive officer of the Company, which are not
historical in nature, are intended to be, and are hereby identified as, "forward
looking statements" for purposes of the safe harbor provided by Section 21E of
the Securities Exchange Act of 1934. The Company cautions readers that forward
looking statements include, without limitation, those relating to the Company's
future business prospects, revenues, working capital, liquidity, capital needs,
plans for future operations, effective tax rates, margins, interest costs, and
income, as well as assumptions relating to the foregoing. Forward looking
statements are subject to certain risks and uncertainties, some of which cannot
be predicted or quantified. Actual results and future events could differ
materially from those indicated in the forward
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looking statements due to several important factors herein identified, among
others, and other risks and factors identified from time to time in the
Company's reports filed with the SEC including, without limitation, the
following: general economic and business conditions which may impact disposable
income of consumers, competitive products and pricing, ability to enforce
intellectual property rights, seasonality, availability of alternative sources
of supply in the case of loss of any significant supplier, the Company's
dependence on key officers, continued availability to the Company of financing
and credit on favorable terms, and success of hedging strategies in respect of
currency exchange rate fluctuations.
Six months ended July 31, 1998 compared to six months ended July 31, 1997.
Net Sales. Net sales increased 20.3% to $110.6 million from $91.9 million for
the six months ended July 31, 1998 and July 31, 1997, respectively. The increase
was attributable to a 20.8% increase in domestic sales and a 18.4% increase in
international sales. The domestic sales increase was primarily due to a 15.5%
increase in the Concord, Movado and ESQ brands, initial shipments of the new
Coach watch line and a 25.2% increase in retail operations primarily from the
opening of two Movado Boutiques in fiscal 1999. The increase in international
sales is attributable to a 30% increase in the Concord and Movado brands.
International sales increases primarily occurred in the Caribbean, Middle East
and Far East.
Gross Margins. The Company's gross margin for the six months ended July 31, 1998
was $64.3 million (58.1% of net sales) as compared to $52.1 million (56.7% of
net sales) for the comparable prior year period. The increase in gross margin
as a percentage of sales relates to the continued increase in the proportion of
the Company's manufactured brands - Concord, Movado and ESQ, as well as the
initial launch of the Coach watch line, which has margins similar to the
Company's other manufactured brands. The Company's margin also benefited from a
decline in the value of the Swiss franc against the U.S.
dollar which reduces the Company's production costs.
Operating Expenses. Operating expenses increased for the six months ended July
31, 1998 to 51.7% of net sales from 51.2% of net sales for the comparable prior
year period. The increase in operating expenses occurred primarily in
advertising, selling and general and administrative expense categories. The
increase in advertising and marketing expenses primarily relates to the
introduction of the Coach watch line and the opening of the first two Movado
Boutiques. The increase in selling expenses is primarily attributable to selling
costs related to the Coach watch line and expenses for the Movado Boutiques. The
increase in general and administrative expenses primarily relates to increases
in information systems costs.
Interest Expense. Net interest expense, which consists primarily of interest on
the Company's 6.56% Senior Notes ("Senior Notes") and borrowings against its
working capital and revolving lines of credit, was $2.5 million for the six
months ended July 31, 1998 as compared to $2.3 million for the comparable prior
year period. The higher interest expense is mainly due to increased average
interest rates offset in part by reduced average borrowings under the Senior
Notes and other credit facilities. Average interest rates in fiscal 1998 were
lower due to favorable terms with local Swiss banks. The average interest rate
has been adversely affected by the shift to U.S. borrowings at higher rates,
offset by lower hedging costs of these funds.
Income Taxes. The Company recorded a provision for taxes of $1.1 million for the
six months ended July 31, 1998. Taxes were provided at a 23% effective rate
which the Company believes will approximate the effective annual rate for fiscal
1999; however, there can be no assurance of this as it is dependent on a number
of factors including: mix of foreign to domestic earnings, local statutory tax
rates and utilization of net operating losses. The 23% effective rate differs
from the United States statutory rate due to the mix
8
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of earnings between the Company's U.S. and international operations, the most
significant of which are located in Switzerland. The Company's international
operations are generally subject to tax rates that are significantly lower than
U.S. statutory rates. At July 31, 1997, the Company recorded a provision for
income taxes of $699,000. Taxes were provided at a 25% effective rate at July
31, 1997.
Three months ended July 31, 1998 compared to three months ended July 31, 1997.
Net Sales. Net sales increased 20.9% to $68.9 million from $57.0 million for the
three months ended July 31, 1998 and July 31, 1997, respectively. The increase
was attributable to a 23.1% increase in domestic sales and a 12.5% increase in
international sales. The domestic sales increase was primarily due to increases
in the Concord, and Movado brands, initial shipments of the new Coach watch line
and a 32.9% increase in retail operations which is primarily attributable to the
opening of two Movado Boutiques in fiscal 1999.
Gross Margins. The Company's gross margin for the three months ended July 31,
1998 was $39.6 million (57.4% of net sales) as compared to $32.2 million (56.5%
of net sales) for the comparable prior year period. The increase in gross
margin as a percentage of sales relates to the continued increase in the
proportion of the Company's manufactured brands - Concord and Movado, as
well as the initial launch of the Coach watch line, which has margins similar to
the Company's other manufactured brands. The Company's margin also benefited
from a decline in the value of the Swiss franc against the U.S. dollar which
reduces the Company's production costs.
Operating Expenses. Operating expenses increased 21.5% for the three months
ended July 31, 1998 to 48.8% of net sales from 48.6% of net sales for the
comparable prior year period. The increase in operating expenses occurred
primarily in advertising, selling and general and administrative expense
categories. The increase in advertising and marketing expenses primarily relates
to the introduction of the Coach watch line and the opening of the first two
Movado Boutiques. The increase in selling expenses is primarily attributable to
selling costs related to the Coach watch line and expenses for the Movado
Boutiques. The increase in general and administrative expenses primarily relates
to increases in information systems costs.
Interest Expense. Net interest expense, which consists primarily of interest on
the Company's 6.56% Senior Notes and borrowings against its working capital and
revolving lines of credit, was $1.5 million and $1.4 million for the three
months ended July 31, 1998 and 1997, respectively. The higher interest expense
is predominantly due to increased average interest rates offset in part by
reduced average borrowings under the Senior Notes and other credit facilities.
Average interest rates in fiscal 1998 were lower due to favorable terms with
local Swiss banks. The average interest rate has been adversely affected by the
shift to U.S. borrowings at higher rates, offset by lower hedging costs of these
funds.
Income Taxes. The Company recorded a provision for income taxes of $1.0 million
for three months ended July 31, 1998. Taxes were provided at a 23% effective
rate which the Company believes will approximate the effective annual rate for
fiscal 1999; however, there can be no assurance of this as it is dependent on a
number of factors including: mix of foreign to domestic earnings, local
statutory tax rates and utilization of net operating losses. The 23% effective
rate differs from the United States statutory rate due to the mix of earnings
between the Company's U.S. and international operations, the most significant of
which are located in Switzerland. The Company's international operations are
generally subject to tax
9
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rates that are significantly lower than U.S. statutory rates. At July 31, 1997,
the Company recorded a provision for income taxes of $786,000. Taxes were
provided at 25% effective tax rate.
Liquidity and Capital Resources
The Company's liquidity needs have been, and are expected to remain, primarily a
function of its seasonal working capital requirements which have increased due
to significant growth in domestic sales over the two previous years. The
Company's business is not capital intensive and liquidity needs for capital
investments have not been significant in relation to the Company's overall
financing requirements.
The Company has met its liquidity needs primarily through funds from operations
and bank borrowings under working capital lines of credit with its domestic
banks. The Company expects that its future requirements for capital will relate
not only to working capital requirements for the expected continued growth of
its existing brands, but also funding new lines of business including the
Company's new Coach watch line which was launched in Spring 1998 and the Movado
Boutiques. In addition, the Company is required to make a $5 million sinking
fund payment on February 1, 1999 in connection with its Senior Notes.
The Company's revolving credit and working capital lines with its domestic bank
group provide for a three year $90.0 million unsecured revolving line of credit,
pursuant to an Amended and Restated Credit Agreement, dated as of July 23, 1997,
among the Company, the Chase Manhattan Bank, as agent, Fleet Bank N.A. as
co-agent, and other banks signatory thereto ("Restated Bank Credit Agreement"),
and $31.6 million of uncommitted working capital lines of credit. The Restated
Bank Credit Agreement contains certain financial covenants and limits the amount
of additional debt outstanding to $20 million. At July 31, 1998, the Company had
$41.1 million in outstanding balances under the Restated Bank Credit Agreement,
$5.0 million of which is included in Long-term debt.
In March 1998, the Company's Board of Directors authorized the repurchase of
400,000 shares of the Company's Common Stock. As of July 31, 1998, no shares
were repurchased under this program.
The Company's debt to total capitalization ratio was 33.9% at July 31, 1998, as
compared to 23.6% at January 31, 1998 and 48.0% at July 31, 1997. The increase
in the debt to total capitalization from January 31, 1998 is primarily due to an
increase in loans payable to banks to fund the Company's working capital
increase and capital expenditures. The decrease in the debt to total
capitalization ratio from July 31, 1997 is predominately due to the sale in a
registered offering of an additional 1.5 million shares of common stock on
October 21, 1997.
The Company's net working capital, consisting primarily of trade receivables and
inventories, amounted to $155.5 million at July 31, 1998, $157.1 million at
January 31, 1998 and $120.0 million at July 31, 1997. The decrease in working
capital from January 31, 1998 is primarily the result of an increase in
liabilities, especially loans payable to banks, proceeds of which were used to
purchase inventories which increased in anticipation of the upcoming selling
season. The increase in the working capital from July 31, 1997 is primarily the
result of a decrease in loans payable to banks.
Accounts receivable at July 31, 1998 were $98.8 million as compared to $92.4
million at January 31, 1998 and $89.5 million at July 31, 1997. The increase in
the receivables was primarily the result of growth in the Company's business.
Inventories at July 31, 1998 were $118.9 million as compared to $98.2 million at
January 31, 1998 and $105.8 million at July 31, 1997. The increase in
inventories from January 31, 1998 and July 31, 1997
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<PAGE> 11
primarily relates to the anticipation of the upcoming selling season, the
Company's new Coach watch line and new product lines for the Movado Boutiques.
The Company's fiscal 1999 year-to-date capital expenditures approximated $5.1
million as of July 31, 1998 and $2.6 million as of July 31, 1997. Expenditures
in fiscal 1999 primarily related to improvements in the Company's management and
sales management information systems. The Company expects that its capital
expenditures in fiscal 1999 will exceed the average levels experienced annually
over the last three fiscal years due to planned continued improvements in
management information systems, including retail information systems and
expansion of its outlet store network as well as the introduction of the Movado
Boutiques.
Year 2000
The Company is actively addressing its information technology infrastructure,
including hardware and software to ensure Year 2000 compliance in all areas of
operations including relationships with vendors and customers. The Company is
implementing a new computer system which is designed to be Year 2000 compliant.
The Company does not expect that costs associated with Year 2000 issues will
have material adverse impact on the Company's consolidated financial position or
results or operations, unless the Company or third parties upon which it relies
are unable to address these issues in a timely manner. In order to assure that
this does not occur, the Company plans to devote all resources required to
resolve any significant Year 2000 issues in a timely manner.
11
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PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 11, 1998 the Company held its annual meeting of shareholders
at the offices of Simpson, Thacher & Bartlett located at 425
Lexington Avenue, New York, New York.
The following matters were voted upon at the meeting:
(i) The election of the following directors, constituting the
entire board of directors:
Margaret Hayes Adame
Michael Bush
Efraim Grinberg
Gedalio Grinberg
Alan H. Howard
Donald Oresman
Leonard L. Silverstein
(ii) A proposal to ratify the selection of PricewaterhouseCoopers,
LLP as the Company's independent public accountants for the
fiscal year ending January 31, 1999; and
(iii) Approval of an amendment to the Company's 1996 Stock Incentive
Plan to increase the number of shares of common stock
available for issuance thereunder and to modify certain other
terms thereof.
With respect to the above referenced proposals that were voted on at
the annual shareholders meeting, the following votes were tabulated.
There were no broker nonvotes.
Proposal (i) on election of directors:
<TABLE>
<CAPTION>
Nominee For Against/Withheld Abstain
------- --- ---------------- -------
<S> <C> <C> <C>
Margaret Hayes Adame ................................................... 28,388,442 67,287 --
Michael Bush ........................................................... 28,850,280 67,287 38,162
Efraim Grinberg ........................................................ 28,850,280 67,287 38,162
Gedalio Grinberg ....................................................... 28,850,280 67,287 38,162
Alan H. Howard ......................................................... 28,850,280 67,287 38,162
Donald Oresman ......................................................... 28,850,280 67,287 38,162
Leonard L. Silverstein ................................................. 28,850,280 67,287 38,162
Proposal (ii) on ratification of appointment of accountants ........... 28,953,531 196 2,002
Proposal (iii) on approval of amendment to Stock Incentive Plan........ 27,949,240 983,802 22,687
</TABLE>
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Lease dated August 5,1998 between Grand Canal Shops Mall Construction,
LLC, as landlord and Movado Retail Group, Inc., as tenant for premises
at Grand Canal Shops, Clark County, Nevada.
27.1 Financial Data Schedule for the six months ended July 31, 1998,
submitted to the Securities and Exchange Commission in electronic
format.
27.2 Restated Financial Data Schedule for the six months ended
July 31, 1997, submitted to the Securities and Exchange
Commission in electronic format.
27.3 Restated Financial Data Schedule for the nine months ended
October 31, 1997, submitted to the Securities and Exchange
Commission in electronic format.
27.4 Restated Financial Data Schedule for the six months ended
July 31, 1996, submitted to the Securities and Exchange
Commission in electronic format.
27.5 Restated Financial Data Schedule for the nine months ended
October 31, 1996, submitted to the Securities and Exchange
Commission in electronic format.
(b) Reports on Form 8-K
None
13
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOVADO GROUP, INC.
(Registrant)
Dated: September 14, 1998 By: /s/ Kenneth J. Adams
--------------------------------
Kenneth J. Adams
Senior Vice President and
Chief Financial Officer
(Chief Financial Officer)
Dated: September 14, 1998 By: /s/ John J. Rooney
--------------------------------
John J. Rooney
Corporate Controller
(Principal Accounting Officer)
14
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.1 Lease dated August 5,1998 between Grand Canal Shops Mall
Construction, LLC, as landlord and Movado Retail Group, Inc.,
as tenant for premises at Grand Canal Shops, Clark County,
Nevada.
27.1 Financial Data Schedule for the six months ended July 31,
1998, submitted to the Securities and Exchange Commission in
electronic format.
27.2 Restated Financial Data Schedule for the six months ended
July 31, 1997, submitted to the Securities and Exchange
Commission in electronic format.
27.3 Restated Financial Data Schedule for the nine months ended
October 31, 1997, submitted to the Securities and Exchange
Commission in electronic format.
27.4 Restated Financial Data Schedule for the six months ended
July 31, 1996, submitted to the Securities and Exchange
Commission in electronic format.
27.5 Restated Financial Data Schedule for the nine months ended
October 31, 1996, submitted to the Securities and Exchange
Commission in electronic format.
</TABLE>
15
<PAGE> 1
Exhibit 10.1
GRAND CANAL SHOPS
Clark County, Nevada
LANDLORD
Grand Canal Shops Mall Construction, LLC,
a Delaware limited liability company
TENANT
Movado Retail Group, Inc.,
a New Jersey corporation
dba
Movado
Space No.
1049
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
INTRODUCTORY PROVISIONS ............................................... 1
Section 1.0 - Basic Lease Provisions .................................. 1
(a) Shopping Center ............................................. 1
(b) Space Number ................................................ 1
(c) Approximate Premises GLA .................................... 1
(d) Term of Lease ............................................... 1
(e) Shopping Center Opening Date ................................ 1
(d) Rent Commencement Date ("RCD") .............................. 1
(g) Fixed Minimum Rent .......................................... 2
(h) Percentage Rent ............................................. 3
(i) Payment of Percentage Rent .................................. 3
(j) Sales Reports ............................................... 3
(k) One Time Grand Opening Assessment ........................... 3
(l) Annual Marketing Fund Charge ................................ 3
(m) Intentionally Omitted ....................................... 3
(n) Tenant Insurance ............................................ 3
(o) CAM Costs ................................................... 4
(p) Taxes ....................................................... 4
(q) Intentionally Omitted ....................................... 4
(r) Utility Services and Charges ................................ 4
(s) Tenant's Trade Name ......................................... 4
(t) Permitted Use ............................................... 4
(u) Intentionally Omitted ....................................... 4
(v) Legal Notice Address ........................................ 4
(w) Security Deposit ............................................ 4
(x) Guarantor ................................................... 5
(y) Additional Provisions ............................................. 5
Section 1.1 - Defined Terms ........................................... 5
ARTICLE II
EXHIBITS .............................................................. 6
Section 2.1 - Exhibits ................................................ 6
ARTICLE III
PREMISES .............................................................. 6
Section 3.1 - Premises ................................................ 6
Section 3.2 - Gross Leasable Area of the Premises ..................... 6
Section 3.3 - Revisions to Premises GLA ............................... 7
Section 3.4 - Landlord's Reservation .................................. 7
Section 3.5 - Intentionally Omitted ................................... 7
Section 3.6 - Remodeling .............................................. 8
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<PAGE> 3
ARTICLE IV
COMMON AREAS .......................................................... 8
Section 4.1 - Use ..................................................... 8
Section 4.2 - Management and Operation of Common Areas ................ 8
ARTICLE V
CHANGES AND ADDITIONS TO
SHOPPING CENTER SITE PLAN AND LEASING PLAN ............................ 9
Section 5.1 - Site Plan ............................................... 9
Section 5.2 - Changes to Shopping Center Site Plan .................... 9
ARTICLE VI
IMPROVEMENTS .......................................................... 10
Section 6.1 - Landlord's Responsibilities ............................. 10
Section 6.2 - Tenant's Responsibilities ............................... 10
Section 6.3 - Tenant's Trade Fixtures ................................. 11
Section 6.4 - Construction Lien ....................................... 11
Section 6.5 - Union Cooperation ....................................... 11
ARTICLE VII
PLANS ................................................................. 12
Section 7.1 - Submission of Plans ..................................... 12
ARTICLE VIII
USE ................................................................... 12
Section 8.1 - Use ..................................................... 12
Section 8.2 - Tenant's Covenant to Operate ............................ 13
Section 8.3 - Prohibitions on Use ..................................... 13
Section 8.4 - Manner of Operation of Business ......................... 13
Section 8.5 - Privileged License ...................................... 14
Section 8.6 - Vendor Agreements ....................................... 14
ARTICLE IX
TERM .................................................................. 15
Section 9.1 - Term .................................................... 15
Section 9.2 - Commencement Date Agreement ............................. 15
Section 9.3 - Holding Over ............................................ 15
Section 9.4 - Expiration of the Term of the Lease ..................... 15
Section 9.5 - Renewal of Term ......................................... 16
ARTICLE X
RENT COMMENCEMENT DATE ................................................ 16
Section 10.1 - Rent Commencement Date . . ............................. 16
Section 10.2 - Failure of Delivery of Premises to Tenant .............. 16
Section 10.3 - Tenant's Failure to be Open by the Rent
Commencement Date ...................................... 16
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<PAGE> 4
ARTICLE XI
RENT .................................................................. 17
Section 11.1 - Fixed Minimum Rent ..................................... 17
Section 11.2 - Percentage Rent ........................................ 17
Section 11.3 - Gross Revenue .......................................... 18
Section 11.4 - Exclusion from Gross Revenue ........................... 18
Section 11.5 - Reporting .............................................. 19
Section 11.6 - Books and Records ...................................... 20
ARTICLE XII
ADDITIONAL CHARGES .................................................... 21
Section 12.1 - Status of Charges ...................................... 21
Section 12.2 - Common Area Maintenance Costs .......................... 22
Section 12.3 - Real Estate Taxes ...................................... 23
Section 12.4 - Marketing Fund ......................................... 25
Section 12.5 - Security Deposit ....................................... 26
Section 12.6 - Grand Opening Marketing Assessment ..................... 26
ARTICLE XIII PREMISES UTILITY SERVICES ...................................... 27
Section 13.0 - Status of Charges ...................................... 27
Section 13.1 - Utilities .............................................. 27
Section 13.2 - Premises Heating, Ventilating and Air-Conditioning
System ................................................. 27
Section 13.3 - Discontinuance of Service .............................. 27
Section 13.4 - Interruption of Service ................................ 27
ARTICLE XIV
SIGNS ................................................................. 28
Section 14.1 - Tenant's Obligation .................................... 28
Section 14.2 - Interior Signs and Advertising ......................... 28
ARTICLE XV
REPAIRS AND ALTERATIONS ............................................... 28
Section 15.1 - Repairs by Landlord .................................... 28
Section 15.2 - Repairs by Tenant ...................................... 29
Section 15.3 - Alterations and Remodeling ............................. 29
Section 15.4 - Renovation ............................................. 29
Section 15.5 - Refurbishment .......................................... 30
ARTICLE XVI
LIENS ................................................................. 30
Section 16.1 - Indemnification by Tenant .............................. 30
Section 16.2 - Tenant's Right of Contest .............................. 30
ARTICLE XVII
INDEMNITY AND INSURANCE ............................................... 30
Section 17.1 - Mutual Indemnification ................................. 30
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<PAGE> 5
Section 17.2 - Tenant's Insurance ..................................... 31
Section 17.3 - Landlord's Insurance ................................... 33
Section 17.4 - Waiver of Subrogation .................................. 34
Section 17.5 - Landlord Not Responsible for Acts of Others ............ 34
ARTICLE XVIII
GENERAL RULES AND REGULATIONS ......................................... 34
Section 18.1 - Uniformity ............................................. 34
Section 18.2 - Rubbish ................................................ 34
Section 18.3 - Lighting ............................................... 35
Section 18.4 - Merchandise Display, Loading and Unloading ............. 35
Section 18.5 - Obstruction of Passageways ............................. 35
Section 18.6 - Employee Parking ....................................... 35
Section 18.7 - Interference With Other Tenants ........................ 35
Section 18.8 - Security ............................................... 35
Section 18.9 - Employee Areas ......................................... 35
Section 18.10 - Tenant Conduct ........................................ 35
Section 18.11 - Gaming ................................................ 36
Section 18.12 - Prohibited Advertising ................................ 36
Section 18.13 - Resort References ..................................... 36
Section 18.14 - Prohibited Uses ....................................... 36
Section 18.15 - Employee Drug Testing ................................. 36
ARTICLE XIX
SUBORDINATION AND ATTORNMENT BY TENANT ................................ 36
Section 19.1 - Subordination of Lease ................................. 36
Section 19.2 - Attornment by Tenant ................................... 37
ARTICLE XX
RIGHTS OF LANDLORD .................................................... 37
Section 20.1 - Landlord's Right to Repair ............................. 37
Section 20.2 - Landlord's Right to Affix Sign ......................... 37
Section 20.3 - Landlord's Right to Make Payments on Behalf of Tenant .. 38
ARTICLE XXI
ASSIGNMENT AND SUBLETTING ............................................. 38
Section 21.1 - Landlord's Consent Required ............................ 38
Section 21.2 - Insolvency Proceedings ................................. 38
Section 21.3 - Return of Premises by Tenant ........................... 38
Section 21.4 - Transfer of Ownership .................................. 39
Section 21.5 - Transfer of Other Business Interests ................... 39
Section 21.6 - Acceptance of Rent by Landlord ......................... 39
Section 21.7 - No Release of Tenant's Liability ....................... 39
Section 21.8 - Legal Fees ............................................. 40
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<PAGE> 6
ARTICLE XXII
DAMAGE OR DESTRUCTION ................................................. 40
Section 22.1 - Landlord's Obligation to Repair and Reconstruct ........ 40
Section 22.2 - Landlord's Option to Terminate ......................... 40
Section 22.3 - Demolition of Landlord's Building ...................... 41
ARTICLE XXIII
CONDEMNATION .......................................................... 41
Section 23.1 - Effect of Taking ....................................... 41
Section 23.2 - Compensation and Awards ................................ 41
Section 23.3 - Condemnation or Breach of Lease ........................ 42
ARTICLE XXIV
DEFAULT ............................................................... 42
Section 24.1 - Events of Default ...................................... 42
Section 24.2 - Remedies and Damages ................................... 43
Section 24.3 - Repeated Default ....................................... 44
Section 24.4 - Waiver of Rights of Redemption ......................... 44
Section 24.5 - Removal of Tenant ...................................... 44
Section 24.6 - Default by Landlord .................................... 44
ARTICLE XXV
COMPETITION ........................................................... 45
Section 25.1 - Restriction on Tenant .................................. 45
Section 25.2 - Imposition of Damages .................................. 45
ARTICLE XXVI
NOTICES ............................................................... 45
Section 26.1 - Notices to Tenant and Landlord ......................... 45
Section 26.2 - Notices to Mortgagee ................................... 46
ARTICLE XXVII
MISCELLANEOUS ......................................................... 46
Section 27.1 - Accord and Satisfaction ................................ 46
Section 27.2 - Complete Agreement ..................................... 46
Section 27.3 - Governing Law .......................................... 46
Section 27.4 - Compliance with Governmental Authorities ............... 46
Section 27.5 - Brokerage .............................................. 47
Section 27.6 - Effective Date of Lease ................................ 47
Section 27.7 - Estoppel Certificates .................................. 47
Section 27.8 - Force Majeure .......................................... 47
Section 27.9 - Partial Invalidity ..................................... 47
Section 27.10 - Memorandum of Lease ................................... 47
Section 27.11 - Quiet Enjoyment ....................................... 48
Section 27.12 - Rent Demand ........................................... 48
Section 27.13 - Section Headings ...................................... 48
v
<PAGE> 7
Section 27.14 - Successors and Assigns ................................ 48
Section 27.15 - Waiver by Landlord .................................... 48
Section 27.16 - Exculpation ........................................... 48
Section 27.17 - Transfer of Landlord's Interest ....................... 49
Section 27.18 - Time of the Essence ................................... 49
Section 27.19 - Remedies Cumulative ................................... 49
Section 27.20 - Joint Liability ....................................... 49
Section 27.21 - Drafting .............................................. 49
Section 27.22 - Perpetuities .......................................... 49
Section 27.23 - Shopping Center and Resort Promotion .................. 49
ARTICLE XXVIII
DISPUTE RESOLUTION .................................................... 49
GUARANTY .................................................................... 52
vi
<PAGE> 8
LEASE
THIS LEASE is entered into as of August 5, 1998, by and between
Grand Canal Shops Mall Construction, LLC, a Delaware limited liability company,
hereinafter called "Landlord", and Movado Retail Group, Inc., a New Jersey
corporation, hereinafter called "Tenant".
ARTICLE I
INTRODUCTORY PROVISIONS
Section 1.0 - Basic Lease Provisions.
The following Basic Lease Provisions are an integral part of this Lease,
are referred to in other Sections hereof, including, without limitation, the
Sections identified below and are presented in this Section for the convenience
of the parties. They are not intended to constitute an exhaustive list of all
charges which may become due and payable under this Lease.
(a) Shopping Center: (Article I, Section 1.1(g))
Grand Canal Shops
(b) Space Number: (Article III, Section 3.1)
1049
(c) Approximate Premises GLA: (Article III, Section 3.3)
2,322 square feet total
2,322 square feet first level
0 square feet second level
(d) Term of Lease: (Article IX, Section 9.1)
(i) Seven (7) Lease Years commencing on the "RCD" (as
hereinafter defined) and expiring on the "Term Expiration
Date" or "TED" (as hereinafter defined).
(ii) Renewal Term: One (1) option of five (5) Lease Years.
(e) Shopping Center Opening Date: (Article X, Section 10.1)
April 21, 1999, or such other date as Landlord may reasonably
determine as the opening date for the Shopping Center,
provided Landlord notifies Tenant in writing at least thirty
(30) days prior to such alternative Shopping Center Opening
Date.
(f) Rent Commencement Date ("RCD"): (Article X, Section 10.1)
The later of (i) the date one hundred twenty (120) days after
Landlord delivers possession of the Premises to Tenant with
the work to be performed by Landlord under Section 6.1(a)
completed other than details of construction which do not
materially interfere with the performance of the work to be
performed by Tenant under Section 6.2, or (ii) the Shopping
Center Opening Date; provided, however,
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<PAGE> 9
that in no event shall the Rent Commencement Date be later
than the date Tenant opens for business.
(g) Fixed Minimum Rent: (Article XI, Section 11.1)
During Lease Years 1-2, the Fixed Minimum Rent shall be Two
Hundred Ninety-Seven Thousand Three Hundred Sixty Dollars
($297,360) per annum (One Hundred Twenty-Eight and 06/100
Dollars ($128.06) per square foot of first level Premises GLA
per annum), payable in equal monthly installments of
Twenty-Four Thousand Seven Hundred Eighty Dollars ($24,780).
Fixed Minimum Rent shall be adjusted as follows:
Beginning on the first day of the third Lease Year, and on the
first day of every second Lease Year thereafter through the
end of the seventh (7th) Lease Year, annual Fixed Minimum Rent
shall be the greater of (a) the Fixed Minimum Rent due for the
previous period adjusted by the increase of the CPI-U (as
defined in Section 12.4(d) below) over such period or (b)
eighty percent (80%) of the sum of (i) the amount of annual
Fixed Minimum Rent payable during the previous Lease Year of
the Term plus (ii) the average amount of Percentage Rent
payable by Tenant to Landlord during the previous two (2)
Lease Years. In no event shall Fixed Minimum Rent be adjusted
downward.
Fixed Minimum Rent for the Renewal Term shall be ninety
percent (90%) of the Fair Market Rent. As used herein, "Fair
Market Rent" shall mean the fair market rental rate for the
Premises at the time Tenant notifies Landlord of Tenant's
election to exercise its option to extend the Term of this
Lease under Section 9.5. Within thirty (30) days of Landlord's
receipt of such notice, Landlord shall notify Tenant of
Landlord's determination of the Fair Market Rent. Tenant shall
have ten (10) days from its receipt of such notice from
Landlord to notify Landlord that Tenant does not agree with
Landlord's determination of the Fair Market Rent. If Tenant
fails to so notify Landlord, Tenant shall be deemed
conclusively to have accepted Landlord's determination. If
Tenant does not agree with Landlord's proposed Fair Market
Rent, and Landlord and Tenant cannot agree upon the Fair
Market Rent within ten (10) days of Tenant's notice to
Landlord of Tenant's disagreement, then Landlord and Tenant
shall each submit a new determination of the Fair Market Rent
to the appraisers appointed as follows. Landlord and Tenant
shall each, within twenty (20) days of Tenant's notice to
Landlord of Tenant's disagreement, appoint one (1) independent
appraiser who shall by profession be a real estate broker who
shall have been active over the five (5) year period ending on
the date of such appointment in the leasing of commercial
properties in the Las Vegas, Nevada area. The two (2)
appraisers so appointed shall, within fifteen (15) days of the
date of appointment of the last appointed appraiser, agree
upon and appoint a third appraiser who shall be qualified
under the same criteria set forth above for qualification of
the initial two (2) appraisers. The three (3) appraisers
shall, within fifteen (15) days of the date of appointment of
the third appraiser, reach a decision as to whether the
parties shall use Landlord's or Tenant's submitted Fair Market
Rent. The determination of the appraisers shall be limited
solely to the issue of
2
<PAGE> 10
whether Landlord's or Tenant's submitted Fair Market Rent is
the closest to the actual fair market rental rate for the
Premises at the time Tenant notifies Landlord of Tenant's
election to exercise its option to extend the Term of this
Lease under Section 9.5 as determined by the appraisers. The
decision of a majority of the three (3) appraisers shall be
binding upon Landlord and Tenant. If either Landlord or
Tenant fails to appoint an appraiser within the time period
specified in this Section 1.0(g), the appraiser appointed by
one of them shall reach a decision based upon the same as
procedures set forth above (i.e. by selecting either
Landlord's or Tenant's submitted Fair Market Rent), and such
appraiser's decision shall be binding upon Landlord and
Tenant. If the two (2) appraisers fail to agree upon and
appoint a third appraiser within the time period specified in
this Section 1.0(g), both appraisers shall be dismissed and
the matter to be decided shall be submitted to arbitration
under the provisions of Article XXVIII, but based upon the
same procedures as set forth above (i.e., by selecting either
Landlord's or Tenant's submitted Fair Market Rent). The cost
of the appraisal (or arbitration if required pursuant to this
Section 1.0(g) shall be paid to the party whose submitted
Fair Market Rent is not accepted.
(h) Percentage Rent: (Article XI, Section 11.2)
The difference between (i) nine percent (9%) of Gross Revenue
and (ii) Fixed Minimum Rent paid; provided, however, that in
no event shall the Percentage Rent be less than Zero Dollars
($0).
(i) Payment of Percentage Rent: (Article XI, Section 11.2)
By the fifteenth (15th) day of each month for the previous
month.
(j) Sales Reports: (Article XI, Section 11.5)
Monthly on or before the fifteenth (15th) day of each month of
each Lease Year. Annually on or before forty-five (45) days
following the close of each calendar year.
(k) One Time Grand Opening Assessment: (Article XII, Section 12.6)
Three Dollars ($3.00) per square foot of Premises GLA.
(l) Annual Marketing Fund Charge: (Article XII, Section 12.4)
Three Dollars ($3.00) per square foot of Premises GLA per
year.
(m) Intentionally Omitted.
(n) Tenant Insurance: (Article XVII, Section 172)
(i) Liability: $2,000,000 combined single limit per occurrence
basis for property damage and personal and bodily injury or
death.
(ii) Boiler: $100,000, if applicable.
(iii) Environmental Impairment Liability: $1,000,000 for
bodily injury or property damage.
(iv) All-Risk Coverage: Full replacement cost
3
<PAGE> 11
(o) CAM Costs: (Article XII, Section 12.2)
Proportionate Share; payable monthly on estimated bill.
(p) Taxes: (Article XII, Section 12.3)
Proportionate Share; payable monthly on estimated bill.
(q) Intentionally Omitted.
(r) Utility Services and Charges: (Article XIII, Section 13.1)
Payable by Tenant as billed per metered or estimated and
adjusted billing. Charges paid directly to Landlord may
include a service charge not to exceed Twenty-Five Dollars
($25) per month.
(s) Tenant's Trade Name: (Article VIII, Section 8.1)
Movado, or any other name (i) used by Tenant or any affiliate
of Tenant to designate any of the brands or products
distributed or sold by Tenant or any such affiliate, and (ii)
approved by Landlord in writing, which approval Landlord shall
not unreasonably withhold.
(t) Permitted Use: (Article VIII, Section 8.1)
The retail sale and service of (i) Swiss watches and personal
luxury accessories manufactured by, or distributed for sale by
Tenant, or any affiliate of Tenant, and sold under the brand
name Movado, or any other trade name owned by or licensed to
Tenant or any affiliate of Tenant, and (ii) other related
merchandise generally sold in other stores operated by Tenant,
or any affiliate of Tenant; and general customer support for
the above items, including incidental office and service
functions necessary in connection therewith.
(u) Intentionally Omitted.
(v) Legal Notice Address: (Article XXVI, Section 26.1)
Tenant: 125 Chubb Ave.
Lyndhurst, New Jersey 07071
Attn: General Counsel
Attn: Vice President, Administration
Landlord: 3355 Las Vegas Boulevard South
Las Vegas, Nevada 89102
(notices) Attn: Rob Goldstein, Senior V.P.
Forest City Management, Inc.
Commercial Division
P.O. Box _________
(payments and copies of notices) Cleveland, Ohio 44101
(w) Security Deposit: (Article XII, Section 12.5)
4
<PAGE> 12
$49,560.
(x) Guarantor:
(i) Name: Movado Group, Inc.
(ii) Address: 125 Chubb Ave.
Lyndhurst, New Jersey 07071
Attn: General Counsel
Attn: Vice President, Administration
(y) Additional Provisions (these provisions shall apply notwithstanding anything
in this Lease to the contrary):
(i) In lieu of the Security Deposit required under Section
12.5, Tenant may provided Landlord with an irrevocable
letter of credit in form and from financial institution
reasonably acceptable to Landlord in the amount of
$49,560. Landlord may draw on such letter of credit in
circumstances when Landlord would have the right to
apply the Security Deposit as set forth herein.
Section 1.1 - Defined Terms.
Wherever used in this Lease, the following terms shall be construed to
mean as follows:
(a) "COMMON AREAS" shall mean the Enclosed Mall and its amenities
(including entertainment features, such as the canal and gondolas), plaza areas,
surface parking areas, parking decks, structures or garages, if any, driveways,
aisles, sidewalks, loading docks, passageways, landscaping, courts, stairs,
ramps, elevators, escalators, moving walkways, meeting rooms, public restrooms
and other common service areas, provided for by Landlord for the common or joint
use and benefit of the tenants and occupants of the Shopping Center, their
employees, agents, servants, customers and other invitees.
(b) "ENCLOSED MALL" shall mean that portion or portions of the climate
controlled enclosed sections of the Shopping Center which are used in common,
among other things, for pedestrian traffic.
(c) "LEASE YEAR" shall mean each twelve (12) month period during the Lease
Term; provided, however, that if the Rent Commencement Date is not the first day
of a month, then the first Lease Year shall commence on the Rent Commencement
Date and end on the last day of the twelfth full calendar month thereafter and
the second and each succeeding Lease Year shall commence on the first day of the
next calendar month.
(d) "PREMISES" shall mean the specific demised store space leased to
Tenant by Landlord now existing or to be constructed in the Shopping Center. The
Premises are cross-hatched on Exhibit "B", attached hereto for the sole purpose
of more specifically locating the Premises.
(e) "RENTS" shall mean Fixed Minimum Rent, Percentage Rent and Additional
Charges (as defined in Article XII) unless otherwise specifically noted.
5
<PAGE> 13
(f) "RESORT" shall mean that hotel, casino, retail, restaurant and parking
complex known as the Venetian Casino Resort of which the Shopping Center is a
part. Notwithstanding the foregoing, Landlord expressly reserves the right, in
the exercise of its sole discretion, to change the name of the Resort at any
time during the Term of this Lease.
(g) "SHOPPING CENTER" shall mean those buildings and common areas
comprising the retail shopping center development known as "The Grand Canal
Shops" owned and/or ground leased by Landlord and located in Clark County,
Nevada, all as shown on Exhibit "A" attached hereto and made a part hereof.
Notwithstanding the foregoing, Landlord expressly reserves the right, in the
exercise of its sole discretion, to change the name of the Shopping Center at
any time during the Term of this Lease.
(h) "TENANT'S PROPORTIONATE SHARE", shall mean a fraction, the numerator
of which is (i) with respect to CAM Costs, as hereinafter defined, the lesser of
(A) two thousand (2,000) square feet, or (B) the "Premises GLA", as hereinafter
defined (but excluding second level space), and (ii) with respect to real estate
taxes, the Premises GLA (but excluding second level space), and the denominator
of which is the total number of square feet of actually occupied gross leasable
area (excluding second level space) on the main level of the Shopping Center
("Occupied Center GLA") (except that the Occupied Center GLA may not be less
than eighty percent (80%) of aggregate Shopping Center GLA (excluding second
level space)).
ARTICLE II
EXHIBITS
Section 2.1 - Exhibits. The following exhibits are attached hereto or otherwise
incorporated herein by reference, and made a part of this Lease;
EXHIBIT "A" Site Plan of the Shopping Center - Attached
EXHIBIT "B" Premises - Attached
EXHIBIT "GCS1.0" Tenant Handbook containing the scope of
Landlord and Tenant work and sign and design criteria -
Not attached but incorporated herein by reference.
ARTICLE III
PREMISES
Section 3.1 - Premises. In consideration of the payment of all Rents and the
performance of the covenants as hereinafter set forth, Landlord demises unto
Tenant, and Tenant leases from Landlord, subject to all matters of record, for
the Term and upon the terms and conditions set forth in this Lease, the Premises
which is situated in the County of Clark and State of Nevada and being the unit
set forth in Section 1.0(b).
Section 3.2 - Gross Leasable Area of the Premises. The gross leasable area of
the Premises or the "Premises GLA" shall be computed based on the "lease lines"
for the Premises, defined as follows: The lease line for common demising walls
between adjoining tenants shall be the center line of the common demising wall.
6
<PAGE> 14
Along the storefront the lease line shall be the "designated line" ("DL")
separating the Premises from the Common Area, regardless of where Tenant's
storefront is actually built unless Tenant's storefront extends or "pops out"
past such DL in which event the storefront exterior shall be Tenant's lease
line. On non-common demising walls such as between the Premises and service
corridors, mechanical rooms, or the building exterior, the lease line shall be
the outside face of the demising wall. Any recesses required to accommodate the
door swing of the exit door for the Premises shall be considered part of the
Premises. No deductions shall be made for columns or bracing within the Premises
or along the demising walls but deductions shall be made for the areas occupied
by major vertical duct shafts and by building support walls.
Section 3.3 - Revisions to Premises GLA. The square footage set forth in Section
1.0(c) has been determined pursuant to the provisions of Section 3.2 by
reference to either "CAD" or scaled architectural drawings of the Premises.
Landlord and Tenant acknowledge that irrespective of whether or not the Premises
shall have been constructed as of the date of this Lease, in the event that
Landlord's final as-built field or CAD measurements of the Premises after
Tenant's leasehold improvements have been constructed should disclose a
different square footage than the Premises GLA set forth in Section 1.0(c) above
("Final Revised Premises GLA"), then Landlord agrees to notify Tenant in writing
of the Final Revised Premises GLA. Within fifteen (15) days after its receipt of
such notice, Tenant shall have the right to have its own measurement made of the
Premises and, in the event that there is a difference between Tenant's
measurement and Landlord's measurement, Tenant will so notify Landlord and the
parties will consult in an effort to resolve such difference. If the parties
have not resolved such difference within fifteen (15) days after Tenant's notice
to Landlord thereof, then each party shall appoint an architect, both of whom
shall appoint a third architect who shall determine the Final Revised Premises
GLA and whose determination thereof shall be final and binding on the parties.
The cost of such third architect shall be borne equally by Landlord and Tenant.
In the event Tenant either chooses not to have its own measurement made or has
its own measurement made and there is no difference from Landlord's measurement,
then Landlord's original notice to Tenant of the Final Revised Premises GLA
shall be deemed sufficient to amend the Premises GLA set forth in Section
1.0(c), such amendment being deemed self-operative without the necessity of
further formal mutual acknowledgment or documentation between Landlord or
Tenant. When so finally determined, the Final Revised Premises GLA shall be used
as the numerator in computing Tenant's Proportionate Share of Additional Charges
and in all computations of Fixed Minimum Rent if such has been determined on a
square foot (as opposed to a fixed rate) basis. If the Fixed Minimum Rent should
be so revised, Landlord will provide Tenant with notice of such rent revision
and the Percentage Rent breakpoint(s) set forth in Section 1.0(h) herein shall
be correspondingly adjusted.
Section 3.4 - Landlord's Reservation. Landlord reserves to itself the roof and
exterior walls of the building containing the Premises and all space above the
ceiling within the Premises, to accommodate the Shopping Center's structural,
mechanical and electrical conduit piping, ducting or venting requirements.
Landlord and its agents further reserve the right on behalf of themselves or an
authorized utility company to run utility lines, pipes, conduits or ductwork
when necessary or desirable through the air space above Tenant's ceiling,
columns or within walls of the Premises and to maintain, repair, alter, replace
or remove the same in locations which will not materially interfere with
Tenant's use of the Premises, materially alter the appearance of the Premises,
or materially alter or interfere with Tenant's use of Tenant's improvements,
trade fixtures or other property at the Premises.
Section 3.5 - Intentionally Omitted.
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Section 3.6 - Remodeling. If at any time from time to time during the Term after
the fourth (4th) Lease Year Landlord remodels all or a substantial portion of
the Shopping Center, and such remodeling includes the Premises or a portion
thereof, then Landlord shall have the right, at its sole cost and expense, to
change the dimensions or reduce the size of the Premises; provided, however,
that if a reduction in size of the Premises would reduce the Premises to less
than ninety percent (90%) of its original size or if, as a result of any
reduction in size or remodeling, the Premises or the remaining portion thereof
would not be suitable for the purpose for which Tenant has leased the Premises,
Tenant may terminate this Lease by written notice to Landlord given within
thirty (30) days after Landlord notifies Tenant of Landlord's intention to
remodel. In connection with any termination of this Lease under the preceding
sentence, Landlord shall pay to Tenant the unamortized (based on straight line
amortization) reasonable costs paid by Tenant for Tenant's non-removable
improvements at the Premises in addition to Tenant's out-of-pocket costs
incurred in closing its store and the Premises and vacating the Premises. In the
event of any remodeling pursuant to this Section 3.6, Landlord shall repair any
damage to the Premises caused thereby and, in the event of any reduction in the
area of the Premises, Fixed Minimum Rent shall be reduced to an amount equal to
that proportion of the rent provided for in Section 1.0(g) that the floor area
of the Premises after the remodeling bears to the floor area of the Premises
prior to the remodeling. In connection with any such remodeling, Landlord may
require Tenant to cease conducting business from the Premises for a period not
in excess of thirty (30) days. Fixed Minimum Rent shall be abated during any
such period that Landlord requires Tenant to cease conducting business. If such
period is more than fifteen (15) days, Landlord will reimburse Tenant for
Tenant's lost profits during the portion of such period after the initial
fifteen (15) days, which for purposes of this Section 3.6 shall be deemed to
equal Tenant's profits for the corresponding period in the immediately preceding
Lease Year, to the extent such profits are not covered by the business
interruption insurance that Tenant is required to carry hereunder.
ARTICLE IV
COMMON AREAS
Section 4.1 - Use.
(a) Landlord grants to Tenant and its agents, employees and customers, a
non-exclusive license, subject to the reasonable uniform rules and regulations
promulgated by Landlord, to use the Common Areas in common with other tenants
and occupants of the Shopping Center, their agents, employees and customers
during the Term, subject to the exclusive control and management thereof at all
times by Landlord and subject further to the rights of Landlord as set forth in
Section 4.2 herein.
(b) Landlord reserves to itself the right to construct, lease and/or
license kiosks, carts, and sales areas on any portion of the Common Areas other
than those portions of the Common Areas within twenty-five (25) feet of the DL,
provided such kiosks, carts and sales areas do not materially interfere with
access to or visibility of the Premises from the Common Areas adjacent to the
Premises.
(c) Tenant shall not use the Common Areas for any other purpose than
herein designated.
Section 4.2 - Management and Operation of Common Areas. Landlord will use its
best efforts to operate and maintain or will cause to be operated and
maintained, the Common Areas in a first-class manner and in the best interest of
the Shopping Center. Landlord will have the right (1) to establish, modify and
enforce
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reasonable and uniform rules and regulations with respect to the Common Areas
for the general benefit of Landlord and all tenants of the Shopping Center; (2)
to enter into, modify and terminate easements and other agreements pertaining to
the use and maintenance of the parking areas and fees for use of such parking
areas and other Common Areas; (3) to provide for employee parking (which parking
may be located off the Resort property) and formulate reasonable and uniform
rules and regulations for the same; (4) without abatement of rent or other
charges, upon prior notice to Tenant to close such portions of said parking
areas or other common areas to such extent as may, in the reasonable opinion of
Landlord, be necessary to prevent a dedication thereof or the accrual of any
right to any person or to the public therein or for any other reason in the best
interest of Landlord and all tenants; (5) without abatement of rent or other
charges, upon prior notice to Tenant to close temporarily any or all portions of
the Common Areas for repairs or refurbishing; (6) to discourage non-customer
parking; (7) to move, remove, relocate and/or replace seats, trees, planters and
other amenities commonly found in first-class shopping centers; and (8) to do
such other acts in and to said areas and improvements as in the exercise of good
business management, and the maintenance of a first-class shopping center, as
Landlord, in the exercise of its reasonable business judgment, shall deem to be
advisable; provided, however, that in connection with any such act Landlord
shall use reasonable efforts to minimize any interference with the access to the
Premises, and any obstruction of visibility of the Premises, from the Common
Areas adjacent to the Premises.
ARTICLE V
CHANGES AND ADDITIONS TO
SHOPPING CENTER SITE PLAN AND LEASING PLAN
Section 5.1 - Site Plan. The site plans attached hereto as Exhibits "A" and "B",
respectively, are for the sole purpose of showing the approximate shape, design,
proposed locations of buildings, tenant spaces and common areas located within
the Shopping Center; provided, however, that in no event will the actual
location of the Premises as finally constructed materially deviate from the
location depicted on Exhibit "B" in relation to the other premises depicted
thereon in the general vicinity of the Premises.
Section 5.2 - Changes to Shopping Center Site Plan. Landlord reserves the right
at any time and from time to time (a) to make or permit changes or revisions in
the site plan for the Shopping Center including additions to, subtractions from,
rearrangements of, alterations of, modifications of or supplements to the
building areas, walkways, parking areas, driveways or other Common Areas, (b) to
construct other buildings or improvements in the Shopping Center and to make
alterations thereof or additions thereto and to build additional stories on any
such building or buildings and to build adjoining same, and (c) to make or
permit changes or revisions in the Shopping Center, including additions thereto,
and to convey portions of the Shopping Center to others for the purpose of
constructing thereon other buildings or improvements, including additions
thereto and alterations thereof; provided, however, that no such changes,
rearrangements or other construction shall permanently (i) reduce the number of
parking spaces provided by Landlord below the number of parking spaces required
by law (ii) materially interfere with the access to the Premises from the Common
Areas adjacent to the Premises, or (iii) materially obstruct the visibility of
the Premises from the Common Areas adjacent to the Premises.
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ARTICLE VI
IMPROVEMENTS
Section 6.1 - Landlord's Responsibilities.
(a) Landlord, at its own cost and expense, shall construct that portion of
the Premises required in Exhibit "GCS1.0" to be constructed by Landlord at its
sole cost and expense, all in accordance with Exhibit "GCS1.0" and all in a
good and workmanlike manner and in compliance with all applicable laws,
regulations, rules and ordinances. As part of such work, Landlord shall
construct a dome to raise the ceiling directly in front of the main entrance of
the Premises to at least seventeen (17) feet from the floor of the Shopping
Center in that same area in accordance with plans and specifications mutually
agreed upon by both parties, which agreement shall not be unreasonably withheld
by either party.
(b) Landlord warrants that its work shall be delivered free and clear of
liens, encumbrances and violations or conditions which may constitute violations
of any laws, ordinances, or regulations relating to the use, occupancy and
construction of the Premises and the building containing the same.
(c) Landlord, at Tenant's sole cost and expense, shall construct in
accordance with Exhibit "GCS1.0" that portion of the Premises required in
Exhibit "GCS1.0" to be constructed by Landlord at Tenant's sole cost and
expense ("Chargebacks"). Landlord may, at its sole option, bill Tenant for the
Chargebacks following the RCD, and Tenant shall pay Landlord the Chargebacks no
later than twenty (20) days following receipt of Landlord's billing.
(d) By the earlier to occur of one hundred twenty (120) days after Tenant
takes possession of the Premises or the date on which Tenant opens for business,
Tenant shall inform the Landlord, in writing, of any items that were required to
be performed by Landlord which are incomplete or inadequate; otherwise Tenant
shall be deemed to have acknowledged that all work required to be performed in
connection with the Premises and any and all obligations to be performed by
Landlord on or before the opening of the Premises have been fully performed;
except that Tenant shall have one (1) year from the date Tenant takes possession
of the Premises to inform Landlord in writing of any latent defects in any items
that were required to be performed by Landlord which cannot reasonably be
detected within such one hundred twenty (120) days.
Section 6.2 - Tenant's Responsibilities. Tenant shall at its own expense and in
accordance with Exhibit "GCS1.0":
(a) Secure all permits and licenses necessary for the construction of any
of its installations and the prosecution of its work, and Tenant shall comply
with all laws and regulations relating to the conduct of said work.
(b) Construct the remainder of the Premises and installations therein and
construct the balance of the leasehold improvements necessary to enable Tenant
to occupy the Premises as shown in Tenant's plans and specifications as approved
by Landlord or Landlord's architect, all in a good and workmanlike manner and in
compliance with all insurance requirements and with all applicable permits,
authorizations, building regulations, zoning laws and all other government
rules, regulations, ordinances, statutes and laws, now or hereafter in effect
pertaining to the Premises or Tenant's use thereof. Notwithstanding any other
provision hereof, any installation to be made or work to be performed by Tenant
on or for the Premises prior to the
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opening of the Premises for business shall be first approved in writing by
Landlord prior to commencement of any work by Tenant. Landlord's approval of any
plans for Tenant's work shall, however, create no responsibility or liability on
the part of Landlord for their completeness, design sufficiency or compliance
with the Requirements of governmental agencies or authorities, as hereinafter
described in Section 27.4.
(c) Obtain on behalf of itself, or any of its contractors or
subcontractors, all insurance protection required by Landlord in Exhibit
"GCS1.0".
(d) Install equipment and appliances in said construction and all trade
fixtures installed shall be new and first quality items.
(e) In the event Landlord performs any work at the request or on behalf of
Tenant which is Tenant's responsibility hereunder, Landlord shall bill Tenant
for the costs thereof and Tenant shall pay such costs to Landlord no later than
twenty (20) days following receipt of Landlord's billing.
(f) Landlord may require Tenant, at Tenant's sole cost and expense, to
furnish a bond or other security satisfactory to Landlord to assure diligent and
faithful performance of all work to be performed by Tenant.
The foregoing shall be completed by and Tenant shall open for business no later
than the RCD.
Section 6.3 - Tenant's Trade Fixtures. Except as otherwise provided in this
Section 6.3, all trade fixtures, signs and apparatus (as distinguished from
leasehold improvements) owned by Tenant and installed in the Premises ("Tenant
Personal Property") shall remain the property of Tenant and shall be removable
at any time, including upon the expiration of the Term; provided that Tenant
shall promptly repair any damage to the Premises caused by the removal of any
Tenant Personal Property. If Tenant is in default, Landlord shall have the
benefit of any applicable lien on Tenant Personal Property located in or on the
Premises as may be permitted under the laws of the State of Nevada, and in the
event such lien is asserted by Landlord in accordance with applicable law and
Landlord notifies Tenant of such assertion, Tenant shall not remove or permit
the removal of such Tenant Personal Property until the lien has been removed and
all defaults have been cured. Any Tenant Personal Property not removed by Tenant
upon the expiration or sooner termination of this Lease may be construed by
Landlord as abandoned by Tenant. Alternatively, Landlord may order Tenant to
remove such Tenant Personal Property from the Premises or have it removed at
Tenant's expense.
Section 6.4 - Construction Lien. Nothing contained in this Lease shall be deemed
or construed in any way as constituting the consent or request of Landlord,
express or implied by inference or otherwise, to any contractor, sub-contractor,
laborer or materialman for the specific performance of any labor or the
furnishing of any materials or equipment for any specific improvement,
alteration to or repair of the Premises or any part thereof, nor as giving
Tenant any right, power or authority to contract for or permit the rendering of
any services or the furnishing of any materials on behalf of Landlord that would
give rise to the filing of any lien against the Premises, Shopping Center or the
Resort.
Section 6.5 - Union Cooperation. Tenant shall perform or cause Tenant's
contractors to perform all work in the making and/or installation of any
repairs, alterations or improvements in a manner so as to avoid any labor
dispute that causes or is likely to cause stoppage or impairment of work or
delivery services or any other services in the Shopping Center. In the event
there shall be any such stoppage or impairment as the
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result of any such labor dispute or potential labor dispute, Tenant shall
immediately undertake such action as may be necessary to eliminate such dispute
or potential dispute, including, but not limited to (i) removing all disputants
from the job site until such time as the labor dispute no longer exists, (ii)
seeking an injunction in the event of a breach of contract between Tenant and
any of Tenant's contractors, and (iii) filing appropriate unfair labor practice
charges in the event of a union jurisdictional dispute. Landlord may require
Tenant to use recognized union labor in the construction of Tenant's
improvements at the Premises.
ARTICLE VII
PLANS
Section 7.1 - Submission of Plans.
(a) Tenant shall prepare, at its sole cost and expense, and in full
compliance with the provisions of Exhibit "GCS1.0", complete plans and
specifications for all of Tenant's work, including store front design, and shall
submit such plans and specifications to Landlord or Landlord's designated
representative for approval prior to commencement of any work. No material
changes to said plans shall be made after such approval by Landlord without
Landlord's prior written consent. Landlord's approval of any plans for Tenant's
work shall create no responsibility or liability on the part of Landlord for
their completeness, design sufficiency or compliance with the Requirements of
governmental agencies or authorities, as hereinafter described in Section 27.4.
Landlord shall not unreasonably withhold or delay any approval or consent under
this Section 7.1(a).
(b) Tenant shall be required to submit its plans and specifications to
Landlord in a timely manner so that Tenant's construction in the Premises shall
be completed on or before the RCD. In the event Tenant's plans are not submitted
in a timely fashion as required above, due to reasons within Tenant's or its
architect's control, Landlord reserves the right, in addition to any other
rights it may have hereunder, to require Tenant to commence the payment of Rents
as of the RCD notwithstanding the fact that Tenant may not be open for business
on such date.
ARTICLE VIII
USE
Section 8.1 - Use. Tenant agrees to: (i) operate its business in the Premises
under the trade name specified in Article I, Section 1.0(s) and (ii) use the
Premises solely for the permitted use specified in Article I, Section 1.0(t) and
for no other business or purpose. Tenant further agrees not to conduct catalog
sales in or from the Premises, except merchandise Tenant is permitted to sell
"over-the-counter" consistent with its permitted use. Tenant recognizes that the
specific limited use prescribed herein is a material consideration to Landlord
so that the Shopping Center will maintain an appropriate tenant mix so as to
produce the maximum Gross Revenue possible for all tenants and that the
continued operation of a first-class shopping center development will be
assured. Notwithstanding the foregoing, Tenant's specific limited use hereunder
shall not be construed to imply that Tenant has an exclusive right to conduct
the use permitted by Article I, Section 1.0(t). Landlord, in its sole
discretion, may permit other tenants or occupants of the Shopping Center to
operate the same or similar use; provided, however, that Landlord shall not
grant any tenant or occupant of the Shopping Center the right to use any portion
of the Shopping Center within eighty-six (86) feet of the DL for the
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primary purpose of selling Swiss watches. If Tenant's business in the Premises
is to be conducted pursuant to a franchise agreement, the existence and
continuation of such franchise agreement is a material consideration to Landlord
in entering into this Lease and if such franchise agreement is terminated,
Landlord shall be entitled to treat such event as an event of default and elect
any of the remedies provided in Article XXIV.
Section 8.2 - Tenant's Covenant to Operate. Subject to Article XXII, Tenant
agrees to complete Tenant's work and open the Premises for business to the
public fully fixtured, stocked and staffed on the RCD, and, thereafter
throughout the Term of this Lease, to continuously operate in one hundred
percent (100%) of the useable space within the Premises the business prescribed
in Article I, Section 1.0(t), Mondays through Sundays during such hours as may
be reasonably determined by Landlord for the operation of the Shopping Center;
provided, however, that notwithstanding the foregoing, Tenant shall not be
required to initially open the Premises for business until the Occupied Center
GLA is at least seventy percent (70%) of the aggregate Shopping Center GLA
(excluding second level space). Tenant agrees it will not open earlier or close
later than such hours without Landlord's prior consent. Notwithstanding anything
to the contrary herein contained, Tenant shall have the right to close the
Premises one (1) day each Lease Year (which day shall be mutually acceptable to
Landlord and Tenant) for purposes of conducting a physical inventory in the
Premises and up to two (2) days each Lease Year in the event, through no fault
of Tenant, that Tenant's insurance coverage would not otherwise be met.
Section 8.3 - Prohibitions on Use.
(a) Tenant shall not use or permit or suffer the Premises, or any part
thereof, to be used by anyone else or for any other business or purpose than
that specifically defined and permitted by this Article and further provided
that Tenant shall not divert any portion of the Premises GLA for any other use
other than the use described above.
(b) Tenant shall not permit the Premises to be used in violation of any
laws or local ordinances or any way which in the sole judgment of Landlord will
injure the reputation of, be a nuisance, annoyance, or do damage to the other
tenants of the Shopping Center or Landlord, including without limitation, the
sale of patently offensive material and merchandise and the use of audio
devices, flashing lights, machinery and equipment creating noise or odors, or
the committing of acts, which will disturb, impair or interfere with the use and
enjoyment by the other tenants of their respective premises within the Shopping
Center.
(c) Tenant agrees not to use or allow the Premises to be used for any
auction, fire, bankruptcy or "going out of business" sales therein unless
ordered by a court of competent jurisdiction after reasonable notice to Landlord
and an opportunity by Landlord to be heard.
Section 8.4 - Manner of Operation of Business.
(a) Tenant agrees that the above business is to be conducted in a
reputable manner, in keeping with good practices as established in the trade.
Tenant shall keep upon the Premises an adequate staff of employees and a full
and complete stock of merchandise during business hours throughout the Term of
this Lease so as to insure a maximum volume of business in and from the
Premises.
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(b) Subject to Section 15.1 of this Lease, Tenant agrees to assume full
responsibility and at its own cost to keep and maintain the Premises neat,
clean, in proper repair and decor, and free from waste and offensive odors, and
in an orderly and sanitary condition, free of vermin, rodents, bugs and other
pests.
(c) Landlord and its agents shall have the right, but not the duty, to
inspect the Premises at any time to determine whether Tenant is complying with
the terms of this Section. If Tenant is not in compliance with this Section,
Landlord shall have the right upon five (5) days notice to Tenant and
immediately in the case of an emergency, to enter upon the Premises to remedy
said noncompliance at Tenant's expense. Landlord shall use its best efforts to
minimize interference with Tenant's business, but shall not be liable for any
interference caused thereby.
Section 8.5 - Privileged License. Tenant acknowledges that Landlord and
affiliates of Landlord are businesses that are or may be subject to and exist
because of privileged licenses issued by governmental authorities relating to
casino gaming ("Gaming Authorities"). If a corporation, Tenant shall disclose
the names of all officers and directors of Tenant, and unless a publicly traded
corporation on a national stock exchange such as NYSE, AMEX or NASDAQ, Tenant
shall disclose to Landlord all ownership interests in Tenant and all lenders or
sources of financing. If requested to do so by Landlord, Tenant shall obtain any
license, qualification, clearance or the like which shall be requested or
required of Tenant by Landlord, Gaming Authorities or any regulatory authority
having jurisdiction over Landlord or any affiliate of Landlord. If Tenant fails
to satisfy such requirement or if Landlord or any affiliate of Landlord is
directed to cease business with Tenant by any such authority, or if Landlord
shall in good faith determine, in Landlord's sole and exclusive judgment, that
Tenant, or any of its officers, directors, employees, agents, designees or
representatives, or partner, owner, member, or shareholder, or any lender or
financial participant (a) is or might be engaged in, or is about to be engaged
in, any activity or activities, or (b) was or is involved in any relationship,
either of which could or does jeopardize Landlord's business, reputation or such
licenses, or those of its affiliates, or if any such license is threatened to
be, or is, denied, curtailed, suspended or revoked, then Tenant shall
immediately (i) terminate any relationship with the individual or entity which
is the source of the problem, or (ii) cease the activity creating the problem to
Landlord's satisfaction. In the event 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
inadequate under the circumstances) or (y) may terminate this Lease without
liability to either party; provided, however, if any matter described herein is
reasonably susceptible to cure, Tenant shall have a reasonable time within which
to effect such cure (but in no event longer than the time available to fully
comply with any requirement imposed by law, rule, regulation or the Gaming
Authorities) and Landlord shall not have the right to terminate this Lease
during such cure period.
Section 8.6 - Vendor Agreements. Tenant acknowledges that Landlord has entered
into or may in the future enter into agreements with vendors or service
providers (hereinafter "Common Vendors") to provide services to the Resort and
its tenants for the purposes of achieving uniformity of services, favorable
pricing and/or limiting the number of service providers working in or making
deliveries to the Resort. Tenant agrees to contract with such Common Vendors for
services and to abide by the terms of Landlord's agreements with such Common
Vendors; provided that amounts which are to be paid to such Common Vendors, and
the quality of product and level of service to be provided by such Common
Vendors, shall at all times be competitive in the Las Vegas marketplace, and
provided further than Tenant shall in no event be obligated to abide by the
terms of any agreement between Landlord and any Common Vendor to the extent such
terms conflict with any of the terms contained herein.
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ARTICLE IX
TERM
Section 9.1 - Term. The Term of this Lease shall commence on the RCD (see
Sections 1.0(f) and 10.1) and the Term, unless the Lease should be terminated
earlier, shall expire at midnight on the "Term Expiration Date" or "TED" which
shall be at the end of the number of Lease Years stated in Section 1.0(d).
Section 9.2 - Commencement Date Agreement. At any time following full execution
of this Lease, Landlord and Tenant may, upon the request of either party,
execute a supplemental agreement setting forth the commencement and termination
dates of the Term of this Lease.
Section 9.3 - Holding Over. If, at the expiration of the Term of this Lease,
Tenant continues to occupy the Premises with or without Landlord's consent, its
tenancy shall become month-to-month terminable by either party on thirty (30)
days prior written notice. Tenant shall be subject to all the conditions of this
Lease excepting the Term thereof and Tenant's obligation to pay hold-over rent
equal to one hundred fifty percent (150%) of the monthly Fixed Minimum Rent
payable by Tenant immediately prior to expiration of the Term, and Tenant shall
be further subject to any changes to this Lease which Landlord has given Tenant,
in writing, during any thirty (30) day period for the following thirty (30) day
period. Notwithstanding anything contained herein to the contrary, nothing
contained in this subparagraph shall be deemed or construed to give Tenant the
right to hold over. Tenant shall not be permitted to hold over if Landlord gives
Tenant notice before the expiration of the Term of this Lease that Tenant may
not hold over.
Section 9.4 - Expiration of the Term of the Lease.
(a) This Lease shall expire at the end of the Term thereof without the
necessity of any notice from either Landlord or Tenant to terminate the same,
and subject to Section 9.3 hereof, Tenant hereby waives notice to vacate or quit
the Premises and agrees that Landlord shall be entitled to the benefit of all
provisions under this Lease respecting the summary recovery of possession of the
Premises from Tenant holding over to the same extent as if statutory notice had
been given. However, if Tenant should vacate prior to the expiration of the Term
of the Lease, Tenant will nevertheless, subject to Article XXIV, be liable for
all Rents due and owing up to the expiration of the Term.
(b) For a period of six (6) months prior to the expiration of the Term,
upon reasonable prior notice to Tenant, Landlord shall have the right and may
show the Premises and all parts thereof to prospective tenants during normal
business hours.
(c) Tenant shall deliver and surrender to Landlord possession of the
Premises upon the expiration or earlier termination of this Lease in as good
condition and repair as the same shall be at the commencement of said term
except ordinary wear and tear and casualty and loss subject to all alterations
and improvements theretofore made thereto and approved by Landlord in writing.
(d) Tenant shall have no right to quit the Premises, cease to operate its
business, cancel or terminate this Lease except as such right is expressly
granted to Tenant herein.
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Section 9.5 - Renewal of Term. Tenant is hereby granted an option to extend the
Term of this Lease, hereinafter referred to as the "Original Lease", for the
additional consecutive periods set forth in Section 1.0(d)(ii), if any, provided
that Tenant shall notify Landlord, in writing, no less than nine (9) months
prior to the commencement of any such renewal term of Tenant's intention to
exercise such Option, and provided further that no Event of Default has occurred
and is occurring at the time of notice of renewal, or as of the commencement
date of the renewal term. The terms and conditions of the renewal term shall be
the same as the terms and conditions of the Original Lease, excepting for the
following modifications:
(a) Tenant shall have no further right of renewal after the expiration of
the last renewal term.
(b) The Fixed Minimum Rent as payable during the renewal periods, shall be
calculated in accordance with Section 1.0(g).
ARTICLE X
RENT COMMENCEMENT DATE
Section 10.1 - Rent Commencement Date.
(a) As used in this Lease, the term "Rent Commencement Date" shall mean
the later of the dates specified in Section 1.0(f); provided, however, that in
no event shall the Rent Commencement Date be later than the date Tenant opens
for business.
(b) Should the RCD occur on a day other than the first day of a calendar
month, Tenant shall be liable for Fixed Minimum Rent and Additional Charges due
for said previous partial month on a prorated basis based upon a thirty (30) day
month.
Section 10.2 - Failure of Delivery of Premises to Tenant. In the event Landlord
shall fail to deliver possession of the Premises to Tenant by December 31, 1999
for any cause within Landlord's control, including, but not limited to, delay in
commencing or completing construction of Landlord's work, the holding over of
any tenant or tenants, or the total failure to deliver the Premises, Tenant
shall have the right to terminate this Lease upon notice to Landlord given at
any time on or before January 31, 2000 (provided Landlord has not theretofore
delivered possession of the Premises to Tenant), and neither party shall have
any further obligation hereunder (except with respect to matters that arose
before such termination).
Section 10.3 - Tenant's Failure to be Open by the Rent Commencement Date.
Notwithstanding any rights or remedies of Landlord set forth in Article XXIV, in
the event Tenant has not opened by the RCD except for reasons outside Tenant's
control, Landlord shall have the right to require Tenant to pay to Landlord as
liquidated damages and not as a penalty, the sum of One Hundred Dollars
($100.00) for each day beyond such date that Tenant is late in opening the
Premises for business, which payment is intended to compensate Landlord for
actual and substantial losses that Landlord may suffer; provided, however, that
notwithstanding the foregoing, Landlord shall only have the right to require
Tenant to pay such sum to Landlord when the Occupied Center GLA is at least
seventy percent (70%) of the aggregate Shopping Center GLA (excluding second
level space). Nothing contained in this Section 10.3 shall be construed to waive
any rights and remedies Landlord may have against Tenant, nor affect Tenant's
obligation to commence payment of Fixed
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Minimum Rent and Additional Charges on the RCD. Landlord may offset any amounts
payable by Tenant hereunder against any amounts Landlord may owe Tenant.
ARTICLE XI
RENT
Section 11.1 - Fixed Minimum Rent.
(a) Tenant hereby covenants and agrees to pay to Landlord's authorized
agent, without deduction or set-off and without demand, at the address set forth
in Section 1.0(v) above or such other place as Landlord may, from time to time,
designate in writing, as Fixed Minimum Rent for the Premises, the amount(s) set
forth in Article I, Section 1.0(g), said amount(s) to be due and payable in
monthly installments, in advance, on the Rent Commencement Date and on the first
day of each and every calendar month thereafter. Tenant agrees at no time to pay
the monthly Fixed Minimum Rent more than one (1) month in advance of its due
date.
(b) Notwithstanding anything in this Lease to the contrary, in the event
Tenant fails to pay any Rents or any other sum due and owing Landlord within ten
(10) days following the due date of said Rents, then Tenant shall pay a late
charge of the greater of (i) five percent (5%) of the amount due and (ii) two
percent (2%) per month of the monthly charges due from the due date of any
installment of any Rents.
(c) Should any governmental taxing authority acting under any present or
future law, ordinance, or regulation, levy, assess, or impose a tax, excise
and/or assessment (other than an income or franchise tax upon Landlord's net
income) upon Landlord with respect to Rents payable by Tenant to Landlord,
either by way of substitution for or in addition to any existing tax on land and
buildings or otherwise, Tenant shall be responsible for and shall pay such tax,
excise and/or assessment, or shall reimburse Landlord for the amount thereof, as
the case may be.
(d) Tenant shall pay the adjusted Fixed Minimum Rent as calculated
pursuant to Section 1.0(g) commencing with the first month of the Lease Year
effected by the adjustment. However, pending the determination of the adjusted
Fixed Minimum Rent, Tenant shall continue to pay Fixed Minimum Rent in the same
amount as the Fixed Minimum Rent required for the preceding Lease Year effected
by the adjustment. When the adjusted Fixed Minimum Rent has been determined,
Tenant, concurrently with the next monthly Fixed Minimum Rent payment due and
payable after the furnishing by Landlord to Tenant of the computation of the
adjusted Fixed Minimum Rent, in addition to the adjusted Fixed Minimum Rent for
such month, shall pay Landlord a sum equal to the amount of the increase in the
Fixed Minimum Rent and Percentage Rent due for each of the previous months in
the effected Lease Year.
Section 11.2 - Percentage Rent.
(a) Amount. In addition to Tenant's Fixed Minimum Rent, Tenant covenants
and agrees to pay to Landlord, without deduction or set-off, during each month
of the term hereof, Percentage Rent in the amount(s) set forth in Section
1.0(h).
(b) Payment.
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(i) The Percentage Rent due for each calendar month shall be payable
by no later than the fifteenth (15th) day of each month immediately following
each month in which nine percent (9%) of Gross Revenue for such month exceeds
the Fixed Minimum Rent paid for such month. Said payments of Percentage Rent
shall be made concurrently with the submission of Tenant's written statement of
monthly Gross Revenue to Landlord as hereinafter provided.
(ii) Upon submission of Tenant's certified statement of Gross
Revenue at the close of each calendar year, as provided in Section 11.5 herein,
adjustments of amounts due for Percentage Rent shall be made to the respective
parties. Overpayments of Percentage Rent shall be credited against the next
installment of Percentage Rent due (or, if at the end of the Term, Landlord
shall pay such amount to Tenant within thirty (30) days after Tenant has
delivered its certified statement of Gross Revenues to Landlord). Underpayments
of Percentage Rent shall be paid to Landlord within thirty (30) days after
Tenant has delivered its certified statement of Gross Revenues to Landlord.
(iii) Notwithstanding the provision for the payment of Percentage
Rent, Landlord shall not, in any event, be deemed to be a partner or associate
of Tenant in the conduct of its business. The relationship of the parties hereto
shall, at all times, be solely that of Landlord and Tenant.
Section 11.3 - Gross Revenue. The term "Gross Revenue" wherever used herein
shall be defined to mean the total amount of all sales of merchandise and/or
services and all other receipts of all business conducted in, at, or from any
part of the Premises, whether the same be for cash, barter, credit, check,
charge account, gift, and merchandise certificates purchased, or other
disposition of value regardless of collection, in the event of sale upon credit
or charge account, and whether made by Tenant, sub-tenants, concessionaires,
licensees, or assignees of Tenant. The value of each sale shall be the actual
total sales price charged the customer, and shall be reported in full in the
month that the transaction occurs irrespective of when, or if, payment is
received. Gross Revenue includes orders or sales which originate in, at, or from
the Premises, whether delivery or performance is made from the Premises or from
another place; orders or sales mailed, telephoned, or telegraphed, which are
received at or filled from the Premises; all sales and revenue accruing by means
of mechanical, self-operated, or automatic vending devices on the Premises.
There shall be no deduction or exclusion from Gross Revenue except as
specifically permitted hereafter. Any deposit not refunded shall be included in
Gross Revenue.
Section 11.4 - Exclusion from Gross Revenue. Notwithstanding the foregoing,
Gross Revenue shall not include:
(a) Merchandise returned in the amount of cash refunded, credit given, or
discounts and allowance granted or exchanges made, provided that the sale price
of such items was originally included in Gross Revenue.
(b) The amount of any sales, use or gross receipts tax, or excise tax,
imposed by any governmental authority directly on sales and collected from the
customers, providing the amount of such tax is separately recorded.
(c) The exchange of merchandise between stores of Tenant, when such
exchanges are made solely for the operation of Tenant's business and not for the
purpose of consummating a sale which has been made at, in or from the Premises.
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(d) Merchandise returned for credit to shippers, jobbers, wholesalers or
manufacturers.
(e) Revenue from sale of trade fixtures after use in the Premises and sums
or credits received in settlement of claims for loss or damage to merchandise.
(f) Revenue from vending machines for Tenant's employee use only.
(g) The amount of any sales to employees of Tenant.
(h) To the extent such charges do not materially exceed Tenant's costs,
separately stated charges for alterations, repairs, gift wrapping and delivery
services rendered to Tenant's customers.
(i) Redemptions of gift certificates.
(j) To the extent such charges are separately stated from the sales price
of the merchandise, financing or service charges in connection with the
extension by Tenant of "in-house" credit.
(k) Discounts or fees payable to credit card companies.
(l) Any sums or credits received by Tenant in settlement of Tenant's
claim(s) for loss of or damage to merchandise.
Section 11.5 - Reporting.
(a) Tenant shall submit to Landlord, on or before the fifteenth (15th) day
of each month of each Lease Year, commencing in the second month of the first
Lease Year, a written statement signed by Tenant showing Tenant's Gross Revenue,
as herein defined, for the preceding calendar month.
(b) On or before forty-five (45) days following the close of each calendar
year (or the expiration of the Term), Tenant shall furnish to Landlord a
statement certified by an officer of Tenant, or a certified public accountant
employed by Tenant, if any, of the Gross Revenue made by Tenant from the
Premises during the preceding calendar year (or portion thereof).
(c) For the purpose of ascertaining the amount of reportable sales and
revenue, Tenant agrees to record each and every sale at the time of the
transaction on either a cash register having a sealed, continuous, cash register
tape with cumulative totals, which numbers, records, and duplicates each
transaction entered into the register, (in any event such cash register must
have a non-resettable grand total) or on serially prenumbered sales slips. In
the event Tenant chooses to record each sale by using a cash register, Tenant
agrees that the continuous, cash register tape will be sealed or locked in such
a manner that it is not accessible to the person operating the cash register. If
Tenant chooses to record each sale on individual sales slips, Tenant agrees that
said sales slips (including those canceled, voided, or not used) will be
retained in numerical sequence for the period set forth in Section 11.6 herein.
(d) If Tenant shall fail to prepare and deliver any statement of Gross
Revenue in a timely manner as required herein, and such failure shall continue
for ten (10) days after the date the same is due, Landlord may do any or all of
the following: (i) elect to treat Tenant's failure to report as a default of
this Lease; (ii)
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elect to make an audit of all books and records of Tenant which in any way
pertain to or show Gross Revenue and to prepare the statement or statements
which Tenant has failed to prepare and deliver; or (iii) impose a
late/non-reporting fee of One Hundred Dollars ($100.00) for each such failure by
Tenant. Tenant shall pay on demand all expenses of such audit and of the
preparation of any such statements and all sums as may be shown by such audit to
be due as Percentage Rent; provided, however, that Tenant shall have the right,
within thirty (30) days after its receipt of any such audit, to dispute same in
good faith.
(e) All such statements and reports shall be kept in confidence by
Landlord except in connection with a sale, mortgage, administrative or judicial
proceedings.
(f) Landlord may, in its sole and absolute discretion, provide a program
for the purpose of collecting daily sales information directly from Tenant via
Tenant's designated representatives at the Premises. The program may be in the
form of automated, computerized telecommunication. The costs and expenses in
connection with the operation of the program will be paid for either by Landlord
or by proceeds from the Marketing Fund. The information collected may be
utilized by Landlord for evaluating and responding to market trends and such
other matters as Landlord finds appropriate.
Section 11.6 - Books and Records.
(a) Tenant agrees to keep on the Premises, or at its principal office,
accurate books and records (as more specifically identified below) of all
business conducted at the Premises in accordance with generally accepted
accounting practices consistently applied, and said records shall be open and
available for examination at Tenant's principal office or, upon ten (10) days
notice, at the Premises at all reasonable times to Landlord, or Landlord's
representatives, upon reasonable notice to Tenant, for the purpose of
ascertaining or verifying the Gross Revenue. All records shall be retained by
Tenant for examination by Landlord for a period of at least two (2) years
following the end of the calendar year for which said records apply.
(b) Tenant further agrees that for the purposes hereinbefore recited,
Tenant shall prepare, preserve and maintain for each calendar year, the
following documents, books, accounts and records:
(1) Daily cash register summary tapes (normally referred to as "Z
Tapes") and sealed, continuous, cash register tapes or prenumbered sales slips,
maintained as recited herein;
(2) A single, separate bank account into which all receipts of
business and other revenue from operations on or from the Premises are
deposited;
(3) All bank statements detailing transactions in or through any
business bank account;
(4) Daily or weekly sales recapitulations;
(5) A sales journal;
(6) A general ledger or a summary record of all cash receipts and
disbursements from operations on or from the Premises;
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(7) Copies of all sales or use tax returns filed with any
governmental authority which reflect in any manner sales, income or revenue
generated in or from the Premises; and
(8) Such other records or accounts as Landlord may reasonably
require in order to ascertain, document, or substantiate reportable Gross
Revenue as defined herein.
(c) If upon inspection or examination of Tenant's available books and
records of account, Landlord determines that Tenant has failed to maintain,
preserve, or retain the above-recited documents, books, and records of account
in the manner detailed herein such that Landlord cannot reasonably determine
Tenant's Gross Revenue for the applicable period, Landlord shall give Tenant
sixty (60) days to cure said deficiencies. Further, if Tenant is found to be
deficient in maintaining any of the above-recited documents, books or records of
account, Tenant shall reimburse Landlord for reasonable expenses incurred by
Landlord in determining said deficiencies, including, but not limited to, any
audit or examination fees incurred by Landlord.
If after receiving the aforesaid notice, and upon expiration of the
sixty (60) day time period specified herein, Tenant fails to cure the noted
deficiencies, Landlord may, at its option, either grant Tenant additional time
to cure the deficiencies, hold Tenant in default of the Lease, or at Tenant's
expense, and for its benefit, retain a good and reputable independent accounting
or bookkeeping firm to prepare and maintain the above-recited documents, books
and records of accounts. If Landlord elects the latter option, Tenant agrees and
covenants that the representative or representatives of said accounting or
bookkeeping firm will have full right of entry and access to the Premises and
existing financial records, and full cooperation by Tenant, for the purpose of
establishing and maintaining the documents, records and books of account recited
hereinabove. Any expenses incurred by Landlord in furtherance of its rights
hereunder will be considered additional rent for the Premises due and payable by
Tenant with the next due installment of Rents.
(d) In the event an examination of the records of Tenant to verify said
Gross Revenue shall disclose a deficiency in excess of two percent (2%) of the
Gross Revenue reported for any calendar year where Percentage Rent is due
Landlord, (1) Tenant agrees to pay to Landlord the reasonable costs and expenses
of such audit, and (2) any additional Percentage Rent found due and owing as a
result of said audit shall be immediately paid by Tenant to Landlord upon
demand. If an examination by Landlord or its representative discloses that
Tenant has overreported Gross Revenue and that, as a result of said
overreporting, Tenant has overpaid Percentage Rent, Landlord shall give Tenant
credit against the next due installment of Rents due and owing by 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 Tenant has delivered its
certified statement of Gross Revenues to Landlord).
ARTICLE XII
ADDITIONAL CHARGES
Section 12.1 - Status of Charges. As part of the Rents provided for by this
Lease, Tenant agrees to pay to Landlord, as hereinafter provided, the
"Additional Charges" as described in this Article and Article XIII for the
purposes as hereinafter set forth. Such Additional Charges shall be subject to
all provisions of this Lease and shall be deemed included as part of Rents due
and owing hereunder.
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Section 12.2 - Common Area Maintenance Costs.
(a) The term "Common Area Maintenance ('CAM') Cost" means the total of all
items of cost related to maintaining, managing, operating, policing, securing,
repairing, replacing, enhancing, insuring and protecting the Common Area,
including but not limited to: all cost of maintaining, painting and upgrading
facilities, fixtures and improvements, including but not limited to, parking
decks or structures, cleaning, removal of trash, dirt and debris, snow and ice
removal, sweeping and janitorial services; all such maintenance and construction
work as shall be required to preserve and maintain the utility and appearance of
the Common Area; lighting of outdoor areas, mall and service corridors;
maintenance, repair and replacement of roof/roofs, and sprinkler systems; cost
of plantings, landscaping and mall amenities, interior and exterior landscaping
and supplies incidental thereto to include all seasonal and similar decorations
plus the cost of all utilities utilized in connection therewith; costs of
maintenance and repair of the system which heats, ventilates and air conditions
the Enclosed Mall and Landlord's energy costs incurred in connection therewith;
directional signs, shopping center signs, bumpers and other markers;
installation, maintenance and repair of any security systems, fire protection
systems, lighting and utility systems, and storm drainage systems; installation,
maintenance, repair and replacement of disposal plants, lift stations, and
retention ponds or basins; costs and expenses of payroll, payroll taxes and
employee benefits of all management personnel, including without limitation
managers, security and maintenance people, secretaries and bookkeepers; costs
and expenses of operating, maintaining, repairing and replacing machinery and
equipment used in the operation and maintenance of the Common Areas, and the
personal property taxes and other charges incurred in connection with such
machinery and equipment; management fees, costs and expenses of purchasing and
maintaining in full force insurance (including, without limitation, liability
insurance for personal injury, death and property damage, rent insurance,
insurance against fire, extended coverage, theft or other casualties, all risk,
difference in conditions, sprinkler, malicious mischief, vandalism, earthquake,
flood, worker's compensation insurance covering personnel, fidelity bonds for
personnel, insurance against liability for defamation and claims of false arrest
occurring on or about the Common Areas, and plate glass insurance), costs and
expenses enforcing any operating agreements pertaining to the Common Areas or
any portions thereof, and any easement agreement, or reservation or any
arbitration or judicial actions undertaken with respect to the same; costs and
expense of policing/security, including uniforms, equipment and all supplies;
cost of installation of any cost saving devices or equipment; all costs relating
to separate employee parking areas, including but not limited to the cost of any
shuttle services Landlord may provide and the cost of transportation services,
depreciation of equipment and equipment buildings used in operating, maintaining
and replacing the Common Areas and/or rent paid for the leasing of any such
equipment or buildings; cost and expense for the rental of music program service
and loudspeaker systems including furnishing electricity; services furnished by
Landlord for nonexclusive use of all tenants on a non-profit basis including
parcel pick up and delivery services and shuttle bus service; the cost of pest
extermination; the cost of improvements not part of initial Shopping Center
construction which are: (i) made to comply with laws, statutes or insurance
requirements not in force at the time of such initial construction; or (ii)
undertaken for the protection of the health and safety of occupants and
customers of the Shopping Center; or (iii) made for the purpose of reducing CAM
Costs and an administration cost in an amount not more than fifteen percent
(15%) of the total cost and expense of all the foregoing. Notwithstanding the
foregoing, it is understood and agreed that (i) the cost of any capital item
shall be expensed by Landlord over such item's reasonably anticipated useful
life in accordance with generally accepted accounting principals, consistently
applied, (ii) as and to the extent that Landlord shall actually receive the
same, CAM Costs shall not include any costs for which Landlord is reimbursed by
insurance proceeds or condemnation awards or by the benefit of any available
warranties, (iii) CAM Costs shall in no event include any costs as to which
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Landlord is expressly required to indemnify Tenant, at Landlord's sole cost and
expense, under any of the express provisions of this Lease, (iv) CAM Costs shall
not include any taxes or other additional rent paid by Tenant to Landlord under
any other provision of this Lease, and (v) CAM Costs shall not include costs or
expenses for services offered specifically to a tenant or other tenants of the
Shopping Center, but not to Tenant.
(b) Tenant's Proportionate Share (as defined in Section 1.1(h)) of the CAM
Costs shall be paid by Tenant to Landlord in equal monthly installments, in
advance, on the first day of each calendar month during the Term of this Lease
in an amount equal to one-twelfth (1/12) of Tenant's Proportionate Share of the
CAM Costs as estimated by Landlord for the fiscal year. The amount due for any
partial fiscal year shall be prorated accordingly.
(c) Within ninety (90) days after the end of Landlord's fiscal year
(January 1 - December 31), Landlord shall furnish Tenant with a written
statement in reasonable detail of the actual CAM Costs and the amount of
Tenant's Proportionate Share thereof for the preceding fiscal year. Landlord
reserves the right, however, to change its fiscal year at any time during the
Term of this Lease upon reasonable prior notice to Tenant. If Tenant's
Proportionate Share of the actual CAM Costs exceed the aggregate of Tenant's
monthly payments, Tenant shall pay to Landlord any deficiency due within thirty
(30) days after receipt of said statement by Landlord. If Tenant's monthly
payments have exceeded Tenant's Proportionate Share of the actual CAM Costs, any
surplus paid by Tenant shall be credited against the next ensuing installment of
Rents until such surplus is exhausted, unless such surplus has occurred during
Tenant's last year prior to expiration of the Lease, in which event Landlord
shall refund such excess to Tenant within thirty (30) days after determination
of such surplus has been made. Failure of Landlord to provide the statement
called for hereunder within the time prescribed shall not relieve Tenant of its
obligations hereunder.
The obligations of Landlord and Tenant to make the foregoing adjustment
shall survive the expiration or earlier termination of this Lease.
(d) Landlord shall keep at its principal offices, accurate books and
records of the CAM Costs in accordance with generally accepted accounting
practices consistently applied, and said records shall be open and available for
examination at all reasonable times to Tenant, or Tenant representatives, upon
reasonable notice to Landlord and not more than once per calendar year, for the
purpose of ascertaining or verifying the CAM Cost. The results of any such audit
shall be kept confidential by Tenant. All records shall be retained by Landlord
for examination by Tenant for a period of at least two (2) years following the
end of the fiscal year for which the records apply.
(e) In the event an examination of the records of Landlord to verify CAM
Cost shall disclose a deficiency in excess of two percent (2%) of the CAM Cost
reported for any calendar year, Landlord agrees to pay to Tenant the reasonable
costs and expenses of such audit. Any overpayment of CAM Cost shall be
reimbursed to Tenant by Landlord and any underpayment shall be paid to Landlord
by Tenant within thirty (30) days after the results of the audit.
Section 12.3 - Real Estate Taxes.
(a) (i) The term "real estate taxes" shall mean all taxes, assessments,
charges, levies, fees and other governmental charges, general and special,
ordinary and extraordinary, of any kind and nature whatsoever,
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including, but not limited to, assessments for off-site public improvements for
the benefit of the Shopping Center, which shall be laid, assessed, levied, or
imposed upon the Shopping Center or any part thereof and which are payable at
any time during the term hereof, and all gross receipts taxes, rent taxes,
business taxes and occupancy taxes, and shall include all of Landlord's
reasonable out-of-pocket administrative costs and any and all costs, including
reasonable attorney fees, incurred by Landlord in contesting or negotiating the
taxes with any governmental authority (but less any reduction in real estate
taxes as a result thereof), excepting only franchise, estate, inheritance,
succession, capital levy, transfer, net income and excess profits taxes imposed
upon Landlord and further excepting any penalties, fines or other amounts
imposed as a result of any nonpayment, underpayment or late filing of any return
in respect of any real estate tax by or on behalf of Landlord.
(ii) The Rents to be paid under this Lease shall be paid to Landlord
absolutely and without deduction for taxes of any nature whatsoever. Landlord
and Tenant recognize and acknowledge that there may be changes in the current
real property tax system and that there may be imposed new forms of taxes,
assessments, charges, levies or fees, or there may be an .increase in certain
existing taxes, assessments, charges, levies or fees placed on, or levied in
connection with the ownership, leasing, occupancy or operation of the Shopping
Center or the Premises. All such new or increased taxes, assessments, charges
levies or fees which are imposed or increased as a result of or arising out of
any changes in the structure of the real property tax system or any limitations
on the real property taxes which can be assessed on real property including, but
not limited to, any and all taxes, assessments, charges, levies and fees
assessed or imposed due to the existence of this Lease (including any surcharge
on the income directly derived by Landlord therefrom) or for the purpose of
funding special assessment districts of the type funded by real property taxes,
shall also be included within the meaning of "real estate taxes." With respect
to any general or special assessment which may be levied against or upon the
Premises or the Shopping Center and which under the laws then in force may be
evidenced by improvement or other bonds, or may be paid in periodic
installments, there shall be included within the meaning of "real estate taxes"
with respect to any tax fiscal year only the amount currently payable on such
bond for such tax fiscal year, or the periodic installment for such tax fiscal
year.
(iii) Tenant shall be responsible for payment of any type of tax,
excise or assessment, (regardless of label or whether in the form of a rental
tax, gross receipts tax, sales tax, business or occupation tax, use assessments,
privilege tax, franchise tax, or otherwise, except any tax, excise or assessment
which in substance is a net income or franchise tax that is based solely on
Landlord's net income), which is levied, assessed or imposed at any time by any
governmental authority upon or against the Premises, the use or occupancy of the
Premises, the Rents payable by Tenant to Landlord, or otherwise with respect to
the Landlord-Tenant relationship hereunder. Tenant shall pay the full amount of
such tax, excise or assessment directly to the appropriate governmental
authority, unless the applicable law expressly imposes solely on Landlord the
duty to pay or collect such tax, excise or assessment, in which case Tenant
shall pay the full amount of such tax, excise or assessment as part of the Rents
due and payable under this lease to Landlord within twenty (20) days following
receipt of Landlord's billing therefor. Notwithstanding that the applicable law
may impose on Landlord the duty to pay or collect such tax, excise or
assessment, it is understood and agreed that Tenant shall nevertheless be
obligated to pay such tax, excise or assessment and Landlord shall be
indemnified against and saved harmless from the same by Tenant. In the event (i)
Tenant fails to timely pay such tax, excise or assessment and Landlord pays the
same, or (ii) Landlord elects in its sole discretion to pay the same in advance,
Tenant shall promptly reimburse Landlord for the amount thereof as part of the
Rents due and payable under this Lease. The provisions of this paragraph shall
also apply to any such tax,
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excise or assessment which may at any time replace or supplement any tax, excise
or assessment described herein.
(b) The Premises, its leasehold improvements and the underlying realty
will not be separately assessed for tax purposes but instead will be assessed as
part of a larger parcel or parcels of land and improvements comprising the
Shopping Center. Accordingly, Tenant agrees to pay its Proportionate Share of
said real estate taxes as set forth in Section 1.1(h). Tenant's Proportionate
Share of real estate taxes shall be paid by Tenant to Landlord in equal monthly
installments on the first day of each calendar month during the Term of this
Lease, in an amount equal to one-twelfth (1/12) of Tenant's Proportionate Share
of said real estate taxes as estimated by Landlord for the tax year. The amount
due for any partial fiscal year shall be prorated accordingly.
(c) Within ninety (90) days after Landlord's payment of the final
installment of real estate taxes for each tax year, Landlord shall furnish
Tenant with a written statement in reasonable detail showing the actual amount
of the real estate taxes applicable to the Shopping Center and of Tenant's
Proportionate Share thereof ("Actual Taxes"). If Tenant's Proportionate Share of
the Actual Taxes exceed the aggregate of Tenant's monthly payments, Tenant shall
pay to Landlord any deficiency due Landlord within thirty (30) days after
receipt of said statement by Tenant. If Tenant's aggregate monthly payments
exceed Tenant's Proportionate Share of the Actual Taxes, any surplus paid by
Tenant shall be credited against the next ensuing monthly installment of Rent
until such surplus is exhausted, unless such surplus has occurred during
Tenant's last year prior to expiration of the Lease in which event Landlord
shall refund such excess to Tenant within thirty (30) days after determination
of such surplus has been made. Failure of Landlord to provide the statement
called for hereunder within the time prescribed shall not relieve Tenant of its
obligations hereunder.
The obligations of Landlord and Tenant to make the foregoing adjustment
shall survive the expiration or earlier termination of this Lease.
Section 12.4 - Marketing Fund.
(a) During the term hereof, Landlord shall maintain a marketing fund
("Marketing Fund") which shall be used by Landlord to pay all costs and expenses
associated with the formulation and carrying out of an ongoing program for the
promotion of the Shopping Center, which program may include, without limitation,
special events, shows, displays, signs, marquees, decor, seasonal events,
advertising for the Shopping Center, promotional literature to be distributed
within and outside the Shopping Center and other activities within the Shopping
Center designed to attract customers.
(b) In addition, Landlord may use the Marketing Fund to defray the costs
of administration of the Marketing Fund, including, without limitation, the
salary of a marketing director and related administrative personnel, rent and
insurance.
(c) Tenant shall make a contribution to the Marketing Fund in the amount
set forth in Article I, Section 1.0(1), hereinafter referred to as "Tenant's
Marketing Fund Contribution". Tenant's Marketing Fund Contribution shall be paid
by Tenant in equal monthly installments, in advance, without deduction or
set-off, on the first day of each calendar month. The amount due for all partial
calendar years shall be prorated accordingly.
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(d) At the end of each calendar year or part thereof, Tenant's Marketing
Fund Contribution shall be adjusted annually by a percentage equal to the
percentage increase in the U.S. Department of Labor, Bureau of Labor Statistics,
Consumers Price Index for all Urban Consumers, All Cities Average, Subgroup "all
items" (1982-84=100) ("CPI-U") measured for the twelve (12) month period from
the CPI-U published nearest to the RCD to the CPI-U published on the next
succeeding anniversary thereof and thereafter for each twelve (12) month period
between each succeeding anniversary thereof.
If during the Term of this Lease, the U.S. Department of Labor,
Bureau of Labor Statistics, ceases to publish a CPI-U, such other index or
standard as will most nearly accomplish the aim and purpose of said CPI-U and
the use thereof of the parties thereto, shall be selected by Landlord in its
sole discretion in determining the amount of any such adjustment.
Section 12.5 - Security Deposit. Concurrently with its execution and submission
of this Lease, Tenant shall deposit with Landlord and thereafter during the Term
of the Lease shall maintain on deposit with Landlord, without interest, the sum
set forth in Section 1.0(w) as security deposit for the full, prompt and
faithful performance by Tenant of all of its obligations hereunder.
It is also agreed between the parties herein as follows:
(a) That such deposit or any portion thereof may be applied to the curing
of any default that may exist, without prejudice to any other remedy or remedies
which Landlord may have on account thereof, and upon such application Tenant
shall pay Landlord on demand the amount so applied which shall be added to the
security deposit so the same will be restored to its original amount;
(b) That should the Premises be transferred by Landlord, the security
deposit or any balance thereof may be turned over to Landlord's successor or
transferee, and Tenant agrees to look solely to such successor or transferee for
such application or return;
(c) That Landlord or its successors shall not be obligated to hold the
security deposit as a separate funds, but may commingle it with other funds; and
(d) That if Tenant shall faithfully perform all of the covenants and
agreements in this Lease contained on the part of Tenant to be performed, the
security deposit, or any then remaining balance thereof, shall be returned to
Tenant, without interest, within thirty (30) days after the expiration of the
term of the Lease.
Section 12.6 - Grand Opening Marketing Assessment. In addition to the charges
set forth in this Lease, Tenant shall pay to Landlord upon being billed, as an
assessment for the initial opening of the Shopping Center, the amount set forth
in Article I, Section 1.0(k). This sum shall be used for the purpose of
defraying the promotional expense in connection with the initial opening of the
Shopping Center and shall be paid by Tenant whether or not Tenant participates
in or is open for business for the initial opening of the Shopping Center. Any
portion of such assessment not actually expended in connection with such initial
opening shall be retained in the Marketing Fund for subsequent expenditures.
ARTICLE XIII
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PREMISES UTILITY SERVICES
Section 13.0 - Status of Charges. As part of the Rents provided for by this
Lease Tenant agrees to pay to Landlord, as hereinafter provided, the utility
service charges which shall be deemed to be included as part of the Additional
Charges described in Article XII.
Section 13.1 - Utilities. Landlord will provide at a point within reasonably
close proximity to the Premises the facilities necessary to enable Tenant to
obtain for the Premises water, electricity, telephone and sanitary sewer
service, such facilities being more specifically described in Exhibit "GCS1.0".
Tenant shall be solely responsible for payment or reimbursement to Landlord of
all utilities and services provided to the Premises, including, without
limitation, gas, heat, water, electricity, other power, air conditioning,
telephone service, flora maintenance and preservation, oven and stove exhaust
cleaning and air filter replacement services, premises cleaning service,
interior window washing services, garbage disposal, pest control and sewerage
services. Landlord may include a service charge of up to Twenty-Five Dollars
($25) per month in the cost of utilities billed directly by Landlord. Tenant
shall also be responsible for and pay all connection or service fees in
connection with the provision to the Premises of such utilities and services.
All costs of providing meters or submeters shall be paid by Tenant. If
applicable, Tenant shall pay all utility charges directly to the billing utility
company by no later than the due date specified in any bill. Landlord may
provide heating, chilled water and chilled air from a central plant to the
Premises, in which case Tenant shall pay to Landlord (or the operator of the
central plant, if applicable) Tenant's share of the cost of such services as
reasonably determined by Landlord. Such share shall be paid to Landlord (or
plant operator) by the first day of each and every month as additional rent.
Section 13.2 - Premises Heating, Ventilating and Air-conditioning System. Tenant
is to provide its own equipment and facilities for heating, ventilating and
air-conditioning the Premises ("Premises HVAC System") described in Exhibit
"GCS1.0," and shall operate and maintain the same during the Term of this Lease
and such equipment shall belong to Landlord at the expiration or earlier
termination of this Lease.
Section 13.3 - Discontinuance of Service. Landlord reserves the right with
thirty (30) days prior written notice to Tenant to cut off and discontinue
water, electricity, air conditioning, heating, ventilating, and any or all other
service without liability to Tenant, whenever and during any period in which
bills for the same remain unpaid by Tenant. Any such action by Landlord shall
not be construed by Tenant or any other party interpreting this Lease as an
eviction or disturbance of possession of Tenant or an election by Landlord to
terminate this Lease on account of such nonpayment. If such service is
discontinued or disconnected by Landlord pursuant to this Section, any
reconnection of such service shall be at Tenant's sole cost and expense.
Section 13.4 - Interruption of Service. Landlord shall not be liable to Tenant
in damages or otherwise if any one or more of said utility services or
obligations hereunder is interrupted or terminated because of necessary repairs,
installations, construction and expansion, non-payment of utility charges due
from Tenant, or by reason of governmental regulation, statute, ordinance,
restriction or decree, or any other cause beyond Landlord's reasonable control.
Landlord shall, however, use reasonable efforts to minimize the duration of any
such interruption or termination of utility service and to minimized any
interference with Tenant's business at the Premises resulting therefrom. Subject
to the foregoing, no such interruption or termination of utility service shall
relieve Tenant from any of its obligations under this Lease.
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ARTICLE XIV
SIGNS
Section 14.1 - Tenant's Obligation. Tenant shall only erect such signs that have
been approved by Landlord in accordance with Exhibit "GCS1.0" and requirements
of all governmental authorities, and said signs shall be maintained in good
condition by Tenant. Tenant shall obtain all permits and licenses for its
sign(s). Tenant shall not exhibit or affix any other type of sign, decal,
advertisement, notice or other writing, awning, antenna or other projection to
the roof or the outside walls or windows of the Premises or the building of
which the Premises are a part, without Landlord's approval, which approval
Landlord shall not unreasonably withhold or delay. No movable displays or sales
fixtures will be allowed in the Design Control Area (as defined in Exhibit "GCS
1.0") except behind the display windows or store closure.
Section 14.2 - Interior Signs and Advertising. Tenant further agrees that no
advertising material of any kind except temporary price tags related to
merchandise on display shall be placed within four (4) feet of any customer door
or lease line of the Premises or on the surface of any display window or
customer door. All window display advertising material and signs shall be in
keeping in character and standards with the improvements within the Shopping
Center as determined by Landlord and as more specifically described in Exhibit
"GCS1.0," and Landlord reserves the right to require Tenant to correct any
nonconformity. Any such display and signs shall only be related to merchandising
of goods from the Premises.
ARTICLE XV
REPAIRS AND ALTERATIONS
Section 15.1 - Repairs by Landlord.
(a) Landlord shall keep the roof, structural portions, the exterior of the
Premises, parking facilities and other Common Areas, in good and tenantable
condition and repair during the Term of this Lease, subject to Section 12.2,
provided, however, if the need for such repair is attributable to or results
from the operation or acts of Tenant or its agents, or is Tenant's
responsibility, then in such case Tenant does hereby agree to and shall
reimburse Landlord for all costs and expenses incurred by Landlord with respect
to such repairs.
(b) As used in this Article the expression "structural portions and
exteriors of the Premises" shall not be deemed to include store front or store
fronts, plate glass, window cases or window frames, doors or door frames or
alterations to the Premises required to comply with any governmental regulations
or requirements, including, but not limited to, the Americans with Disabilities
Act ("ADA"). It is expressly understood and agreed that Landlord shall be under
no obligation to make any repairs, alterations, replacements or improvements to
and upon the Premises resulting from compliance with the ADA or the mechanical
equipment exclusively serving the Premises at any time.
(c) Landlord shall not in any way be liable to Tenant for failure to make
repairs as herein specifically required of Landlord unless Tenant has previously
notified Landlord in writing of the need for such repairs and Landlord has
failed to commence said repairs within a reasonable period of time following
receipt of Tenant's written notification, and has not diligently pursued said
repairs to completion.
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Section 15.2 - Repairs by Tenant.
(a) It shall be Tenant's sole responsibility, at its own expense, to keep
and maintain its storefront and the interior of the Premises in good condition
and repair. All repairs to the Premises or any installation, equipment or
facilities therein or thereabout, other than those repairs required to be made
by Landlord pursuant to Section 15.1, shall be made by Tenant. Said repairs
shall include but not be limited to all necessary painting and decorating, the
maintenance, repair and replacement of the electrical, plumbing and sewer
systems, under the floor and elsewhere which exclusively serve the Premises,
storefronts, window and other glass, entrance and service doors and window
frames, and any other mechanical or operational installations exclusively
serving the Premises. All such repairs and replacements shall be in quality and
class equal to the original work or item and shall be subject to Landlord's
prior reasonable approval.
(b) Tenant shall replace, at the expense of Tenant, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
Premises except for any cause resulting from the negligence or intentional
misconduct of Landlord or any employee, contractor or representative of
Landlord. Landlord may insure, and keep insured, at Tenant's expense, all plate
and other glass in the Premises for and in the name of Landlord. Bills for the
premiums thereof shall be rendered by Landlord to Tenant at such times as
Landlord may elect, and shall be due from, and payable by, Tenant when rendered,
and the amount thereof shall be deemed to be, and be paid as, additional rent.
Section 15.3 - Alterations and Remodeling.
(a) Tenant, at its own expense, shall have the right, during the Term of
this Lease, to make such interior alterations, changes and improvements to the
Premises as Tenant may deem necessary for its use and business, provided,
however, that any major remodeling of the interior in excess of Fifteen Thousand
Dollars ($15,000) and any material or structural alterations to the Premises or
changes in the electrical, heating, ventilating and air conditioning systems
thereof shall not be made without Landlord's prior written consent. In addition,
prior to the commencement of such work, Tenant, if required by Landlord, shall
secure, at Tenant's expense, performance, labor and materials bonds satisfactory
to Landlord for the full cost of such work. Landlord's approval of Tenant's
alterations shall create no responsibility or liability on the part of Landlord
for their completeness, design sufficiency or compliance with the Requirements
of governmental agencies or authorities as hereinafter described in Section
27.4. All such alterations, changes and improvements, except trade fixtures,
shall become the property of Landlord upon installation and shall remain upon
and be surrendered with the Premises upon expiration or earlier termination of
this Lease. If any alteration costs in excess of Two Hundred Thousand Dollars
($200,000), Tenant shall deliver "as-built" plans to Landlord upon completion.
(b) Tenant further agrees not to make any alterations, additions or
changes to any storefront or exterior sign, the exterior walls or roof of the
Premises, nor shall Tenant erect any second level or increase the size of same
if one is initially constructed unless and until the prior written consent of
Landlord shall first have been obtained. In no event shall Tenant make or cause
to be made any penetration through the roof or the floor slab of the Premises
without the prior written consent of Landlord. Tenant shall be directly
responsible for any and all damages resulting from any violation of the
provisions of this Section.
Section 15.4 - Renovation. In the event that Landlord develops after five (5)
years from the date of this Lease, a comprehensive renovation plan for the
Shopping Center which may include structural changes to
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conform to revised design criteria or to new additions to the Shopping Center,
Tenant agrees, at Landlord's sole cost, to redesign and reconstruct its store
front and signs to conform to Landlord's revised design criteria. Landlord shall
provide Tenant with revised design criteria and Tenant shall commence its
renovation within ninety (90) days of receipt of said criteria and shall
thereafter diligently pursue its completion.
Section 15.5 - Refurbishment. Without limiting Section 15.2 or Section 15.3,
Tenant shall (a) maintain the Premises to a standard commensurate with all
similar Movado stores in the United States and shall invest such additional
capital in the Premises on an annual basis as is necessary to so maintain the
Premises, and (b) keep the Premises and all of Tenant's personal property in a
first-class condition and state of repair in keeping with the standards of the
Shopping Center.
ARTICLE XVI
LIENS
Section 16.1 - Indemnification by Tenant. Tenant shall allow no liens to be
filed against the Premises, the Shopping Center or the Resort as a result of
work performed by, at the request or on behalf of Tenant. Tenant shall indemnify
and save harmless Landlord against all loss, liability, costs, attorney's fees,
damages or interest charges as a result of any mechanic's lien or any other lien
caused to be filed against the Shopping Center, the Premises, the Resort or
Tenant's leasehold estate therein as a result of acts or omissions of Tenant or
its agents, contractors and employees, and Tenant shall, within thirty (30) days
of the filing of any such lien and written notice given to Tenant, remove, pay
or cancel said lien or secure the payment of any such lien or liens by bond or
other security acceptable to Landlord.
Section 16.2 - Tenant's Right of Contest. Tenant shall have the right at all
times and at its own expense to contest and defend on behalf of Tenant or
Landlord any action involving the collection, validity or removal of such lien
or liens, upon giving adequate security to Landlord for payment of such lien.
ARTICLE XVII
INDEMNITY AND INSURANCE
Section 17.1 - Mutual Indemnification.
(a) Tenant shall defend, indemnify and save Landlord harmless from legal
action, damages, loss, liability and any other expense (including reasonable
attorney fees) in connection with loss of life, bodily or personal injury or
property damage arising from or out of all acts, failures, omissions or
negligence of Tenant, its agents, employees or contractors which occur in the
Premises, Common Areas or other parts of the Shopping Center, unless and to the
extent such legal action, damages, loss, liability or other expense (including
reasonable attorney fees) results from any act, omission or neglect of Landlord,
its respective agents, contractors, employees or persons claiming through it.
(b) Landlord shall indemnify and save Tenant harmless from legal action,
damages, loss, liability and any other expense (including reasonable attorney
fees) in connection with loss of life, bodily or personal
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injury or property damage, arising from or out of all acts, failures, omissions
or negligence of Landlord, its agents, employees or contractors which occur in
the Premises, Common Areas or other parts of the Shopping Center, unless and to
the extent such legal action, damages, loss, liability or other expense
(including reasonable attorney fees) results from any act, omission or neglect
of Tenant, its respective agents, contractors, employees or persons claiming
through it.
Section 17.2 - Tenant's Insurance. Tenant covenants and agrees that from and
after the date of delivery of the Premises from Landlord to Tenant, and during
the Term of this Lease, Tenant will carry and maintain, at its sole cost and
expense, the following types of insurance, naming as insureds Tenant, Landlord,
Landlord's lenders and other parties with an insurable interest as designated by
Landlord, in the amount specified and in the form hereinafter provided for with
insurance companies authorized to do business in the state in which the Premises
is located and rated A/VIII or better in the most current edition of Best's
Insurance Report. All policies shall be written as primary policies and not
contributing with or in excess of the coverage, if any, which Landlord may
carry.
(a) Commercial General Liability Insurance. Tenant shall keep in full
force and effect commercial general liability insurance, which shall include
broad form property damage liability coverage, extended bodily injury coverage,
advertising injury liability coverage, contractual liability coverage and
independent contractors coverage, in the amount set forth in Section 1.0(n),
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.
(b) Boiler and Machinery Insurance. If applicable, Tenant shall maintain
in full force and effect at all times during the Term of the Lease a policy(s)
of boiler and machinery breakdown insurance covering all of its boilers, fired
or unfired pressure vessels, heating, ventilating and air-conditioning units or
any other mechanical equipment which may malfunction or cause damage to property
or injury to persons that may be caused by or results from any equipment
existing from time to time at the Premises, which equipment is used exclusively
by Tenant, and if said coverage is not included within the policy(s) providing
coverage for Tenant's alterations, improvements and betterments, pursuant to
Section 17.2(e), then said insurance shall be by separate policy in the amount
set forth in Section 1.0(n).
(c) Environmental Impairment Liability Insurance. Subject to the
limitations imposed by Section 18.14, if Tenant uses, stores, handles, processes
or disposes of "Hazardous Materials" (as hereinafter defined) in the ordinary
course of its business, then Tenant shall maintain in full force and effect
throughout the Term of this Lease, Environmental Impairment Liability Insurance
with limits of not less than the amount set forth in Section 1.0(n), providing
coverage for bodily injury, property damage or injury or damage of actual,
alleged or threatened emission, discharge, dispersal, seepage, release or escape
of Hazardous Materials, including any loss, cost or expense incurred as a result
of any cleanup of Hazardous Materials or in the investigation, settlement or
defense of any claim, suit, or proceedings against Landlord or its management
company arising from Tenant's use, storage, handling, processing or disposal of
Hazardous Materials.
As used herein, the term "Hazardous Material" means those
substances, chemicals and mixtures as may be defined as "hazardous substances,"
"hazardous materials", "toxic substances," "imminently hazardous chemical
substance or mixture," "pesticide," "heavy metal," "hazardous air pollutant,"
"toxic pollutant," "toxic waste," "pollutant," "regulated substance,"
"asbestos," "asbestos containing material," "solid waste" "hazardous waste,"
"medical waste," or "radioactive waste" in any of the following acts, as now
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or hereafter amended; the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et
seq., the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980,42 U.S.C. Sec. 9601 et seq, the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Sec. 5901 et seq., the Federal Hazardous Substances Act, 15
U.S.C. Sec. 1261 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Sec. 1251 et seq., the Clean Air Act, 42 U.S.C. Sec. 7401, et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. Sec. 136 et seq., the
Emergency Planning and Community Right to Know Act of 1986, 42 U.S.C. Sec. 11001
et seq., the Occupational Safety and Health Act of 1970, 29 U.S.C. Sec. 651 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801 et seq.,
the statutes of the State of Nevada found currently at ch. 444, 445, 459, 477,
590, 618 or in the Uniform Fire Code, 1991 edition and the rules, orders and
regulations now in effect or promulgated and effective hereafter pursuant to
each respective law listed above as well as such other substances, materials and
wastes which are regulated under applicable local, state or federal law, or
which are classified as hazardous or toxic under federal, state or local laws or
regulations.
(d) Liquor Liability Insurance. If Tenant distributes, sells, serves or
furnishes alcoholic beverages in the ordinary course of its business, then
Tenant shall maintain and keep in full force and effect throughout the Term of
this Lease, Liquor Liability Insurance in an amount not less than $1,000,000
written on a combined single limit per occurrence basis.
(e) Personal Property, Alterations, Improvements and Betterments. Tenant
shall at all times during the Term hereof maintain in full force and effect a
policy(s) of all risk insurance including coverage for sprinkler damage,
vandalism and malicious mischief, covering all of Tenant's personal property,
including alterations, improvements and betterments to the Premises now existing
or to be added, to the extent of their full replacement costs as updated from
time to time during the Term of this Lease. Landlord shall be the named loss
payee under each such policy.
The proceeds of Tenant's policy(s) to the extent of the cost of any damage
or loss to the Premises, shall be used for the repair and replacement of the
property damaged or destroyed. In the event of Tenant's failure to commence,
within thirty (30) days of availability of insurance proceeds, and to diligently
proceed to reconstruct or repair its portion of the damaged or destroyed
Premises to its former condition prior to said casualty, then Landlord shall
have the right to make all necessary repairs and if the insurance proceeds
described above are not sufficient to cover the repairs, Tenant shall be liable
for all additional costs in excess of such available insurance proceeds.
However, it is expressly understood and agreed that Landlord shall be under no
obligation to insure, reinstall, repair or replace any such alterations,
additions, improvements or betterments. This paragraph is only applicable if the
Lease is not terminated pursuant to Article XXII hereof.
(f) Additional Hazards. Tenant agrees that it will not keep, use, sell or
offer for sale in or upon the Premises any article which may be prohibited by
the standard form of all risk insurance coverage. Tenant agrees to pay any
increase in premium for All Risk Coverage resulting from the keeping, use, sale
or offering for sale of such prohibited articles that may be charged during the
Term of this Lease for the amount of any insurance which may be carried by
Landlord on the Premises. Said additional premiums shall be payable by Tenant to
Landlord upon ten (10) days written notice to Tenant.
(g) Blanket Policies. Tenant may maintain any of its required insurance
coverages under blanket policies of insurance covering said Premises and any
other premises of Tenant, or companies affiliated with
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Tenant, provided that the coverage afforded will not be reduced or diminished by
reason of the use of such blanket policy.
(h) Worker's Compensation. Tenant shall, at all times during the Term,
maintain and pay all sums to the State Industrial Insurance System in order to
be in compliance with their worker's compensation requirements or maintain
adequate worker's compensation insurance in the event of that Tenant is
permitted to be self-insured, together with Employer's Liability (Nevada Stop
Gap) in an amount not less than One Million Dollars ($1,000,000.00) for each
injury, accident or illness. If self-insured, Tenant shall submit at least
fourteen (14) days prior to the RCD and annually during the Term thereafter a
certificate of compliance to Landlord confirming that Tenant has fulfilled its
self-insurance requirements.
(i) Business Interruption. Tenant shall, at all times during the Term,
procure and maintain in full force and effect a policy of business interruption
insurance in an amount not less than one hundred percent (100%) of the annual
business interruption value and an extended period of indemnity clause for an
additional three (3) months.
(j) Other Policies. Tenant shall maintain such other or additional
insurance (as to risks covered, policy amounts, policy provisions or otherwise)
with respect to the Premises or Tenant's use or occupancy thereof as Landlord
may reasonably request provided that such insurance and such amounts are then
commonly insured against with respect to similar properties in Clark County,
Nevada.
(k) Policy(s) and/or Certificates of Insurance. The above mentioned
policy(s) or certificate(s) of insurance are to be provided by Tenant to
Landlord prior to occupancy and at least annually thereafter or as requested by
Landlord. The coverage evidenced by the policy(s) or certificate(s) of insurance
will be with insurance company(s) acceptable to Landlord and will be for a
period of not less than one (1) year, and will provide that Landlord be given
written notice thirty (30) days prior to the expiration, material alteration,
cancellation, non-renewal or replacement of the existing policy(s), with the
further understanding that should Tenant fail to furnish said notice or policies
as is provided in this Lease, and at the times herein provided, Landlord may
obtain such insurance and the premiums on such insurance shall be deemed to be
an Additional Charge to be paid by Tenant to Landlord upon demand.
(l) Notice of Loss. Tenant shall notify Landlord forthwith in the event of
any damage to persons or property occurring on the Premises from fire, any other
casualty, or serious injury.
Section 17.3 - Landlord's Insurance. Landlord covenants and agrees that from and
after the date of delivery of the Premises from Landlord to Tenant, and during
the Term of this Lease, Landlord will carry and maintain, with regard to the
Shopping Center, the following types of insurance, in the amounts specified and
in the form hereinafter provided:
(a) Commercial General Liability Insurance. Landlord shall keep and
maintain in full force and effect commercial general liability insurance in an
amount not less than $1,000,000, adjusted annually for inflation, written on a
combined single limit per occurrence basis for property damage and personal and
bodily injury or death of one or more persons.
(b) Property Damage Insurance. Landlord shall, at all times, keep and
maintain in full force and effect all risk policy(s) of insurance, including
coverage for sprinkler damage, vandalism and malicious mischief,
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covering the roof, structural portions and perimeter walls of the Shopping
Center and equipment (excluding Tenant's fixtures, merchandise, personal
property, wall coverings, alterations, improvements, betterments and any other
item included in Tenant's insurance) in an amount not less than full replacement
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 such insurance
which Landlord's mortgage lender may require Landlord to maintain, whichever is
the greater.
(c) Blanket Policies. Landlord may maintain any of its required insurance
under blanket policies of insurance covering the Premises and any other premises
of Landlord or companies affiliated with Landlord, provided that the coverage
afforded will not be reduced or diminished by reason of the use of such blanket
policy of insurance.
All insurance maintained by Landlord pursuant to this Section 17.3 shall
be a part of the CAM Cost.
Section 17.4 - Waiver of Subrogation. Notwithstanding anything to the contrary
contained elsewhere in this Lease, neither Landlord nor Tenant shall be liable
to the other party or to any insurance company insuring the other party by way
of subrogated rights or otherwise, for any loss or damage caused by fire or any
other hazard or peril covered by fire and extended coverage or all risk
insurance, to the extent such loss or damage is covered by insurance (or where
insurance was required by this Lease) to any building structure or other
tangible property, or any resulting loss of income, even though such loss or
damage may have been occasioned by the negligence of such party, its agents or
employees.
Section 17.5 - Landlord Not Responsible for Acts of Others. Landlord shall not
be responsible or liable to Tenant, or those claiming by, through or under
Tenant, for any loss or damage to their person or property resulting from the
acts or omissions of persons occupying space adjoining or adjacent to the
Premises or connected to the Premises or any other part of the Shopping Center
caused by but not limited to events such as breaking or falling of electrical
cables and wires, the breaking, bursting, stoppage or leaking of water, gas,
sewer or steam pipes.
ARTICLE XVIII
GENERAL RULES AND REGULATIONS
Section 18.1 - Uniformity. Landlord reserves the right, at any time and from
time to time for the general welfare of the Shopping Center, the avoidance of
nuisance and the maintenance of a good reputation, safety, order and cleanliness
in the Premises and at the Shopping Center, to impose reasonable rules and
regulations of generally uniform application governing the conduct of tenants
and the use of the Common Areas in the Shopping Center. Tenant agrees to comply
with such rules and regulations imposed by Landlord as if they had existed and
been attached hereto at the time of execution of this Lease.
Section 18.2 - Rubbish. Tenant agrees to maintain the Premises, at its expense,
free and clear of all rubbish, garbage or trash in the containers permitted
and/or required by Landlord. Tenant, at its own expense, shall dispose of all
said rubbish as directed by Landlord. In the event Tenant requires the services
of a trash compactor, it agrees to arrange for and coordinate said services
through Landlord's mall manager. If Tenant is required to use the Shopping
Center's trash compactor service, the charge for such service shall be
competitive with the prevailing market rate for such services.
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Section 18.3 - Lighting. Tenant agrees to keep the windows of the Premises
properly displayed and the Premises signs and external lights, where
specifically permitted, properly illuminated during the hours as established by
the rules and regulations of Landlord for the Shopping Center.
Section 18.4 - Merchandise Display, Loading and Unloading. Tenant agrees not to
display merchandise outside the Premises, and to load, unload or deliver goods
and merchandise only at such times and in such areas and through such entrances
as shall be designated by Landlord.
Section 18.5 - Obstruction of Passageways. Tenant agrees not to obstruct the
passageways, driveways, approachways, walks, roadways, exits and entries in, to,
from and through the Common Areas and all other parts of the Shopping Center
used in common with other tenants.
Section 18.6 - Employee Parking. Tenant and its employees shall park their cars
only in such areas designated for the purpose by Landlord. Tenant shall furnish
Landlord with state automobile license numbers assigned to cars used by Tenant's
employees within five (5) days after taking possession of the Premises and shall
thereafter notify Landlord of any changes within five (5) days after such
changes occur. If Tenant or its employees shall fail to park their cars in the
designated parking areas, then, without limiting any other remedy which Landlord
may pursue in the event of Tenant's default, Landlord, after giving notice to
Tenant, shall have the right to charge Tenant, as an Additional Charge, the sum
of Thirty Dollars ($30.00) per day per car parked in violation of the provisions
of this Section. Tenant shall notify its employees in writing of the provisions
of this Section.
Landlord may, in its sole discretion, arrange for off-site parking and a
shuttle service to the Shopping Center. The cost for such service shall be
included in the CAM Cost.
Section 18.7 - Interference With Other Tenants. Tenant shall not do, permit or
suffer anything to be done, or kept upon the Premises that will obstruct or
interfere with the rights of other tenants, Landlord or the patrons and
customers of any of them, or which will or would be likely to cause a nuisance
to any of them or their patrons or customers by reason of unreasonable noise,
odor, vibration, or otherwise, nor will Tenant commit or suffer any act which
would result in the diminishment of the good will of the Resort, the Landlord or
the Tenant or in any way reflect the Resort, the Landlord or the Tenant in an
negative manner within the business and consumer community.
Section 18.8 - Security. Tenant acknowledges that Landlord's security department
and security officers are not responsible for providing security services in the
Premises and that all such responsibility is the obligation of Tenant. In no
event shall Landlord be liable to Tenant or any third-party for the security
department's failure to respond to a request for aid or assistance by Tenant.
Section 18.9 - Employee Areas. Tenant shall not cause or permit its employees or
agents to enter upon those areas of the Resort which are designated "Employees
Only".
Section 18.10 - Tenant Conduct. Tenant acknowledges that Landlord and its
affiliates have a reputation for offering high-quality entertainment and/or
services to the public, and that it and its affiliates are subject to regulation
and licensing, and desire to maintain their reputation and receive positive
publicity. Tenant therefore agrees that throughout the Term of this Lease, it
and its officers, directors, shareholders, employees and agents will not conduct
themselves in a manner which is contrary to the best interests of Landlord, nor
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in any manner that adversely affects or is detrimental to Landlord or its
affiliates, and will not directly or indirectly make any oral, written or
recorded private or public statement or comment that is disparaging, critical,
defamatory or otherwise not in the best interests of Landlord. Landlord shall
use its good faith business judgment in determining whether Tenant's conduct or
that of its officers, directors or management adversely affects Landlord or its
affiliates.
Section 18.11 - Gaming. No slot machine, video gaming device or other gambling
game shall be permitted on the Premises.
Section 18.12 - Prohibited Advertising. Landlord shall have the right to
prohibit any advertising, promotion or display by Tenant which, in Landlord's
reasonable opinion, impairs or would tend to impair the reputation of Landlord,
the Shopping Center, and the Resort or its desirability as a location as a
resort, hotel, casino, restaurant, retail or other commercial space, and upon
written notice from Landlord Tenant shall immediately refrain from and
discontinue such advertising. Upon written request of Landlord, Tenant shall
provide Landlord a tangible specimen of advertising material relating to the
Premises prior to publishing or otherwise displaying such advertisements in any
manner, whether through print media, electronic media, over or through the
Internet or through any other means now known or hereafter developed.
Section 18.13 - Resort References. Tenant, at its sole expense, agrees to refer
to the Shopping Center and the Resort only by such name as permitted by Landlord
in designating the location of the Premises in all newspaper or other
advertising, stationery, other printed materials and all other references to
location and to include the address and identity of its business activity in the
Premises in all advertisements made by Tenant in which the address and identity
of any other business activity of like character conducted by Tenant within the
Las Vegas metropolitan area shall be mentioned. Tenant agrees Landlord may
include a reference to Tenant's tradename listing Tenant as one of the tenants
of the Shopping Center in advertising and marketing of the Shopping Center and
Resort.
Section 18.14 - Prohibited Uses. Tenant shall not, without prior written consent
of Landlord, sell, or suffer to be kept, used or sold in, upon or about the
Premises any gasoline, distillate or other petroleum products or any other
substance or material of an explosive, inflammable or radiological nature, in
such quantities as may be prohibited by any such insurance policy or any
Hazardous Material or any other substance that may endanger any part of the
Resort or its occupants, business patrons or invitees. Notwithstanding anything
to the contrary in the foregoing, Tenant shall not use, store, transport,
manufacture, process, treat, discharge or release any Hazardous Material from
in, on or about the Premises in violation of the Environmental Laws.
Section 18.15 - Employee Drug Testing. Tenant shall require pre-employment drug
testing of all employees (other than persons employed by Tenant as of the date
hereof) at Tenant's sole cost and expense.
ARTICLE XIX
SUBORDINATION AND ATTORNMENT BY TENANT
Section 19.1 - Subordination of Lease. This Lease and the estate of Tenant
hereunder shall be subject and subordinate to any ground lease, deed of trust,
mortgage lien or charge or any reciprocal easement agreement or other operating
agreement which now encumber or which at any time hereafter may encumber the
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Premises (such ground lease, deed of trust, mortgage lien or charge, or any
reciprocal easement agreement or other operating agreement and any replacement,
renewal, modification, consolidation or extension thereof being hereinafter
referred to as an "Encumbrance"). Any Encumbrance shall be prior and paramount
to this Lease and to the right of Tenant hereunder and all persons claiming
through and under Tenant, or otherwise, in the Premises. Tenant's acknowledgment
and agreement of subordination provided for in this Section shall be
self-operative and no further instrument of subordination shall be required.
However, Tenant, on Tenant's behalf, and on behalf of all persons claiming
through and under Tenant, covenants and agrees that, from time to time at the
request of Landlord or the holder of any Encumbrance, Tenant will execute and
deliver any necessary or proper instruments or certificates reasonably necessary
to acknowledge or confirm the priority of the Encumbrance over this Lease and
the subordination of this Lease thereto or to evidence Tenant's consent to any
Encumbrance. Notwithstanding the foregoing, any holder of an Encumbrance may
elect to the extent possible that this Lease shall have priority over such
Encumbrance and, upon notification of such election by the holder of such
Encumbrance, this Lease shall be deemed to have priority over such Encumbrance,
whether this Lease is dated prior to or subsequent to the date of such
Encumbrance. Notwithstanding the foregoing, the subordination of this Lease to
any Encumbrance under this Section 19.1 shall only be effective if the holder of
such Encumbrance (a "Superior Mortgagee") executes and delivers to Tenant a
non-disturbance agreement, the form of which shall be (a) the Superior
Mortgagee's standard form if the Superior Mortgagee is an institution, or (b) a
commercially reasonable form if the Superior Mortgagee is not an institution.
Tenant shall execute and deliver to any Superior Mortgagee any such
non-disturbance agreement requested by such Superior Mortgagee within ten (10)
days of such Superior Mortgagee's request therefor.
Section 19.2 - Attornment by Tenant. Tenant agrees that if the holder of any
Encumbrance or any person claiming under said Encumbrance shall succeed to the
interest of Landlord in this Lease, Tenant shall recognize and attorn to said
holder as Landlord under the terms of this Lease. Tenant agrees that it will,
upon the request of Landlord, execute, acknowledge and deliver any and all
instruments necessary or desirable to give effect or notice of such attornment
and failure of Tenant to execute any such document or instrument on demand shall
constitute a default by Tenant under the terms of this Lease.
ARTICLE XX
RIGHTS OF LANDLORD
Section 20.1 - Landlord's Right to Repair. Landlord, or its authorized agents,
after reasonable prior written notice to Tenant and at reasonable times, may go
upon and inspect the Premises or any portion of the Shopping Center and, if
Tenant has failed to commence such repairs within fifteen (15) days following
receipt of written notice from Landlord, may make those needed repairs which are
Tenant's obligation to perform and which Tenant has failed to do. Said work
performed shall be chargeable to Tenant and shall be due and payable within
fifteen (15) days following receipt of Landlord's billing.
Section 20.2 - Landlord's Right to Affix Sign. Landlord has a right to install
or place upon, or affix to the roof and exterior walls of the Premises
equipment, non-competitive signs, displays, antennas and any other object or
structure of any kind, provided the same shall not materially impair the
structural integrity of the building or interfere with Tenant's occupancy or
materially impair access to or visibility of the Premises.
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Section 20.3 - Landlord's Right to Make Payments on Behalf of Tenant. Landlord
has a right to make payments on behalf of Tenant where Tenant defaults in its
payments or obligations under the terms of this Lease and such default continues
for more than five (5) days after Landlord notifies Tenant of such default. Said
payments by Landlord shall be considered as an Additional Charge and be due and
payable within ten (10) days following receipt of Landlord's billing.
ARTICLE XXI
ASSIGNMENT AND SUBLETTING
Section 21.1 - Landlord's Consent Required.
(a) Landlord has entered into this Lease with Tenant in order to obtain
the benefit for the Shopping Center of the unique attraction of the trade name
set forth in Article I and of the unique merchandising mix and product line
associated with the business operated by Tenant under such trade name. In
entering into this Lease, Landlord has specifically relied on the identity and
special skill of Tenant in its ability to conduct the business identified in
Article I. Accordingly Tenant shall not mortgage, pledge, encumber, franchise,
assign or in any manner transfer this Lease, voluntarily or involuntarily, by
operation of law or otherwise, nor sublet all or any part of the Premises for
the conduct of any business by any third person or business entity, or for any
purpose other than is herein authorized without Landlord's prior written consent
which shall not be unreasonably withheld or delayed by Landlord.
(b) Any consent by Landlord to any assignment or subletting, or other
operation by a concessionaire, or licensee, shall not constitute a waiver of the
necessity for such consent under any subsequent assignment or subletting or
operation by a concessionaire or licensee.
(c) Reference anywhere else in this Lease to an assignee or subtenant
shall not be considered as a consent by Landlord to such assignment or
subletting nor as a waiver against the same except as specifically permitted in
this Section.
Section 21.2 - Insolvency Proceedings. In the event an assignment of the
Premises is caused by operation of law due to Tenant's voluntary or involuntary
insolvency proceedings under the Bankruptcy Reform Act of 1978 as amended, said
assignment shall be subject to any and all conditions contained in Section 365
of said Act or any other section pertaining to the termination, assumption,
assignment and rejection of executory contracts for leases.
Section 21.3 - Return of Premises by Tenant. Prior to or simultaneously with any
request by Tenant for consent as required in this Article XXI to assign this
Lease or sublet the whole of the Premises, Tenant shall, by written notice and
without charge of any kind, offer the return of the Premises to Landlord herein.
Landlord, within sixty (60) days of receipt of said written notice, shall have
the option to accept the Premises without further liability upon Tenant as to
the terms of this Lease or reject said offer and permit Tenant to assign or
sublet the Premises subject to the conditions of this Article XXI.
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Section 21.4 - Transfer of Ownership.
(a) In the event that Tenant is a "closely-held" entity (meaning a
corporation which is not listed on a national security exchange as defined in
the Securities Exchange Act of 1934 and as amended or the NASDAQ National
Market), a change in the "control" of Tenant ("control" meaning the ownership or
control of more than fifty percent (50%) of Tenant's ownership interests)
without Landlord's prior written consent (other than the transfer of all of the
outstanding stock of Tenant, or of an entity that wholly owns Tenant) shall
constitute an attempted assignment in violation of this Lease and shall at
Landlord's election: (x) be deemed to be a default under this Lease; (y) be
deemed to be an offer of return of the Premises to Landlord pursuant to Section
21.3; or (z) be deemed to be null and void and of no effect.
(b) Notwithstanding the foregoing provisions, Tenant shall have the right
to assign or otherwise transfer this Lease or sublease the entire Premises (but
not part of the Premises), to its parent or to a wholly owned subsidiary or to
an entity which is wholly owned by the same entity which wholly owns Tenant,
provided, however, that (i) Tenant shall also remain primarily liable for all
obligations under this Lease, (ii) the transferee shall, prior to the effective
date of the transfer, deliver to Landlord, instruments evidencing such transfer
and its agreement to assume and be bound by all the terms, conditions and
covenants of this Lease to be performed by Tenant, all in form acceptable to
Landlord, (iii) no Event of Default shall have occurred and be occurring, and
(iv) Tenant's right to make such transfer is expressly conditioned on, and shall
remain in effect only as long as the transferee maintains its relationship as
parent or wholly owned subsidiary of Tenant or wholly owned subsidiary of
Tenant's parent. Any transfer of other ownership interests of such parent or
subsidiary transferee shall be deemed a change in the control of Tenant and
governed by the provisions of Section 21.4(a) unless such parent or subsidiary
transferee is not a closely-held entity. Tenant shall also have the right to
assign or otherwise transfer this Lease or the entire Premises (but not part of
the Premises), to any purchaser of substantially all of the assets of Tenant
comprising Tenant's retail operations.
Section 21.5 - Transfer of Other Business Interests. If Tenant is a partnership,
general or limited, or any other type of business entity other than a
corporation, and if at any time during the Term hereof, the person or persons
who at the time of the execution of this Lease owns or own the general partners'
interest of a limited partnership or owns a controlling partnership interest in
a general partnership, or a majority share of any other business entity other
than a corporation, ceases to own such interest, such cessation of ownership
shall constitute an assignment of this Lease for all purposes of this Section
(except as a result of transfers by bequests or inheritance).
Section 21.6 - Acceptance of Rent by Landlord. If this Lease be assigned, or if
the Premises, or any part thereof, be subleased or occupied by anybody other
than Tenant with or without Landlord's consent, Landlord may collect from
assignee, subtenant or occupant, any Rent or other charges payable by Tenant
under this Lease and apply the amount collected to the Rents herein reserved,
but such collection by Landlord shall not be deemed a waiver of the provisions
of this Lease, nor an acceptance of this assignee, subtenant or occupant, as a
tenant of the Premises.
Section 21.7 - No Release of Tenant's Liability. No assignment or subletting or
any other transfer by Tenant, either with or without Landlord's consent,
required or otherwise, during the Term of this Lease shall release Tenant from
any liability under the terms of this Lease nor shall Tenant be relieved of the
obligation of performing any of the terms, covenants and conditions of this
Lease.
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Section 21.8 - Legal Fees. In each instance where Landlord's consent to an
assignment or subletting is requested by Tenant, Tenant acknowledges and agrees
that Landlord shall not be deemed to be acting unreasonably if Landlord, as one
of its conditions to the granting of such consent, should require Tenant to pay
the reasonable attorney's fees incurred by Landlord, its outside counsel, if
any, or counsel for Landlord's lender if such lender's consent should be
required, in the preparing, reviewing, negotiating and/or processing of
documentation in connection with the requested assignment or subletting
irrespective of whether or not consent is given to such assignment or
subletting.
ARTICLE XXII
DAMAGE OR DESTRUCTION
Section 22.1 - Landlord's Obligation to Repair and Reconstruct.
(a) If the Premises shall be partially damaged by fire or other casualty
insurable under standard extended coverage insurance but are not thereby
rendered unsuitable for the purposes contemplated hereunder in any manner,
Landlord shall cause the Premises to be repaired subject to Subsections (c) and
(d) herein and Section 22.2, and the Fixed Minimum Rent and Additional Charges
shall not be abated. If by reason of such occurrence the Premises shall be
rendered unsuitable for the purposes contemplated hereunder only in part,
Landlord shall cause the Premises to be repaired subject to Subsections (c) and
(d) herein and Section 22.2, and the Fixed Minimum Rent and Additional Charges
shall be abated proportionately as to the portion of the Premises rendered
unsuitable for the purposes contemplated hereunder until the earlier to occur of
sixty (60) days after Landlord's restoration work has been substantially
completed or the date the Premises so repaired has reopened for business.
(b) Subject to Section 22.2, if the Premises shall be rendered wholly
unsuitable for the purposes contemplated hereunder by reason of such occurrence
and the remainder of the term of the Lease (hereinafter called the "residual
term") is two (2) Lease Years or more, Landlord shall cause the Premises to be
repaired in accordance with Subsection (c) herein (subject to reasonable delays
occasioned by adjustment of losses with insurance carriers or for any cause
beyond Landlord's control), and the Fixed Minimum Rent and Additional Charges
shall be abated until the earlier to occur of sixty (60) days after Landlord's
restoration work has been substantially completed or the date the Premises so
repaired has reopened for business.
(c) If Landlord is required or elects to repair or reconstruct the
Premises under the provisions of this Article XXII, its obligation shall be
limited to those repairs to the Premises which were Landlord's obligation to
perform for Tenant at the commencement date of this Lease. Tenant, at Tenant's
expense, shall promptly perform all repairs and restoration not required to be
done by Landlord and shall promptly refixture and reconstruct the Premises and
recommence business in all parts thereof.
(d) Tenant shall not be entitled to any compensation or damages, other
than stated herein, from Landlord for the loss of the use of the whole or any
part of the Premises or damage to Tenant's personal property or any
inconvenience or annoyance occasioned by such damage, repair, reconstruction or
restoration.
Section 22.2 - Landlord's Option to Terminate. If (1) the Premises are rendered
wholly untenantable, or damaged as a result of any cause which is not covered by
Landlord's insurance; (2) the Premises are damaged or destroyed in whole or in
part during the last two (2) Lease Years of the Term; or (3) the Shopping Center
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or Resort is damaged to the extent of ten percent (10%) or more of the cost of
replacement, then in any of such events, Landlord may elect to terminate this
Lease by giving to Tenant notice of such election within ninety (90) days after
the occurrence of such event. If such notice is given, the Lease shall terminate
as of the date of such notice, and Fixed Minimum Rent and Additional Charges
shall be adjusted as of the date of such termination.
Tenant hereby waives any statutory rights of termination which may arise
out of partial or total destruction of the Premises which Landlord is obligated
to restore.
Section 22.3 - Demolition of Landlord's Building. If the Shopping Center is so
substantially damaged that it is reasonably necessary, in Landlord's judgment,
to demolish a portion of the said Shopping Center, including the Premises, for
the purpose of reconstruction, Landlord may demolish the Premises, in which
event Tenant's Fixed Minimum Rent and Additional Charges shall be abated until
the earlier to occur of sixty (60) days after Landlord's restoration work has
been substantially completed or the date the Premises so restored has reopened
for business.
ARTICLE XXIII
CONDEMNATION
Section 23.1 - Effect of Taking.
(a) In the event that the whole or any part of the Premises shall be taken
for public or quasi-public use or condemnation under eminent domain, this Lease
shall terminate as to the part so taken on the date possession is yielded to the
condemning authority, and, at Tenant's option upon notice to Landlord within
thirty (30) days of such taking, shall terminate entirely if the part so taken
exceeds ten percent (10%) of the Premises GLA.
(b) In the event that any portion of the Resort, Shopping Center or Common
Areas is taken and such taking substantially impairs access to or the usefulness
of the Premises for the purposes hereinbefore granted to Tenant, either party
may terminate the Lease by written notice within thirty (30) days prior to the
actual physical taking.
(c) For the purposes of this Article, a voluntary sale, conveyance or deed
in lieu of condemnation, but under threat of condemnation, shall be deemed an
appropriation or taking under the power of eminent domain.
(d) If this Lease has not been terminated as above provided following any
of such actual takings, then Landlord shall, at its expense, make all necessary
repairs or alterations to the basic building and exterior work so as to
constitute the remaining Premises a complete architectural unit and a
proportionate allowance shall be made in the Fixed Minimum Rent and Additional
Charges based on the proportion of the Premises remaining as compared to the
original Premises.
Section 23.2 - Compensation and Awards. All compensation awarded for any taking
of the fee and the leasehold, or any part thereof, shall belong to and be the
property of Landlord. Tenant hereby assigns to Landlord all right, title and
interest of Tenant in and to any award made for leasehold damages and/or
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diminution in the value of Tenant's leasehold estate. Tenant shall have the
right to claim such compensation as may be separately awarded or allocated by
reason of the cost or loss to which Tenant might be put in removing Tenant's
merchandise, fixtures, leasehold improvements and equipment. Compensation as
used in this Section shall mean any award given to Landlord for such taking in
excess of, and free and clear of, all prior claims of the holders of any
mortgages or other security interests.
Section 23.3 - Condemnation or Breach of Lease. Any such appropriation or
condemnation proceedings shall not operate as or be deemed an eviction of Tenant
or a breach of Landlord's covenant of quiet enjoyment.
Tenant hereby waives any statutory rights of termination which may arise
by reason of any partial taking of the Premises under the power of eminent
domain.
ARTICLE XXIV
DEFAULT
Section 24.1 - Events of Default. Each of the following shall be considered an
"Event of Default" and shall give rise to and entitle Landlord to the remedies
provided for in Section 24.2, as well as any and all other remedies, whether at
law or in equity, provided for or otherwise available to Landlord or as
otherwise provided for in this Lease:
(a) Tenant shall default in the payment of any Rents or charges, or in the
payment of any other sums of money required to be paid by Tenant to Landlord
under this Lease, or as reimbursement to Landlord for sums paid by Landlord on
behalf of Tenant in the performance of the covenants of this Lease, and said
default is not cured within ten (10) days after receipt of written notice
thereof from Landlord.
(b) Tenant shall default in the performance of any other covenants, terms,
conditions, provisions, rules and regulations of this Lease excepting those
items listed in the above section (a) and such default is not cured within
thirty (30) days after written notice thereof given by Landlord, excepting such
defaults that cannot be cured completely within such thirty (30) day period
providing Tenant, within said thirty (30) day period, has promptly commenced to
proceed with diligence and in good faith to remedy such default.
(c) In the event Tenant or any related or affiliated entity thereof, shall
at any time during the term hereof be a party to a lease or leases with Landlord
for other space(s) in the Shopping Center, then if there shall exist a default
in either this Lease or said other lease(s) such default shall be deemed a
default under all of said leases, pursuant to which default Landlord may take
appropriate action hereunder.
(d) There is commenced any case in bankruptcy against the original named
Tenant, any assignee or subtenant of the original named Tenant, any then
occupant of the Premises or any guarantor of all or any of Tenant's obligations
hereunder (collectively "Key Persons") or an order for relief is entered with
respect to any Key Person or there is appointed a receiver or trustee to take
possession of any of the assets of any Key Person or the Premises or any Key
Person applies for or consents to such appointment, or there is a general
assignment by any Key Person for the benefit of creditors, or any action is
taken by or against any Key Person under any state or federal insolvency or
bankruptcy act, or any similar law now or hereafter in effect
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or any property of any Key Person is taken or seized under levy of execution or
attachment, or any Key Person admits in writing its inability to pay its debts
as they mature.
(e) The sale of Tenant's interest in the Premises under attachment,
execution or similar legal process.
(f) Tenant should vacate or abandon the Premises or shall fail to operate
its business on the days and hours required, or fails to continuously occupy and
conduct Tenant's business in the Premises.
All cure periods provided in this Lease shall run concurrently with any periods
provided by law.
Section 24.2 - Remedies and Damages.
(a) If any Event of Default occurs, Landlord may, at its option and in
addition to any and all other rights or remedies provided Landlord in this Lease
or at law or equity, immediately, or at any time thereafter, and without demand
or notice (except as provided herein):
(i) without waiving the Event of Default, apply all or part of the
security deposit, if any, to cure the Event of Default and Tenant shall on
demand restore the security deposit to its original amount;
(ii) without waiving such Event of Default, apply thereto any
overpayment of Rents to curing the Event of Default in lieu of refunding or
crediting the same to Tenant;
(iii) if the Event of Default pertains to work or other obligations
(other than the payment of Rents or Additional Charges) to be performed by
Tenant, without waiving such Event of Default, enter upon the Premises and
perform such work or other obligation, or cause such work or other obligation to
be performed, for the account of Tenant; and Tenant shall on demand pay to
Landlord the cost of performing such work or other obligation plus fifteen
percent (15%) thereof as administrative costs;
(iv) declare the term of this Lease ended and re-enter the Premises
and take possession thereof, and to terminate all of the rights of Tenant in and
to the Premises.
(b) Notwithstanding any termination of this Lease or termination of
Tenant's rights to possession, whether by summary proceedings or otherwise,
Tenant shall pay and be liable for (on the days originally fixed herein for the
payment thereof) the several installments of Rent as if this Lease had not been
terminated and as if Landlord had not entered and whether the Premises are relet
or remain vacant in whole or in part, but in the event the Premises is relet by
Landlord, Tenant shall be entitled to a credit in the net sum of Rents received
by Landlord in reletting after deduction of all expenses incurred in reletting
the Premises, and in collecting such Rents.
(c) In the event of a reletting, Landlord may apply the rent therefrom
first to the payment of Landlord's reasonable expenses including but not limited
to attorney's fees incurred, expense of reletting, repairs, brokerage fees,
subdividing, renovation or alteration of the Premises and then to the payment of
Rent and all other sums due from Tenant hereunder, and Tenant shall remain
liable for any deficiency.
(d) In computing damages or rental due under this Lease, the value of the
Percentage Rent for any period subsequent to the termination of this Lease, or
the termination of Tenant's right of possession, shall be
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included and shall be an amount per year equal to one-third of the total
Percentage Rent chargeable to Tenant for the last three (3) full years
immediately preceding such termination, and if less than three (3) full years
shall have elapsed, such value shall be an amount per year equal to the average
yearly Percentage Rent theretofore payable by Tenant.
(e) Notwithstanding anything to the contrary contained herein, Landlord
shall use commercially reasonable efforts to mitigate its damages resulting from
any Event of Default.
Section 24.3 - Repeated Default.
(a) Notwithstanding anything to the contrary set forth in this Lease, if
Tenant shall be in default in the timely payment of any Rents due Landlord from
Tenant or the payment of any other money due Landlord from Tenant under the
terms of this Lease, or in the timely reporting of Gross Revenue as required by
Section 11.5 of this Lease and any such default shall be repeated two (2) times
in any period of twelve (12) consecutive months, then, notwithstanding that such
default shall have been cured within the period after notice, as provided in
this Lease, any further similar default within said twelve (12) month period
shall be deemed to be a "Repeated Event of Default."
(b) In the event of a Repeated Event of Default, Landlord, without
affording Tenant an opportunity to cure such Repeated Event of Default may
terminate this Lease forthwith on notice to Tenant.
Section 24.4 - Waiver of Rights of Redemption. Tenant hereby expressly waives
any and all rights of redemption granted by or under any present or future laws
in the event of Tenant being evicted or dispossessed for any cause, or in the
event of Landlord obtaining possession of the Premises by reason of the
violation, by Tenant, of any of the covenants or conditions of this Lease, or
otherwise.
Section 24.5 - Removal of Tenant. Pursuant to the rights of re-entry provided
above, Landlord may remove all persons from the Premises and may, but shall not
be obligated to, remove all property therefrom, and may, but shall not be
obligated to, enforce any rights Landlord may have against said property or
store the same in any public or private warehouse or elsewhere at the cost and
for the account of Tenant or the owner or owners thereof. Tenant agrees to hold
Landlord free and harmless from any liability whatsoever for the removal and
storage of any such property, whether of Tenant or any third party whomsoever.
Anything contained herein to the contrary notwithstanding, Landlord shall not be
deemed to have terminated this Lease or the liability of Tenant to pay any Rent
or other sum of money thereafter to accrue hereunder, or Tenant's liability for
damages under any of the provisions hereof, by any such reentry, or by any
action in unlawful detainer or otherwise to obtain possession of the Premises,
unless Landlord shall have specifically, with reference to this Section 24.5,
notified Tenant in writing that it has so elected to terminate this Lease.
Tenant covenants and agrees that the service by Landlord of any notice pursuant
to the unlawful detainer statutes of the State of Nevada and the surrender of
possession pursuant to such notice shall not (unless Landlord elects to the
contrary at the time of, or at any time subsequent to, the service of such
notice to Tenant) be deemed to be a termination of this Lease, or the
termination of any liability of Tenant hereunder to Landlord.
Section 24.6 - Default by Landlord. In the event Landlord fails or refuses to
perform any of the provisions, covenants or conditions of this Lease on
Landlord's part to be kept or performed, Tenant, prior to exercising any right
or remedy Tenant may have against Landlord on account of such default, shall
give written notice to Landlord and Landlord's lender of such default,
specifying in said notice the default with which Landlord
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is charged and Landlord shall not be deemed in default if the same is cured
within thirty (30) days of receipt of said notice. Notwithstanding any other
provision hereof, Tenant agrees that if the default complained of in the notice
provided for by this Section is of such a nature that the same can be rectified
or cured by Landlord, but cannot with reasonable diligence be rectified or cured
within said thirty (30) day period, then such default shall be deemed to be
rectified or cured if Landlord within said thirty (30) day period (or Landlord's
lender in a longer reasonable time) shall commence the rectification and curing
thereof and shall continue thereafter with all due diligence to cause such
rectification and curing to proceed.
ARTICLE XXV
COMPETITION
Section 25.1 - Restriction on Tenant. Tenant agrees that for as long as this
Lease shall remain in effect, neither Tenant, nor any affiliate of Tenant, shall
directly or indirectly operate, manage, or have any ownership interest in any
business (unless such business is already in operation on the date of this Lease
or is a wholesale business) which is substantially similar or in competition
with the use set forth in Section 1.0(t) ("Competing Store"), within a radius of
five (5) miles from the perimeter of the Shopping Center ("Restricted Area").
Section 25.2 - Imposition of Damages. In the event that Tenant shall violate
this covenant, Landlord may, at its option (provided the Occupied Center GLA is
at least seventy percent (70%) of the aggregated Shopping Center GLA (excluding
second level space)), without limiting Landlord's remedies, effective as of the
date such Competing Store opens for business within the Restricted Area, pursue
any and/or all of the following remedies in its sole and absolute discretion:
(i) include seventy-five percent (75%) of the Gross Revenues of the Competing
Store(s) in the Gross Revenues generated from the Premises for the purpose of
computing Percentage Rent due hereunder; or (ii) increase Tenant's Fixed Minimum
Rent to the average of the annual "effective" (aggregate of Fixed Minimum Rent
and Percentage Rent) rent paid by Tenant to Landlord during the immediately
preceding two (2) Lease Years; or (iii) increase Tenant's Fixed Minimum Rent
then in effect as well as any future increases in Fixed Minimum Rent by fifty
percent (50%).
ARTICLE XXVI
NOTICES
Section 26.1 - Notices to Tenant and Landlord. Any and all notices and demands
by or from Landlord to Tenant, or by or from Tenant to Landlord, required or
desired to be given hereunder shall be in writing and shall be validly given or
made if served either personally or if deposited in the United States mail,
certified or registered, postage prepaid, return receipt requested, or if
delivered by a nationally recognized next day delivery courier service. If such
notice or demand be served by registered or certified mail or by courier service
in the manner provided, service shall be conclusively deemed given the first
business day delivery is attempted or upon receipt, whichever is sooner. Notices
shall be addressed in accordance with Section 1.0(v) above. Either party may
change its address for the purpose of receiving notices or demands as herein
provided by a written notice given in the manner aforesaid to the other party
hereto, which notice of change of address shall not become effective, however,
until the actual receipt thereof by the other party.
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Section 26.2 - Notices to Mortgagee. Tenant shall give Landlord's mortgagee
("Mortgagee") written notice of any alleged default which could give rise to
Tenant's termination of the Lease or expenditure of money on behalf of Landlord.
Such Mortgagee shall also be given an appropriate time to cure such default
including the opportunity to obtain possession of Landlord's interest, if
necessary, to cure the default. Landlord shall notify Tenant in writing of any
change in the Mortgagee for the Shopping Center.
ARTICLE XXVII
MISCELLANEOUS
Section 27.1 - Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than any payment of Rents herein stipulated shall be
deemed to be other than on account of the earliest stipulated Rents, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment of Rents be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Rents or pursue any other remedy provided for in this Lease
or available at law or in equity.
Section 27.2 - Complete Agreement. The parties hereto acknowledge that all of
the terms and covenants contained herein were reviewed by both parties and/or
their counsel hereto and all negotiations, consideration, representations,
inducements and understandings between the parties are incorporated herein, and
may be modified or altered only by agreement, in writing, between the parties.
This Lease contains the entire agreement between the parties hereto, and no
agent, representative, employee or officer of Landlord has or had authority to
make or has made any statement, agreement or representation, either oral or
written, in connection herewith, modifying, adding or changing the terms and
conditions herein set forth. No present or past dealings or custom between the
parties shall be permitted to contradict or modify the terms hereof. No
modification of this Lease shall be binding unless such modification shall be in
writing and signed by the parties hereto. Unless otherwise expressly set forth
in writing herein, Tenant acknowledges that there are no agreements, promises,
representations, warranties or covenants by Landlord or its agents or employees
as to the following types of matters, including, without limitation: (i)
exclusive rights to sell goods and/or services; (ii) limitations on or
restrictions against competing businesses in the Shopping Center; (iii) the
future opening of other stores or businesses; (iv) expected per square foot or
total sales from the Premises; (v) type or quality of existing or prospective
tenants located or to be located in the Shopping Center; (vi) work to be
performed by Landlord in improving Tenant's Premises; (vii) contribution by
Landlord towards Tenant's leasehold improvement costs; (viii) that Tenant's
annual Proportionate Share of CAM Costs or real estate taxes will not exceed a
certain amount per square foot of Premises GLA during the Term hereof; or (ix)
promotion and/or advertising of Tenant's business and/or products or services.
Section 27.3 - Governing Law. The laws of the State of Nevada shall govern the
validity, construction, performance and effect of this Lease. Any legal suit,
action or proceeding against lender or borrower arising out of or relating to
this Lease shall be instituted in any federal or state court in Clark County,
Nevada, and Tenant waives any objection which it may now or hereafter have to
the laying of venue of any such suit, action or proceeding, and Tenant hereby
irrevocably submits to the jurisdiction of any such court in any suit, action or
proceeding.
Section 27.4 - Compliance with Governmental Authorities. Tenant, at its own
expense, shall comply with all laws, rules, orders, ordinances, directions,
regulations and requirements ("Requirements") of federal,
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state, county and municipal authorities now in force or which hereafter may be
in force, which shall impose any duty upon Landlord or Tenant with respect to
the initial improvement, use, occupation or alteration of the Premises by
Tenant, including, but not limited to, Requirements of the ADA which may be
applicable thereto. Tenant agrees to indemnify and save Landlord harmless from
and against any penalty, damage or charge imposed for any violation by Tenant,
its assignees, subtenants, licensees, agents and employees of any said
Requirements.
Section 27.5 - Brokerage. Tenant and Landlord each warrants to the other that it
has had no dealings with any broker or agent in connection with the Lease,
except Blatteis Realty Company, Inc., whose commission shall be paid by
Landlord. Tenant and Landlord covenant and agree to pay, hold harmless and
indemnify the other from and against any and all costs, expenses or liability
for any compensation, commissions and charges claimed by any broker or agent
alleging to have dealt with the indemnifying party with respect to this Lease or
the negotiation hereof (including, without limitation, the cost of legal fees in
connection therewith).
Section 27.6 - Effective Date of Lease. Submission of this Lease by Landlord for
examination or execution by Tenant does not constitute a reservation of nor
option for Lease, and this instrument shall not become effective as a lease or
otherwise until execution by and delivery to both Landlord and Tenant. This
Lease shall only become effective and binding upon the parties in establishing
the relationship of Landlord and Tenant as of the date first written above, but
not earlier than the date Landlord executes this Lease.
Section 27.7 - Estoppel Certificates. Tenant agrees at any time, upon not less
than ten (10) days prior written request by Landlord, to execute, acknowledge
and deliver to Landlord a written statement certifying that this Lease is
unmodified and in full force and effect (or, if there has been modifications,
that the same is in full force as modified and stating the modifications), the
dates to which the Rents have been paid in pursuant to this Lease and such other
certification concerning the Lease as may be reasonably required by Landlord or
Landlord's mortgagee. Tenant further agrees that such statement may be relied
upon by any mortgagee or prospective purchaser of the fee or assignee of any
mortgage on the fee of the Premises.
Section 27.8 - Force Majeure. Landlord and/or Tenant shall be excused for the
period of delay in the performance of any of their respective obligations
hereunder, except their respective obligation to pay any sums of money due under
the terms of this Lease, and shall not be considered in default, when prevented
from so performing by cause or causes beyond Landlord's or Tenant's control,
including, but not limited to, all labor disputes, civil commotion, war, fire or
other casualty, governmental regulations, statutes, ordinances, restrictions or
decrees, or through acts of God. Notwithstanding anything to the contrary
contained in this Section 27.8, in the event any work performed by Tenant or
Tenant's contractors results in a strike, lockout and/or labor dispute, such
strike, lockout and/or labor dispute shall not excuse the performance by Tenant
as provided for herein.
Section 27.9 - Partial Invalidity. If any term, covenant or condition of this
Lease, or any application thereof, should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, covenants and
conditions of this Lease, and all applications thereof, not held invalid, void
or unenforceable, shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.
Section 27.10 - Memorandum of Lease. This Lease shall not be recorded, but
either party may record a memorandum of lease describing the Premises herein
demised, giving the Term of this Lease, and referring
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to this Lease. The party requesting that the Memorandum of Lease be recorded
shall prepare and pay all costs of preparation and recording of the Memorandum
of Lease and the other party agrees to execute at any and all times such
instruments as may be reasonably required for such recording. Tenant shall
execute such documents as Landlord may require, in recordable form, upon the
expiration or earlier termination of the Term of this Lease in order to remove
the memorandum of lease from record.
Section 27.11 - Quiet Enjoyment. Subject to the terms and conditions of this
Lease and to any Encumbrances to which this Lease is subordinate pursuant to
Section 19.1, Landlord hereby covenants and agrees that if Tenant shall perform
all of the covenants and agreements herein stipulated to be performed on
Tenant's part, Tenant shall at all times during the continuance hereof have the
peaceful and quiet enjoyment and possession of the Premises without any manner
of hindrance from Landlord or any person or persons lawfully claiming the
Premises, save and except in the event of the taking of the Premises by public
or quasi-public authority as hereinbefore provided.
Section 27.12 - Rent Demand. Every demand for Rents due wherever and whenever
made shall have the same effect as if made at the time it falls due and at the
place of payment, and after the service of any notice or commencement of any
suit, or final judgment therein, Landlord may receive and collect any Rents due,
and such collection or receipt shall not operate as a waiver of nor affect such
notice, suit or judgment.
Section 27.13 - Section Headings. The section headings and title headings
contained herein are for convenience only and do not define, limit, construe or
amplify the contents of such Sections.
Section 27.14 - Successors and Assigns. The conditions, covenants and agreements
contained in this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
Section 27.15 - Waiver by Landlord.
(a) Landlord shall have the right at all times to enforce the covenants,
conditions and legal rights or remedies of this Lease in strict accordance with
the terms thereof, notwithstanding any conduct or custom on the part of Landlord
in refraining from so doing at any time or times. No failure by Landlord to
insist upon the strict performance of any term or condition of this Lease or to
exercise any right or remedy available, legal or equitable, for a breach
thereof, and no acceptance of full or partial Rents during the continuance of
any such breach shall constitute a waiver of any such breach or any such term,
condition or right.
(b) No term or condition of this Lease required to be performed by Tenant,
and no breach thereof, shall be waived, altered or modified except by a written
instrument executed by Landlord.
(c) A waiver by Landlord in respect to any tenant of the Shopping Center
in which the Premises are located shall not constitute a waiver in favor of any
other tenant, nor shall the waiver of the breach of any condition be claimed if
pleaded to excuse a future breach of the same condition or covenant or any other
condition, covenant, provision, rule and regulation of this Lease.
Section 27.16 - Exculpation. If Landlord shall fail to perform any covenant,
term or condition of this Lease upon Landlord's part to be performed and, as a
consequence of such default, Tenant shall recover a money
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judgment against Landlord, such judgment shall be satisfied only out of the
proceeds of sale received upon the execution of such judgment and levy thereon
against the right, title and interest of Landlord in the Shopping Center and out
of rents or other income from the Shopping Center receivable by Landlord or out
of the consideration received by Landlord from the sale or other disposition of
all or any part of Landlord's right, title and interest in the Shopping Center.
Neither Landlord nor any of the partners, beneficiaries, officers, directors,
venturers, shareholders or affiliated entities of Landlord shall be personally
liable for any deficiency.
Section 27.17 - Transfer of Landlord's Interest. Landlord shall be liable under
this Lease only while owner of the Premises. If Landlord should sell or
otherwise transfer Landlord's interest in the Premises, then such
purchaser/transferee shall be responsible for all of the covenants and
undertakings thereafter accruing of Landlord. Tenant agrees that Landlord shall,
after such sale or transfer of Landlord's interest, have no liability to Tenant
under this Lease or any modification or amendment thereof, or extensions or
renewals thereof, except for such liabilities which might have accrued prior to
the date of such sale or transfer of Landlord's interest to such
purchaser/transferee.
Section 27.18 - Time of the Essence. Time is of the essence of this Lease and
all of the terms, covenants and conditions hereof.
Section 27.19 - Remedies Cumulative. The various rights, options, elections and
remedies of Landlord contained in this Lease shall be cumulative and no one of
them shall be construed as exclusive of any other, or of any right, priority or
remedy allowed or provided for by law and not expressly waived in this Lease.
Section 27.20 - Joint Liability. In the event Tenant now or hereafter shall
consist of more than one person, firm or corporation, then and in such event,
all such persons, firms or corporations shall be jointly and severally liable as
Tenant hereunder.
Section 27.21 - Drafting. This Lease shall not be construed either for or
against Landlord or Tenant, but shall be interpreted in accordance with the
general tenor of its language.
Section 27.22 - Perpetuities. If for any reason the Rent Commencement Date has
not occurred within three (3) years of the date hereof, this Lease shall
thereupon terminate and be of no further force or effect (except with respect to
matters that arose before such termination).
Section 27.23 - Shopping Center and Resort Promotion. Tenant hereby agrees that
Landlord may publicly announce, advertise and promote Tenant's leasing of space
in the Shopping Center and may use Tenant's name and logos, the name and logos
of Tenant's business at the Premises, and Tenant's drawings, renderings and
photos of the Premises in public advertising, marketing and promotional
activities for the Shopping Center or the Resort, including, without limitation,
in press interviews, press kits, sales kits and print, billboard, radio and
television advertisements for the Shopping Center or the Resort.
ARTICLE XXVIII
DISPUTE RESOLUTION
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If any controversy or claim between the parties, other than Landlord's
claim of unlawful detainer or a proceeding for summary eviction for failure to
pay Fixed Minimum Rent, arises out of this Lease, and the parties are unable to
agree by direct negotiations, the parties shall promptly mediate any such
disagreement or dispute under the Commercial Mediation Rules of the American
Arbitration Association. If the parties are unable to resolve such disagreement
or dispute through mediation, then such disagreement or dispute (excluding an
action by Landlord in unlawful detainer or summary proceeding, as provided
above) shall be submitted to binding arbitration under the Commercial
Arbitration Rules of the American Arbitration Association.
The arbitrators shall be appointed under the Commercial Arbitration Rules
of the American Arbitration Association. As soon as the panel has been convened,
a hearing date shall be set within twenty-one (21) days thereafter. Written
submittals shall be presented and exchanged by both parties ten (10) days before
the hearing date, including reports prepared by experts upon whom either party
intends to rely. At such time the parties will also exchange copies of all
documentary evidence upon which they will rely at the arbitration hearing and a
list of the witnesses whom they intend to call to testify at the hearing. Each
party shall also make its respective experts available for deposition by the
other party prior to the hearing date. The hearings shall be concluded no later
than five (5) days after the initial hearing date. The arbitrators shall make
their award within ten (10) business days after the conclusion of the hearing.
In the event of a three-member panel, the decision in which two (2) of the
members of the arbitration panel concur shall be the award of the arbitrators.
Except as otherwise specified herein, there shall be no discovery or
dispositive motion practice (such as motions for summary judgment or to dismiss
or the like) except as may be permitted by the arbitrators, who shall authorize
only such discovery as is shown to be absolutely necessary to insure a fair
hearing and no such discovery or motions permitted by the arbitrators shall in
any way conflict with the time limits contained herein. The arbitrators shall
not be bound by the rules of evidence or civil procedure, but rather may
consider such writings and oral presentations as reasonable businessmen would
use in the conduct of their day-to-day affairs, and may require the parties to
submit some or all of their presentation as the arbitrators may deem
appropriate. It is the intention of the parties to limit live testimony and
cross-examination to the extent absolutely necessary to insure a fair hearing to
the parties on the significant matters submitted to arbitration. The parties
have included the foregoing provisions limiting the scope and extent of the
arbitration with the intention of providing for prompt, economic and fair
resolution of any dispute submitted to arbitration.
The arbitrators shall have the discretion to award the costs of
arbitration, arbitrators' fees and the respective attorneys' fees of each party
between the parties as they see fit.
Judgment upon the award entered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
Notwithstanding the parties' agreement to mediate or arbitrate their
disputes as provided herein, any party may seek emergency relief in a court of
law without waiving the right to arbitrate.
The arbitrators shall make their award in accordance with applicable law
and based on the evidence presented by the parties, and at the request of either
party at the start of the arbitration, shall include in their award findings of
fact and conclusions of law supporting the award.
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Nothing contained herein is intended to, nor shall, limit Landlord's right
to pursue any action in unlawful detainer in the case of an Event of Default by
Tenant.
IN WITNESS WHEREOF, the parties hereto have executed these presents, the
day and year first written above.
Grand Canal Shops Mall Construction, LLC, a
Delaware limited liability company
By: Venetian Casino Resort, LLC, a
Nevada limited liability company, its
member
By: Las Vegas Sands, Inc., a Nevada
corporation, its member
By:
-------------------------------------------
Name:
-----------------------------------------
Its:
------------------------------------------
Movado Retail Group, Inc., a New Jersey
corporation
By: /s/ Robert A. Donofrio
----------------------------------------------
Name: Robert A. Donofrio
--------------------------------------------
Its: President
---------------------------------------------
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EXHIBIT "B"
Premises
See Attached
55
<PAGE> 60
LOT A
LEGAL DESCRIPTION
A PARCEL OF LAND BEING A PORTION OF THE SOUTHWEST QUARTER (SW 1/4) AND A
PORTION OF THE NORTHWEST QUARTER OF SECTION 16, TOWNSHIP 21 SOUTH, RANGE 61
EAST, M.D.M., CLARK COUNTY, NEVADA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHEAST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF SAID
SECTION 16; THENCE SOUTHERLY THEREOF SOUTH 00(degree)24'18" EAST 74.80 FEET
ALONG THE CENTERLINE OF KOVAL LANE (100.00 FEET WIDE); THENCE DEPARTING SAID
CENTERLINE SOUTH 89(degree)35'42" WEST 50.00 FEET TO A POINT ON THE WESTERLY
RIGHT OF WAY OF KOVAL LANE; THENCE ALONG SAID WESTERLY RIGHT OF WAY SOUTH
00(degree)24'18" EAST 761.05 FEET; THENCE DEPARTING SAID WESTERLY RIGHT OF WAY
NORTH 89(degree)00'17" WEST 1299.12 FEET TO THE POINT OF BEGINNING; THENCE SOUTH
00(degree)27'55" EAST 7.81 FEET; THENCE NORTH 88(degree)51'25" WEST 562.02 FEET;
THENCE NORTH 00(degree)55'34" WEST 200.11 FEET; THENCE NORTH 89(degree)01'44"
WEST 132.47 FEET; THENCE NORTH 00(degree)56'23" WEST 175.81 FEET; THENCE NORTH
88(degree)59'20" WEST 239.23 FEET TO A POINT ON A CURVE ON THE EASTERLY RIGHT OF
WAY OF LAS VEGAS BOULEVARD (100.00 FEET WIDE); THENCE FROM A TANGENT BEARING
NORTH 20(degree)55'41" EAST CURVING RIGHT, HAVING A RADIUS OF 3960.00 FEET
CONCAVE SOUTHEASTERLY, AN ARC LENGTH OF 489.16 FEET THROUGH A CENTRAL ANGLE OF
7(degree)4'39"; THENCE NORTH 28(degree)00'20" EAST 247.72 FEET; THENCE DEPARTING
SAID EASTERLY RIGHT OF WAY OF LAS VEGAS BOULEVARD SOUTH 89(degree)05'40" EAST
336.41 FEET; THENCE NORTH 00(degree)59'07" EAST 89.23 FEET; THENCE SOUTH
89(degree)06'39" EAST 223.66 FEET; THENCE SOUTH 01(degree)01'21" WEST 274.05
FEET; THENCE NORTH 89(degree)51'02" EAST 627.09 FEET; THENCE SOUTH
01(degree)00'22" WEST 169.33 FEET; THENCE NORTH 89(degree)00'34" WEST 110.80
FEET TO A POINT ON A CURVE WHERE THE RADIUS POINT BEARS SOUTH 62(degree)11'16"
WEST; THENCE CURVING TO THE RIGHT HAVING A RADIUS OF 410.82 FEET CONCAVE
SOUTHWESTERLY, AN ARC LENGTH OF 206.68 FEET, THROUGH A CENTRAL ANGLE OF
28(degree)49'30"; THENCE SOUTH 01(degree)00'46" NORTH 495.04 FEET TO A POINT ON
A CURVE WHERE THE RADIUS POINT BEARS NORTH 15(degree)08'27" WEST; THENCE ALONG
AN ARC TO THE RIGHT HAVING A RADIUS OF 117.00 FEET, CONCAVE NORTHWESTERLY AN ARC
DISTANCE OF 32.95, THROUGH A CENTRAL ANGLE OF 16(degree)08'10"; THENCE NORTH
89(degree)00'17" WEST 455.28 FEET TO THE POINT OF BEGINNING.
CONTAINS 27.69 ACRES (1,206,265 SQUARE FEET) MORE OR LESS.
EXHIBIT A
<PAGE> 61
LOT C
LEGAL DESCRIPTION
A PARCEL OF LAND BEING A PORTION OF THE NORTHWEST QUARTER (NW 1/4) OF SECTION
16, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.M., CLARK COUNTY, NEVADA, DESCRIBED AS
FOLLOWS:
COMMENCING AT THE NORTHEAST CORNER OF THE SOUTHWEST QUARTER (SW 1/4) OF SAID
SECTION 16; THENCE SOUTHERLY THEREOF SOUTH 00(degree)24'18" EAST 74.80 FEET
ALONG THE CENTERLINE OF KOVAL LANE (100.00 FEET WIDE); THENCE DEPARTING SAID
CENTERLINE SOUTH 89(degree)35'42" WEST 50.00 FEET TO A POINT ON THE WESTERLY
RIGHT OF WAY OF KOVAL LANE; THENCE ALONG SAID WESTERLY RIGHT OF WAY SOUTH
00(degree)24'18" EAST 761.05 FEET; THENCE DEPARTING SAID WESTERLY RIGHT OF WAY
89(degree)00'17" WEST 843.84 FEET TO A POINT OF CURVATURE THENCE ALONG A CURVE
TO THE LEFT HAVING A RADIUS OF 117.00 FEET CONCAVE NORTHWESTERLY THROUGH A
CENTRAL ANGLE OF 16(degree)08'10", AN ARC DISTANCE OR 32.95 FEET TO A POINT OF
NON TANGENCY WHERE THE RADIUS POINT BEARS NORTH 15(degree)O8'27" WEST; THENCE
NORTH 01(degree)00'46" EAST 495.04 FEET TO A POINT OF CURVATURE; THENCE ALONG A
CURVE TO THE LEFT HAVING A RADIUS OF 410.82 FEET CONCAVE SOUTHWESTERLY, AN ARC
DISTANCE OF 206.68 FEET THROUGH A CENTRAL ANGLE OF 28(degree)49'30" TO A POINT
OF NON TANGENCY WHERE THE RADIUS POINT BEARS SOUTH 62(degree)11'16" WEST; THENCE
SOUTH 89(degree)00'34" EAST 110.80 FEET; THENCE NORTH 01(degree)00'22" EAST
169.33 FEET TO THE POINT OF BEGINNING; THENCE SOUTH 89(degree)51'02" WEST 231.09
FEET; THENCE NORTH 01(degree)01'21" EAST 265.95 FEET; THENCE NORTH
88(degree)58'39" WEST 395.92 FEET; THENCE NORTH 01(degree)01'21" EAST 599.75
FEET; THENCE NORTH 89(degree)53'58" EAST 145.87 FEET; THENCE SOUTH
02(degree)10'07" WEST 50.00 FEET; THENCE NORTH 89(degree)53'58" EAST 205.00
FEET; THENCE NORTH 89(degree)53'58" EAST 39.25 FEET TO A POINT ON A CURVE WHERE
THE RADIUS POINT BEARS SOUTH 38(degree)41'35" WEST, SAME POINT BEING ON THE
WESTERLY RIGHT OF WAY OF SANDS AVENUE; THENCE CURVING TO THE RIGHT, HAVING A
RADIUS OF 537.86 FEET, CONCAVE SOUTHWESTERLY, AN ARC LENGTH OF 274.24 FEET,
THROUGH A CENTRAL ANGLE OF 29(degree)12'50"; THENCE SOUTH 20(degree)31'22" EAST
304.01 FEET TO A POINT ON A CURVE WHERE THE RADIUS POINT BEARS SOUTH
08(degree)59'10" EAST, HAVING A RADIUS OF 15.00 FEET, CURVING TO THE RIGHT AN
ARC LENGTH OF 20.54 FEET THROUGH A CENTRAL ANGLE OF 78(degree)27'48" TO A POINT
ON A REVERSE CURVE HAVING A RADIUS OF 650.00 FEET, CONCAVE NORTHEASTERLY AN ARC
LENGTH OF 200.33 FEET THROUGH A CENTRAL ANGLE OF 17(degree)39'30" TO A POINT
WHERE THE RADIUS POINT BEARS NORTH 51(degree)49'09" EAST; THENCE DEPARTING SAID
WESTERLY RIGHT OF WAY OF SANDS AVENUE SOUTH 51(degree)33'08" WEST 213.88 FEET;
THENCE SOUTH 01(degree)00'22" WEST 33.87 FEET TO THE POINT OF BEGINNING.
CONTAINS 9.80 ACRES (426,884 SQUARE FEET) MORE OR LESS.
EXHIBIT A
<PAGE> 62
[FLOOR PLAN OMITTED]
<PAGE> 63
NORTH PARKING
GARAGE
[FLOOR PLAN OMITTED]
<PAGE> 64
GUARANTY
GUARANTY OF LEASE dated as of August 5, 1998 by and between Grand
Canal Shops Mall Construction, LLC, a Delaware limited liability company, as
Landlord, and Movado Retail Group, Inc., a New York corporation, as Tenant.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
the undersigned Guarantor hereby unconditionally and irrevocably guarantees the
full and faithful performance by Tenant of all the terms, covenants and
conditions of the above-referenced Lease. This Guaranty shall remain in full
force and effect regardless of any amendment, modification, extension,
compromise or release of any term, covenant or condition of the Lease or of any
party thereto, as the case maybe.
Guarantor waives any right or claim or rights to cause a marshaling
of Tenant's assets or to proceed against Guarantor or Tenant or any security for
the Lease or this Guaranty in any particular order and Guarantor agrees that any
payments or performance required to be made hereunder shall become due upon
demand in accordance with the terms hereof immediately upon the happening of a
default under the Lease, whether or not Guarantor has been given notice of such
default, and Guarantor hereby expressly waives and relinquishes all rights and
remedies accorded by applicable law to guarantors, including, but not limited
to, notice of demand, notice of default, any failure to pursue Tenant or its
property, any defense arising out of the absence, impairment or loss of any
right of reimbursement or subrogation and any defense by reason of the assertion
by Landlord against Tenant of any of the rights or remedies reserved to Landlord
pursuant to the provisions of the Lease, or by reason of summary or other
proceedings against Tenant.
No delay on Landlord's part in exercising any right, power or
privilege under this Guaranty or any other document executed in connection
herewith shall operate as a waiver of any such privilege, power or right.
Guarantor agrees that any judgment rendered against Tenant for
monies or performance due Landlord shall in every and all respects bind and be
conclusive against Guarantor to the same extent as if Guarantor had appeared in
any such proceedings and judgment therein had been rendered against Guarantor.
Guarantor subordinates to Tenant's obligations to Landlord all
indebtedness of Tenant to Guarantor, whether now existing or hereafter
contracted, whether direct or indirect, contingent or determined. With respect
to any such indebtedness of Tenant to Guarantor, Guarantor further agrees to
make no claim therefor until any and all obligations of Tenant to Landlord shall
have been discharged in full and Guarantor further covenants and agrees not to
assign all or any part of such indebtedness while this Guaranty remains in
effect.
The terms, covenants and conditions contained in this Guaranty shall
inure to the benefit of the successors and assigns of Landlord.
If any term, covenant or condition of this Guaranty, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all terms, covenants and conditions of this
Guaranty, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
In this Guaranty, whenever the context so requires, the masculine
gender includes the feminine and/or neuter, and the singular number includes the
plural.
This Guaranty shall be construed in accordance with its intent and
without regard to any presumption or other rule requiring construction against
the party causing the same to be drafted.
The laws of the State of Nevada shall govern the validity,
construction, performance and effect of this Guaranty.
52
<PAGE> 65
Should Guarantor consist of more than one person or entity, then, in
such event, all such persons and entities shall be jointly and severally liable
as Guarantor hereunder. In any action brought by Landlord to enforce any of its
rights under or arising from this Guaranty, in the event Landlord prevails,
Landlord shall be entitled to receive its costs and legal expenses including
reasonable attorneys' fees, whether such action is prosecuted to judgment or
not. If Landlord shall engage the services of any attorney for the purpose of
collecting any rental due from Tenant, having first given Tenant five (5) days'
notice of its intention so to do, Tenant shall pay the reasonable fees of such
attorney for his services regardless of the fact that no legal proceeding or
action may have been filed or commenced.
Dated as of August 5, 1998.
Movado Group, Inc., a New York corporation
By: /s/ [ILLEGIBLE]
-----------------------------------------------
Its: CHIEF OPERATING OFFICER
----------------------------------------------
"Guarantor"
53
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JULY 31, 1998.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> JUL-31-1998
<CASH> 4,767
<SECURITIES> 0
<RECEIVABLES> 98,766
<ALLOWANCES> 0
<INVENTORY> 118,885
<CURRENT-ASSETS> 245,929
<PP&E> 22,546
<DEPRECIATION> 0
<TOTAL-ASSETS> 280,133
<CURRENT-LIABILITIES> 90,387
<BONDS> 35,000
0
0
<COMMON> 129
<OTHER-SE> 148,359
<TOTAL-LIABILITY-AND-EQUITY> 280,133
<SALES> 110,584
<TOTAL-REVENUES> 110,584
<CGS> 46,305
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,516
<INCOME-PRETAX> 4,590
<INCOME-TAX> 1,056
<INCOME-CONTINUING> 3,534
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,534
<EPS-PRIMARY> 0.27<F1>
<EPS-DILUTED> 0.26
<FN>
<F1>THE AMOUNT IS REPORTED AS EPS BASIC AND NOT FOR EPS PRIMARY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JULY 31, 1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 1,493
<SECURITIES> 0
<RECEIVABLES> 89,549
<ALLOWANCES> 0
<INVENTORY> 105,819
<CURRENT-ASSETS> 219,559
<PP&E> 16,738
<DEPRECIATION> 0
<TOTAL-ASSETS> 246,302
<CURRENT-LIABILITIES> 99,585
<BONDS> 40,000
0
0
<COMMON> 113
<OTHER-SE> 100,292
<TOTAL-LIABILITY-AND-EQUITY> 246,302
<SALES> 91,912
<TOTAL-REVENUES> 91,912
<CGS> 39,785
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,283
<INCOME-PRETAX> 2,794
<INCOME-TAX> 699
<INCOME-CONTINUING> 2,095
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,095
<EPS-PRIMARY> .19<F1>
<EPS-DILUTED> .18
<FN>
<F1>THE AMOUNT IS REPORTED AS EPS BASIC AND NOT FOR EPS PRIMARY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED
OCTOBER 31, 1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 2,882
<SECURITIES> 0
<RECEIVABLES> 125,670
<ALLOWANCES> 0
<INVENTORY> 103,574
<CURRENT-ASSETS> 248,210
<PP&E> 17,358
<DEPRECIATION> 0
<TOTAL-ASSETS> 275,999
<CURRENT-LIABILITIES> 82,537
<BONDS> 40,000
0
0
<COMMON> 129
<OTHER-SE> 145,161
<TOTAL-LIABILITY-AND-EQUITY> 275,999
<SALES> 176,447
<TOTAL-REVENUES> 176,447
<CGS> 75,223
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,968
<INCOME-PRETAX> 14,808
<INCOME-TAX> 3,406
<INCOME-CONTINUING> 11,402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,402
<EPS-PRIMARY> 1.00<F1>
<EPS-DILUTED> .96
<FN>
<F1>THE AMOUNT IS REPORTED AS EPS BASIC AND NOT FOR EPS PRIMARY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS RESTATED FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JULY 31, 1996.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 1,603
<SECURITIES> 0
<RECEIVABLES> 79,299
<ALLOWANCES> 0
<INVENTORY> 108,563
<CURRENT-ASSETS> 205,829
<PP&E> 13,230
<DEPRECIATION> 0
<TOTAL-ASSETS> 227,590
<CURRENT-LIABILITIES> 73,251
<BONDS> 40,000
0
0
<COMMON> 113
<OTHER-SE> 107,657
<TOTAL-LIABILITY-AND-EQUITY> 227,590
<SALES> 81,764
<TOTAL-REVENUES> 81,764
<CGS> 36,784
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,123
<INCOME-PRETAX> 1,729
<INCOME-TAX> 519
<INCOME-CONTINUING> 1,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,210
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.11
<FN>
<F1>AMOUNT IS REPORTED AS EPS BASIC AND NOT FOR EPS PRIMARY
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED OCTOBER 31,
1996.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 4,040
<SECURITIES> 0
<RECEIVABLES> 112,701
<ALLOWANCES> 0
<INVENTORY> 102,894
<CURRENT-ASSETS> 230,607
<PP&E> 14,312
<DEPRECIATION> 0
<TOTAL-ASSETS> 253,257
<CURRENT-LIABILITIES> 90,681
<BONDS> 40,000
0
0
<COMMON> 113
<OTHER-SE> 110,034
<TOTAL-LIABILITY-AND-EQUITY> 253,257
<SALES> 158,629
<TOTAL-REVENUES> 158,629
<CGS> 70,681
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,490
<INCOME-PRETAX> 11,890
<INCOME-TAX> 3,330
<INCOME-CONTINUING> 8,560
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,560
<EPS-PRIMARY> .76<F1>
<EPS-DILUTED> .75
<FN>
<F1>AMOUNT IS FOR EPS BASIC AND NOT FOR EPS PRIMARY
</FN>
</TABLE>
