nature of the interest of the applicable related person, (iii) whether the transaction may involve a conflict of interest, (iv) whether the transaction involves the provision of goods
or services to the Company that are readily available from unaffiliated third parties upon better terms, and (v) whether there are business reasons to enter into the transaction.
The Company and its subsidiaries periodically enter into transactions with other entities or individuals that are considered related parties,
including certain transactions with entities owned by, affiliated with, or for the respective benefit of Paul Marciano, who is an executive and member of the Board of the Company, and Maurice Marciano, who is also a member of the Board, and certain
of their children (the Marciano Entities).
Leases
The Company leases warehouse and administrative facilities, including the Companys corporate headquarters in Los Angeles, California,
from partnerships affiliated with the Marciano Entities and certain of their affiliates. There were four of these leases in effect as of January 30, 2021 with expiration or option exercise dates ranging from calendar years 2021 to
2025.
On October 7, 2020, the Company and the related party landlord entered into amendments to the leases for the Companys
corporate headquarters located in Los Angeles, California (the Corporate Headquarters) and a parking lot adjacent to the Corporate Headquarters (together, the Lease Amendments). The Lease Amendments provide for:
(1) a five-year lease renewal term ending September 30, 2025, with an additional five-year renewal option to September 30, 2030 at the Companys sole discretion; (2) triple net lease terms with an aggregate
annual rent in the amount of approximately $7.4 million for the first lease year of the renewal term, subject to an annual 2.5% increase each year thereafter; (3) 100% rent abatement for the first three months of the renewal
term for the Corporate Headquarters; and (4) a Company right to reduce the amount of rented space in the Corporate Headquarters by up to approximately 25% (and reduce its rent on a pro-rata basis),
subject to certain specified conditions, including a six month notice period and limits on the specific space that may be reduced. All other material terms in the previously existing leases for the Corporate Headquarters and the parking
lot adjacent to the Corporate Headquarters remain the same.
During the fourth quarter of fiscal 2021, the Company agreed with the related
party landlord to receive a two-month rent abatement related to COVID-19 relief on its lease for its warehouse and administrative facilities located in
Montreal, Quebec. The monthly lease payment is CAD$49,000 (US$37,000). All other terms of the existing lease remain in full force and effect.
The Company is currently in discussions with the related party landlord for extension of the lease for the office location in Paris, and in
the meantime, this lease is continuing on a month-to-month basis under the existing lease terms.
Aggregate lease costs recorded under these four related party leases for fiscal 2021, fiscal 2020 and fiscal 2019 were
$6.3 million, $5.1 million and $5.0 million, respectively. The Company believes that the terms of the related party leases have not been significantly affected by the fact that the Company and the lessors are related.
Employment of Family Member
Nicolai
Marciano, the son of Paul Marciano, is employed by the Company as Director of Specialty Marketing & Brand Partnerships. For fiscal 2021, Mr. Nicolai Marciano received $177,529 in base salary and a $50,000 annual incentive award (paid
in accordance with the Companys Bonus Plan during the first quarter of fiscal 2022 with respect to fiscal 2021 performance). Mr. Nicolai Marciano was entitled to participate during fiscal 2021 in the retirement, health and welfare benefit
plans generally available to other salaried employees of the Company. In addition, the Company granted Mr. Nicolai Marciano, on April 13, 2020, 7,200 shares of restricted Company Common Stock that is scheduled to vest, subject to his
continued employment through the applicable vesting date, in equal 25% installments on January 5 of 2021, 2022, 2023 and 2024.
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