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HomeMy WebLinkAbout12-7661v ~-~ w_ C.. J , ` ~ ~ ~: ~ ", - -,~ ..., .. ,.t ~~ SPIRIT MASTER FUNDING III, LLC . ~ '~' IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA LLC CORNETT HOSPITALITY 7(~(~/ i~+ Zo , No. _ Defendant Civil Term NOTICE TO DEFEND YOU HAVE BEEN SUED IN COURT. IF YOU WISH TO DEFEND AGAINST THE CLAIMS SET FORTH IN THE FOLLOWING PAGES, YOU MUST TAKE ACTION WITHIN TWENTY (20) DAYS AFTER THIS COMPLAINT AND NOTICE ARE SERVED, BY ENTERING A WRITTEN APPEARANCE PERSONALLY OR BY AN ATTORNEY AND FILLING IN WRITING WITH THE COURT YOUR DEFENSES OR OBJECTIONS TO THE CLAIMS SET FORTH AGAINST YOU. YOU ARE WARNED THAT IF YOU FAIL TO DO SO THE CASE MAY PROCEED WITHOUT YOU AND A JUDGEMENT MAY BE ENTERED AGAINST YOU BY THE COURT WITHOUT FURTHER NOTICE FOR ANY MONEY CLAIMED IN THE COMPLAINT OR FOR ANY OTHER CLAIM OR RELIEF REQUESTED BY THE PLAINTIFF. YOU MAY LOSE MONEY OR PEOPERTY OR OTHER RIGHTS IMPORTANT TO YOU. YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A LAWYER OR :,ANNOY AFFORD ONE, GO TO THE TELEPHONE OR THE OFFICE SET FORTH BELOW TO FIND WHERE YOU CAN GET LEGAL HELP. CUMBERLAND COUNTY BAR ASSOCIATION 32 SOUTH BEDFORD STREET CARLISLE, PA 17013 1-800-990-9108 717-249-3166 ~`1 ~# 1/9D ,~a8~1530 .. IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY SPIRIT MASTER FUNDING III, LLC, Plaintiff, v. CORNETT HOSPITALITY, LLC, CIVIL ACTION AT LAW ACTION IN EJECTMENT Case No.: ~oZ ` 7Gt 4~/ C~r~ ~ T~/i~ JURY TRIAL DEMANDED Defendant COMPLAINT FOR EJECTMENT Plaintiff, Spirit Master Funding III, LLC ("Spirit"), by and through its counsel, Pion, Johnston, Nerone, ' Girman, Clements & Smith, P.C. hereby files the instant Complaint for Ejectment, against Defendant, Cornett Hospitality, LLC ("Cornett"), on the grounds set forth below: 1. Spirit is a Delaware limited liability company with is principal place of business in Scottsdale, Arizona. Spirit is the owner of the premises at 6035 Carlisle Pike Mechanicsburg PA 17050, which is currently operated as a Hooters restaurant (the "Mechanicsburg Property"). 2. Cornett is a Virginia limited liability company that operates Hooters restaurants throughout Virginia, West Virginia and Pennsylvania. 3. On or about November 28, 2006, Spirit and Cornett entered into a Master Lease Agreement (the "Lease Agreement"), whereby Cornett agreed to lease certain properties, including three properties in Richmond, Virginia, one property in Mechanicsburg, Pennsylvania, and the Roanoke Property, from Spirit on the terms and conditions set forth in the Lease Agreement. A true and correct copy of the Lease Agreement, as amended, is attached hereto as Exhibit A. 4. Pursuant to -the Lease Agreement, Cornett agreed to, among other things, pay Spirit a base monthly rental amount and other monetary obligations as more specifically defined in the Lease Agreement (collectively the "Rent") on or before the first day of each calendar month. 5. In August 2012, Cornett defaulted under the Lease Agreement by, among other things, failing to pay the Rent and property taxes to Spirit when due. Cornett has conceded its default. 6. On or about October 12, 2012, Spirit sent Cornett aFive-Day Notice to Pay or Quit, a copy of wh~h is attached hereto as Exhibit B. Cornett admits it received the Five-Day Notice. 7. On November 2, 2012, Spirit sent Cornett a Notice of Termination of Lease and Notice of Acceleration of Indebtedness ("Termination Notice"), a copy of which is attached hereto as Exhibit C. Cornett admits it received the Termination Notice. The Termination Notice applied to each of the properties under the Lease Agreement including the Mechanicsburg, PA Property. 8. On November 21, 2012, Cornett filed a chapter 11 petition in the United States Bankruptcy Court for the Eastern District of Virginia ("Bankruptcy Court") 9. On November 26, 2012, Spirit filed its Motion for Relief From Automatic Stay ("Motion for Relief') seeking relief from the Bankruptcy Court to pursue possession of the properties, including the Mechanicsburg Property. Cornett opposed the 2 Motion for Relief on the sole grounds that the Termination Notice was improperly mailed -yet, it concedes it received the Termination Notice. 10. By Order dated December 13, 2012, the Bankruptcy Court granted Spirit's Motion for Relief finding that the Lease Agreement was properly terminated and good cause existed for Spirit to pursue possession of the properties in state court. A copy of the Bankruptcy Court order is attached as Ezhibit D. 11. On or about December 17, 2012, Cornett voluntarily surrendered possession of the three Richmond properties that are the subject of the Lease Agreement and Notice of Termination. Cornett refuses to surrender possession of the Mechanicsburg Property.l 12. Cornett continues to unlawfully detain and withhold possession of the Mechanicsburg Property from Spirit and continues to operate its business in the Mechanicsburg Property without consent or under any colorable claim of right2. Cornett has thwarted Spirit's attempts to peacefully take possession of the Mechanicsburg Property. 13. Cornett's unlawful detainer has and will continue to cause damages to Spirit in the form of lost rental income and has exposed Cornett to potential damage to the property. Moreover, Cornett continues to profit from its unlawful possession. WHEREFORE, Spirit Master Funding, III, LLC respectfully requests judgment in their favor in the form of an entry of an Order finding that Cornett is unlawfully withholding possession of the Mechanicsburg Property from Spirit, granting Spirit 1 Cornett also refuse to surrender the Roanoke Virginia property and Complaint For Unlawful Detainer has been filed in the Circuit Court of the City Of Roanoke. z On information and belief, Hooters of America, LLC has revoked Corentt's (or its related entity) franchise rights to operate any Hooters restaurants. 3 immediate possession of the Mechanicsburg Property, and such other relief as is appropriate. December 21, 2012 Respectfully Submitted, PION, JOHNSTON, NERONE, GIRMAN, CLEMENTS & SMITH, P.C. ~/~ By James eCinti, Esquire Pa. I.D. 77421 355 North 21St Street, Suite 102 Camp Hill, PA 17011 717-737-5833 Counsel for SPIRIT MASTER FUNDING III, LLC 4 VERIFICATION I, Sean Hufford, ~ authorized agent of Plaintiff SPIRIT MASTER FUNDING III, LLC have read the foregoing Complaint. The statements therein are true and correct to the best of my personal knowledge or on information and belief. This statement and verification is madc subject to the penalties of 18 Pa. C.S.A. § 4904 relating to tmsworn falsification to authorities, which provides that if I make knowingly false statements, I may be subject to criminal penalties. p~~ DATED: ~~ Sean Hufford EXHIBIT A Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 2 of 57 MASTER LEASE AGREEMENT THIS MASTER LEASE AGREEMENT (this "Lease") is made as of November 28, 2006 (the "Effective Date"), by and between SPIRIT MASTER FUNDING III, LLC, a Delaware limited liability company ("Lessor"), whose address is 14631 North Scottsdale Road, Suite 200, Scottsdale, Arizona. 85254-2711, and CORNETT HOSPITALITY, LLC, a Virginia limited liability company ("Les ~e"), whose address is 2120 Staples Mill Road, Suite 300, Richmond, Virginia 23230. Capitalized terms not defined herein shall have the meanings set forth in Exhi it A hereto. In consideration of the mutual covenants and agreements herein contained, Lessor and Lessee hereby covenant and agree as follows: ARTICLE I BASIC LEASE TERMS Section 1.01. Properties. See Exhibit B attached hereto. Section 1.02. Initial Term Expiration Date. November 30, 2026. Section 1.03. Extension Options. Two (2) extensions of ten (10) years each, as described in Section 3.02. Section 1.04, Term Expiration Date (if fully extended). November 30, 2046. Section 1.05. Initial Base Annual Rental. $703,339.93, as described in Article IV. Section 1.06. Rental Adjustment. The lesser of (i) 2%, or (ii) 1.25 times the change in the Price Index, as described in Section 4.02. Section 1.07. Adjustment Date. December 1, 2007, and every one year anniversary thereafter during the Lease Term (including any Extension Term). Section 1.08. Guarantor(s). J. Philip Cornett and James E. Cornett III. Section 1.09. Lessee Tax Identification No. 31-1748361. Section 1.10. Lessor Tax Identification No. 20-3 1 1 8006. ARTICLE II LEASE OF PROPERTIES Section 2.01. Lease. In consideration of Lessee's payment of the Rental and other Monetary Obligations and Lessee's performance of all other obligations hereunder, Lessor hereby leases to Lessee, and Lessee hereby takes and hires, the Properties, "AS IS" and "WHERE IS" without representation or warranty by Lessor, and subject to the existing state of 4823-?597-2353.4 Case 12-36693-DOT Doc 16-1 Filed 11 /26/12 Entered 11 /26/12 20:20:26 Desc Exhibit(s) A Page 3 of 57 title, the parties in possession, any statement of facts which an accurate survey or physical inspection might reveal, and all Legal Requirements now or hereafter in effect. Section 2.02. Quiet Enjoyment. So long as Lessee shall pay the Rental and other Monetary Obligations provided in this Lease, and shall keep and perform all of the terms, covenants and conditions on its part contained herein, Lessee shall have, subject and to the terms and conditions set forth herein, the right to the peaceful and quiet enjoyment and occupancy of the Properties; provided, however, in no event shall Lessee be entitled to bring any action against Lessor to enforce its rights hereunder if an Event of Default, or any event or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Event of Default, shall have occurred and be continuing. ARTICLE III LEASE TERM; EXTENSION Section 3.01. Initial Term. The initial term of this Lease ("Initial Term") shall commence as of the Effective Date and shall expire at midnight on November 30, 2026 ("Expiration Date"), unless terminated sooner as provided in this Lease and as may be extended as provided herein. The time period during which this Lease shall actually be in effect, including any Extension Term, is referred to as the "Lease Term." Section 3.02. Extensions. Unless this Lease has expired or has been sooner terminated, or an Event of Default has occurred and is continuing at the time any extension option is exercised, and provided that all other agreements necessary to the continued operation of Lessee's business at each of the Properties are extended for a period of not less than the applicable extension periods (including, without limitation, all Franchise Agreements, where applicable), Lessee shall have the right and option (each, an "Extension Lion") to extend the Initial Term for all and not less than all of the Properties for two (2) additional successive periods of ten (10) years each (each, an "Extension Term"), pursuant to the terms and conditions of this Lease then in effect. Section 3.03. Notice of Exercise. Lessee may only exercise the Extension Options by giving written notice thereof to Lessor of its election to do so no later than one hundred twenty { 120) days prior to the Expiration Date and one hundred twenty (120) days prior to the immediately preceding Extension Term, as the case may be. If written notice of the exercise of any Extension Qption is not received by Lessor by the applicable dates described above, then this Lease shall terminate on the last day of the Initial Term or, if applicable, the last day of the Extension Term then in effect. Upon the request of Lessor or Lessee, the parties hereto will, at the expense of Lessee, execute and exchange an instrument in recordable form setting forth the extension of the Lease Term in accordance with this Section 3.03. Section 3.04. Removal of Personalty. Upon the expiration of the Lease Term, and if Lessee is not then in breach hereof, Lessee may remove from the Properties all personal property belonging to Lessee. Lessee shall repair any damage caused by such removal and shall leave all of the Properties clean and in good and working condition and repair inside and out, subject to normal wear and tear. Any property of Lessee left on the Properties on the tenth day following 4823-7597-2353.4 _ __ _ _ _ 2 ___ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26!12 20:20:26 Desc Exhibit(s) A Page 4 of 57 the expiration of the Lease Term shall automatically and immediately become the property of Lessor. ARTICLE IV RENTAL AND OTHER MONETARY OBLIGATIONS Section 4.01. Base Monthly Rental. During the Lease Term, on or before the first day of each calendar month, Lessee shall pay in advance the Base Monthly Rental then in effect. if the Effective Date is a date other than the first day of the month, Lessee shall pay to Lessor on the Effective Date the Base Monthly Rental prorated by multiplying the Base Monthly Rental by a fraction, the numerator of which is the number of days remaining in the month (including the Effective Date) for which Rental is being paid, and the denominator of which is the total number of days in such month. Section 4.02. Adjustments.. During the Lease Term (including any Extension Term), on the first Adjustment Date and on each Adjustment Date thereafter, the Base Annual Rental shall increase by an amount equal to the Rental Adjustment; provided, however, that in no event shall Base Annual Rental be reduced as a result of the application of the Rental Adjustment. Section 4.03. Additional Rental. Lessee shall pay and discharge, as additional rental ("Additional Rental"), all sums of money required to be paid by Lessee under this Lease which are not specifically referred to as Rental. Lessee shall pay and discharge any Additional Rental when the same shall become due, provided that amounts which are billed to Lessor or any third party, but not to Lessee, shall be paid within fifteen (1 S) days after Lessor's written demand for payment thereof and documentation verifying such demand or, if later, when the same are due. In no event shall Lessee be required to pay to Lessor any item of Additional Rental that Lessee is obligated to pay and has paid to any third party pursuant to any provision of this Lease. Section 4.04. Rentals To Be Net to Lessor. The Base Annual Rental payable hereunder shall be net to Lessor, so that this Lease shall yield to Lessor the Rentals specified during the Lease Term, and all Costs and obligations of every kind and nature whatsoever relating to the Properties shall be performed and paid by Lessee. Lessee shall perform all of its obligations under this Lease at its sole cost and expense. All Rental and other Monetary Obligations which Lessee is required to pay hereunder shall be the unconditional obligation of Lessee and shall be payable in full when due and payable, without notice or demand, and without any setoff, abatement, deferment, deduction or counterclaim whatsoever. Section 4.05. ACH Authorization. Upon execution of this Lease, Lessee shall deliver to Lessor a complete Authorization Agreement -Pre Arranged Payments in the form of Exhibit attached hereto and incorporated herein by this reference, together with a voided check for account verification, establishing arrangements whereby payments of the Base Monthly Rental, any Additional Rental, impound payments (if any), sales tax on real property tax (if any), and any other Monetary Obligations are transferred by Automated Clearing House Debit initiated by Lessor from an account established by Lessee at a United States bank or other financial institution to such account as Lessor may designate. Lessee shall continue to pay all Rental and 4823-7547-2353.4.. _ 3 _ _ _ _ _ _ _ _ _ _ . Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 5 of 57 other Monetary Obligations by Automated Clearing House Debit unless otherwise directed by Lessor. Section 4.Ob. Late Charges; Default Interest. Any delinquent payment shall, in addition to any other remedy of Lessor, incur a late charge of five percent (5%) (which late charge is intended to compensate Lessor for the cost of handling and processing such delinquent payment and should not be considered interest) and bear interest at the Default Rate, such interest to be computed from and including the date such payment was due through and including the date of the payment; provided, however, in no event shall Lessee be obligated to pay a sum of late charge and interest higher than the maximum legal rate then in effect. Section 4.07. Holdover. If Lessee remains in possession of the Properties after the expiration of the term hereof, Lessee, at Lessor's option and within Lessor's sole discretion, may be deemed a tenant on a month to month basis and shall continue to pay Rentals and other Monetary Obligations in the amounts herein provided, except that the Base Monthly Rental shall be automatically increased to one hundred fifty percent (1 SO%} of the last Base Monthly Rental payable under this Lease, and Lessee shall comply with all the terms of this Lease; provided that nothing herein nor the acceptance of Rental by Lessor shall be deemed a consent to such holding over. Lessee shall defend, indemnify, protect and hold the Indemnified Parties harmless from and against any and all Losses resulting from Lessee's failure to surrender possession upon the expiration of the Lease Term, including, without limitation, any claims made by any succeeding lessee. Section 4.08. Guaranty. On or before the execution of this Lease, Lessee shall cause Guarantor to execute and deliver to Lessor the Guaranty. ARTICLE V REPRESENTATIONS AND WARRANTIES OF LESSEE The representations and warranties of Lessee contained in this Article V are being made to induce Lessor to enter into this Lease, and Lessor has relied, and will continue to rely, upon such representations and warranties. Lessee represents and warrants to Lessor as follows: Section 5.01. Organization, Authority and Status of Lessee. Lessee has been duly organized or formed, is validly existing and in good standing under the laws of its state of formation and is qualified as a foreign limited liability company to do business in any jurisdiction where such qualification is required. All necessary company action has been taken to authorize the execution, delivery and performance by Lessee of this Lease and of the other documents, instruments and agreements provided for herein. Lessee is not a "foreign limited liability company," "foreign corporation," "foreign partnership," "foreign trust" or "foreign estate," as those terms are defined in the Code and the regulations promulgated thereunder. The person who has executed this Lease on behalf of Lessee is duly authorized to do so. Section 5.02. Enforceability. This Lease constitutes the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms. 4823.7597-2353.4 _ _ __ _ _ 4 _ _ . _. Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 6 of 57 Section 5.03. Property Condition. Lessee has physically inspected all of the Properties and has examined title to the Properties, and has found all of the same satisfactory in all respects for all of Lessee's purposes. Section 5.04. Litigation. There are no suits, actions, proceedings or investigations pending, or to the best of Lessee Knowledge, threatened against or involving any Lessee Entity or the Properties before any arbitrator or Governmental Authority which might reasonably result in any material adverse change in the contemplated business, condition, worth or operations of any Lessee Entity or the Properties. Section 5.05. Absence of Breaches or Defaults. Lessee is not in default under any document, instrument or agreement to which Lessee is a party or by which Lessee, the Properties or any of Lessee's property is subject or bound, which has had, or could reasonably be expected to result in, a Material Adverse Effect. The authorization, execution, delivery and performance of this Lease and the documents, instruments and agreements provided for herein will not result in any breach of or default under any document, instrument or agreement to which Lessee is a party or by which Lessee, the Properties or any of Lessee's property is subject or bound. Section 5.06. Licenses and Permits. Lessee has obtained as of the Effective Date all required licenses and permits, both governmental and private, to use and operate the Properties as Permitted Facilities. Section 5.07. Financial Condition; Information Provided to Lessor. The financial statements, all financial data and all other documents and information heretofore delivered to Lessor by or with respect to the Lessee and the Properties in connection with this Lease or relating to the Lessee or the Properties are true, correct and complete in all material respects; there have been no amendments thereto since the date such items were prepared or delivered to Lessor; all financial statements provided were prepared in accordance with GAAP, and fairly present as of the date thereof the financial condition of each individual or entity to which they pertain; and no change has occurred to any such financial statements, financial data, documents and other information not disclosed in writing to Lessor, which has had, or could reasonably be expected to result in, a Material Adverse Effect. Section 5.08. Compliance With OFAC Laws. None of the Lessee or any individual or entity owning directly or indirectly any interest in any of the Lessee, is an individual or entity whose property or interests are subject to being blocked under any of the OFAC Laws or is otherwise in violation of any of the OFAC Laws; provided, however, that the representation contained in this sentence shall not apply to any Person to the extent such Person's interest is in or through a U.S. Publicly Traded Entity. Section 5.09. Solvency. There is no contemplated, pending or to Lessee's Knowledge, threatened Insolvency Event or similaz proceedings, whether voluntary or involuntary, affecting Lessee or Guarantor, or to the best of Lessee's Knowledge, its members or its Affiliates. Lessee does not have unreasonably small capital to conduct its business. Section 5.10. Ownership. To Lessee's Knowledge, no Person that actually or constructively owns ten percent (10%) or more of the outstanding capital stock of Lessor owns, 4823-7597-2353.4 5 _ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 7 of 57 ~' directly or indirectly, (a) ten percent (10%) or more of the total combined voting power of all classes of voting capital stock of Lessee, or (b) ten percent (10%) or more of the total value of all classes of capital stock of Lessee. Section 5.11. Franchise Agreement. Lessee has entered into a franchise, license and/or area development agreement with Franchisor ("Franchise A~reemgnt") for conduct of the business at the Properties. Such Franchise Agreement, where applicable, is valid, binding and in full force and effect, permits Lessee to operate Permitted Facilities on the Properties, and has a term which will not expire prior to the Lease Tenn, except as disclosed in writing to Lessor prior to the Effective Date. Lessee represents and warrants to Lessor that Franchisor possesses no right to purchase the Properties, or, in the event Franchisor possesses such right, any such right to purchase the Properties is waived with respect to the purchase of the Properties by Lessor or any subsequent transfer of the Properties whatsoever. Lessee shall indemnify, protect, defend and hold harmless each of the Indemnified Parties from and against any and all Losses caused by, incurred or resulting from the exercise of any right to purchase the Properties by Franchisor. ARTICLE VI TAXES AND ASSESSMENTS; UTILITIES; INSURANCE Section 6.01. Taxes. (a) Payment. Lessee shall pay, prior to the eazlier of delinquency or the accrual of interest on the unpaid balance, all taxes and assessments of every type or nature assessed against or imposed upon the Properties, Lessee or Lessor during the Lease Term related to or arising out of this Lease and the activities of the parties hereunder, including without limitation, (i) all taxes or assessments upon the Properties or any part thereof and upon any personal property, trade fixtures and improvements located on the Properties, whether belonging to Lessor or Lessee, or any tax or charge levied in lieu of such taxes and assessments; (ii) all taxes, charges, license fees and or similar fees imposed by reason of the use of the Properties by Lessee; and (iii) all excise, franchise, transaction, privilege, license, sales, use and other taxes upon the Rental or other Monetary Obligations hereunder, the leasehold estate of either pazty or the activities of either party pursuant to this Lease. (b) Right To Contest. Within thirty {30) days after each tax and assessment payment is required by this Section 6.01 to be paid, Lessee shall, upon prior written request of Lessor, provide Lessor-with evidence reasonably satisfactory to Lessor that such payment was made in a timely fashion. Lessee may, at its own expense, contest or cause to be contested {in the case of any item involving more than $10,:000, after prior written notice to Lessor), by appropriate legal proceedings conducted in good faith and with due diligence, any above described item or lien with respect thereto, including, without limitation, the amount or validity or application, in whole or in part, of any such item, provided that (i) neither the Properties nor any interest therein would be in any danger of being sold, forfeited or lost by reason of such proceedings; (ii) no Event of Default has occurred; {iii) Lessee posts a bond or takes other steps acceptable to Lessor that remove such lien or stay enforcement thereof; (iv) Lessee shall promptly provide 4823-7547-2353.4 Case 12-36693-DOT Doc 16-1 Filed 11 /26/12 Entered 11 /26/12 20:20:26 Desc Exhibit(s) A Page 8 of 57 Lessor with copies of all notices received or delivered by Lessee and filings made by Lessee in connection with such proceeding; and (v) upon termination of such proceedings, it shall be the obligation of Lessee to pay the amount of any such tax and assessment or part thereof as finally determined in such proceedings, the payment of which may have been deferred during the prosecution of such proceedings, together with any costs, fees (including attorneys' fees and disbursements), interest, penalties or other liabilities in connection therewith. Section 6.02. Utilities. Lessee shall contract, in its own name, for and pay when due all charges for the connection and use of water, gas, electricity, telephone, garbage collection, sewer use and other utility services supplied to the Properties during the Lease Term. Under no circumstances shall Lessor be responsible for any interruption of any utility service. Section 6.03. Insurance. (a) Coverage. Throughout the Lease Term, Lessee shall maintain, with respect to each of the Properties, at its sole expense, the following types and amounts of insurance, in addition to such other insurance as Lessor may reasonably require from time to time: (i) Insurance against loss or damage to real property under a "special cause of loss" insurance policy, which shall include coverage against all risks of direct physical loss, including loss by fire, lightning, terrorism, ordinance or law, flood (including National Flood Insurance, to the extent the Properties are located within a flood zone), windstorm, hail and earthquake with a limit satisfactory to Lessor and other risks normally included in the standard ISO special form. Such insurance shall be in amounts sufficient to prevent Lessor from becoming a co insurer under the applicable policies, and in any event, after application of deductible, in amounts not less than 100% of the full insurable replacement cost, as reasonably determined from time to time at Lessor's request but not more frequently than once in any twelve (12) month period. (ii) Comprehensive general liability insurance, including products and completed operation liability, covering Lessor and Lessee against bodily injury liability, property damage liability and personal and advertising injury, liquor liability coverage, including without limitation any liability arising out of the ownership, maintenance, repair, condition or operation of the Property or adjoining ways, streets, parking lots or sidewalks. Such insurance policy or policies shall contain a broad form contractual liability endorsement under which the insurer agrees to insure Lessee's obligations under Article X hereof to the extent insurable, and a "severability of interest" clause or endorsement which precludes the insurer from denying the claim of Lessee or Lessor because of the negligence or other acts of the other, shall be in amounts of not less than $2,000,000 per occurrence for bodily injury and property damage, and $2,000,000 general aggregate per location, or such higher limits as Lessor may reasonably require from time to time, and shall be of form and substance satisfactory to Lessor. 4823-759-2353.4 ~] Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 9 of 57 (iii) Workers' compensation insurance in the statutorily mandated limits covering all persons employed by Lessee on the Property in connection with any work done on or about any of the Property for which claims for death or bodily injury could be asserted against Lessor, Lessee or the Property. (iv) Rental value insurance, equal to 100% of the Base Annual Rental (as may adjusted hereunder) for a period of not less than twelve (12) months; which insurance shall be carved out of Lessee's business interruption coverage for a separate rental value insurance payable to Lessor, or if rental value insurance is included in Lessee's business interruption coverage, the insurer shall provide priority payment to any rent obligations, and such obligations shall be paid directly to Lessor. Such insurance is to follow form of the real properly "all risk" coverage and is not to contain a co insurance clause. (v) Only in the event Lessee installs boiler and machinery equipment, comprehensive Boiler & Machinery Insurance against loss or damage from explosion of any steam or pressure boilers or similar apparatus, located in or about the Property and in an amount equal to the lesser of 25% of the 100% replacement cost of the Properly or $5,000,000.00. (vi) Such additional and/or other insurance and in such amounts as at the time is customarily carried by prudent owners or tenants with respect to improvements similar in character, location and use and occupancy to the Property. (b) Insurance Provisions. All insurance policies shall: (i) provide (A) for a waiver of subrogation by the insurer as to claims against Lessor, its employees and agents; (B) that the insurer shall not deny a claim and that such insurance cannot be unreasonably cancelled, invalidated or suspended on account of the conduct of Lessee, its officers, directors, employees or agents, or anyone acting for Lessee or any subtenant or other occupant of the Properties; and (C) that any losses otherwise payable thereunder shall be payable notwithstanding any act or omission of Lessor or Lessee which might, absent such provision, result in a forfeiture of all or a part of such insurance payment; (ii) be primary and provide that any "other insurance" clause in the insurance policy shall exclude any policies of insurance maintained by Lessor and the insurance policy shall not be brought into contribution with insurance maintained by Lessor; (iii) contain deductibles not to exceed $25,000.00, except for employment practices liability insurance coverage; (iv) contain a standard non contributory mortgagee clause or endorsement in favor of any lender designated by Lessor; • 4823-7597-2353.4 g _ _ . Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 10 of 57 (v) provide that the policy of insurance shall not be terminated, cancelled or amended without at least thirty (30) days' prior written notice to Lessor and to any lender covered by any standard mortgagee clause or endorsement; (vi) provide that the insurer shall not have the option to restore the Properties if Lessor elects to terminate this Lease in accordance with the terms hereof; (vii} be in amounts sufficient at all times to satisfy any coinsurance requirements thereof; (viii) except for workers' compensation insurance referred to in Section 6.03(a)(iii) above, name Lessor and any Lessor Affiliate or lender requested by Lessor, as an "additional insured" with respect to general liability insurance, as a "named insured" with respect to real property, and as a "loss payee" with respect to all real property, and as a rental value insurance, as appropriate and as their interests may appear; (ix) be evidenced by delivery to Lessor and any lender designated by Lessor of an Acord Form 28 for property coverage (or any other form requested by Lessor) and an Acord Form 25 for liability, workers' compensation and umbrella coverage (or any other form requested by Lessor); provided that in the event that either such form is no longer available, such evidence of insurance shall be in a form reasonably satisfactory to Lessor and any lender designated by Lessor; and (x) be issued by insurance companies licensed to do business in the states where the Properties aze located and which aze rated A:VIII (other than Lessee's workers' compensation carrier) or better by Best's Insurance Guide or are otherwise reasonably approved by Lessor. (c) Addltional 4bligaHons. It is expressly understood and agreed that (i) if any insurance required hereunder, or any part thereof, shall expire, be withdrawn, become void by breach of any condition thereof by Lessee, or become void or in jeopardy by reason of the failure or irnpainment of the capital of any insurer, Lessee shall immediately obtain new or additional insurance reasonably satisfactory to Lessor and any lender designated by Lessor; (ii) the minimum limits of insurance coverage set forth in this Section 6.03 shall not limit the liability of Lessee for its acts or omissions as provided in this Lease; (iii) Lessee shall procure policies for all insurance for periods of not less than one year and shall provide to Lessor and any servicer or lender of Lessor certificates of insurance or, upon Lessor's request, duplicate originals of insurance policies evidencing that insurance satisfying the requirements of this Lease is in effect at all times; (iv) Lessee shall pay as they become due all premiums for the insurance required by this Section 6.03; and (v) in the event that Lessee fails to comply with any of the requirements set forth in this Section 6.03, within ten (10) days of the giving of written notice by Lessor to Lessee, (A) Lessor shall be entitled to procure such insurance; and 4823.7597-2353.4 9 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 11 of 57 (B) any sums expended by Lessor in procuring such insurance shall be Additional Rental and shall be repaid by Lessee, together with interest thereon at the Default Rate, from the time of payment by Lessor until fully paid by Lessee immediately upon written demand therefor by Lessor. (d) Blanket Policies. Anything in this Section 6.03 to the contrary notwithstanding, any insurance which Lessee is required to obtain pursuant to this Section 6.03 may be carried under a "blanket" policy or policies covering other properties or liabilities of Lessee provided that such "blanket" policy or policies otherwise comply with the provisions of this Section 6.03. Section 6.04. Tax and Insurance Impound. Upon the occurrence of an Event of Default and with respect to each Event of Default, in addition to any other remedies, Lessor may require Lessee to pay to Lessor sums which will provide an impound account (which shall not be deemed a trust fund) for paying up to the next one year of taxes, assessments and/or insurance premiums. Upon such requirement, Lessor will estimate and notify Lessee in writing of the amounts needed for such purposes, and Lessee shall pay the same to Lessor within ten (10} days of Lessor's notice thereof. Should additional funds be required at any time, Lessee shall pay the same to Lessor within ten (10) days after demand. Lessee shall advise Lessor of all taxes and insurance bills which are due and shall cooperate fully with Lessor in assuring that the same aze paid. Lessor may deposit all impounded funds in accounts insured by any federal or state agency and may commingle such funds with other funds and accounts of Lessor. Interest or other gains from such funds, if any, shall be the sole property of Lessor. In the event of any default by Lessee, Lessor may apply all impounded funds against any sums due from Lessee to Lessor. Lessor shall give to Lessee an annual accounting showing all credits and debits to and from such impounded funds received fiom Lessee. ARTICLE VII MAINTENANCE; ALTERATIONS Sectoon 7.01. Condition of Property; Maintenance. Lessee hereby accepts the Properties "AS IS" and "WHERE IS" with no representation or warranty of Lessor as to the condition thereof. Lessee shall, at its sole cost and expense, be responsible for (a) keeping all of the building, structures and improvements erected on each of the Properties in good order and repair, free from actual or constructive waste; (b) the repair or reconstruction of any building, structures or improvements erected on the Properties damaged or destroyed by acts of God or any other catastrophes; (c) making all necessary structural, exterior and interior repairs and replacements to any building, structures or improvements erected on the Properties; (d) operating, remodeling, updating and modernizing the Properties in accordance with those standards adopted from time to time on a system wide basis for the Permitted Facilities; and (e) paying all operating costs of the Properties in the ordinary course of business. Lessee waives any right to require Lessor to maintain, repair or rebuild all or any part of the Properties or make repairs at the expense of Lessor pursuant to any Legal Requirements at any time in effect. Section 7.02. Alterations and Improvements. During the Lease Term, Lessee shall not alter the exterior, structural, plumbing or electrical elements of the Properties in any manner 4823-759-2353.4 10 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 12 of 57 without the consent of Lessor, which consent shall not be unreasonably withheld or conditioned; provided, however, Lessee may undertake nonstructural alterations to the Properties, individually, costing less than $100,000 without Lessor's prior written consent. If Lessor's consent is required hereunder and Lessor consents to the making of any such alterations, the same shall be made by Lessee at Lessee's sole expense by a licensed contractor and according to plans and specifications reasonably approved by Lessor and subject to such other conditions as Lessor shall reasonably require. Any work at any time commenced by Lessee on the Properties shall be prosecuted diligently to completion, shall be of good workmanship and materials and shall comply fully with all the terms of this Lease. Upon completion of any alterations individually costing $50,000 or more, Lessee shall promptly provide Lessor with evidence of full payment to all laborers and materialmen contributing to the alterations. Additionally, upon completion of any alterations, Lessee shall promptly provide Lessor with (a) an architect's certificate certifying the alterations to have been completed in conformity with the plans and specifications (if the alterations are of such a nature as would require the issuance of such a certificate from the architect); (b) a certificate of occupancy (if the alterations are of such a nature as would require the issuance of a certificate of occupancy); and (c) any other documents or information reasonably requested by Lessor. Lessee shall keep the Properties free from any liens arising out of any work performed on, or materials furnished to, the Properties. Lessee shall execute and file or record, as appropriate, a "Notice of Non Responsibility," or any equivalent notice permitted under applicable law in the states where the Properties are located which provides that Lessor is not responsible for the payment of any costs or expenses relating to the additions or alterations.. Any addition to or alteration of the Properties shall be deemed a part of the Properties and belong to Lessor, and Lessee shall execute and deliver to Lessor such instruments as Lessor may require to evidence the ownership by Lessor of such addition or alteration. Section 7.03. Encumbrances. During the Lease Term, Lessor shall have the right to grant easements on, over, under and above the Properties without the prior consent of Lessee, provided that such easements will not materially interfere with Lessee's use of the Properties. Lessee shall comply with and perform all obligations of Lessor under all easements, declarations, covenants, restrictions and other items of record now or hereafter encumbering the Properties. ARTICLE VIII USE OF THE PROPERTIES; COMPLIANCE Section 8.01. Use. During the Lease Term, each of the Properties shall be used solely for the operation of a Permitted Facility. Except during periods when a Property is untenantable due to Casualty or Condemnation (and provided that Lessee continues to strictly comply with the other terms and conditions of this Lease}, Lessee shall at all times during the Lease Term occupy the Properties and shall diligently operate its business on the Properties, except as reasonably necessary to perform repairs, remodeling, construction or renovations (which must be performed in accordance with the requirements of Section 7.02). Section 8.02. Alternative Use. Lessee shall not, by itself or through any assignment, sublease or other type of transfer, convert any of the Properties to an alternative use during the Lease Term without Lessor's prior written consent, which consent shall not be unreasonably 4823-7597-2353.4 11 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 13 of 57 withheld; provided, however, that Lessor's consent shall not be deemed unreasonably withheld if Lessor's decision is based on any or all of the following: (a) whether the rental paid to Lessor would be equal to or greater than the anticipated rental assuming continued existing use; (b) whether the proposed rental to be paid to Lessor is reasonable considering the converted use of such Property and the customary rental prevailing in the community for such use; (c) whether the converted use will be consistent with the highest and best use of such Property; (d) whether the converted use will increase Lessor's risks or decrease the value of such Property; and (e) whether the converted use will adversely affect Lessor's status as a REIT. Section 8.03. Compliance. Lessee's use and occupation of each of the Properties, and the condition thereof, shall, at Lessee's sole cost and expense, comply fully with ali Legal Requirements and all restrictions, covenants and encumbrances of record, and any owner obligations under such Legal Requirements, or restrictions, covenants and encumbrances of record, with respect to the Properties, in either event, the failure with which to comply could have a Material Adverse Effect. Without in any way limiting the foregoing provisions, Lessee shall comply with all Legal Requirements relating to money laundering, anti terrorism, trade embargos, economic sanctions, and the Americans with Disabilities Act of 1990, as such act may be amended from time to time, and all regulations promulgated thereunder, as it affects the Properties now or hereafter in effect. Upon Lessor's reasonable written request from time to time during the Lease Term, Lessee shall certify in writing to Lessor that Lessee's representations, warranties and obligations under Section 5.08 and this Section 8.03 remain true and correct and have not been breached. Lessee shall immediately notify Lessor in writing if any of such representations, warranties or covenants are no longer true or have been breached or if Lessee has a reasonable basis to believe that they may no longer be true or have. been breached. In connection with such an event, Lessee shall comply with all Legal Requirements and directives of Governmental Authorities and, at Lessor's request, provide to Lessor copies of all notices, reports and other communications exchanged with, or received from, Governmental Authorities relating to such an event. Lessee shall also reimburse Lessor for all Costs incurred by Lessor in evaluating the effect of such an event on the Properties and this Lease, in obtaining any necessary license from Governmental Authorities as may be necessary for Lessor to enforce its rights under the Transaction Documents, and in complying with all Legal Requirements applicable to Lessor as the result of the existence of such an event and for any penalties or fines imposed upon Lessor as a result thereof. Lessee will use its best efforts to prevent any act or condition to exist on or about the Properties which will materially increase any insurance rate thereon, except when such acts are required in the normal course of its business and Lessee shall pay for such increase. Lessee agrees that it will defend, indemnify and hold harmless the Indemnified Parties from and against any and all Losses caused by, incurred or resulting from Lessee's failure to comply with its obligations under this Section. Section 8.04. Environmental. (a) Representations and Warranties. To Lessee's Knowledge and except as described in Schedule 8.04 attached hereto, Lessee represents and warrants to Lessor which representations and warranties shall survive the execution and delivery of this Lease, as follows: 4823-9597-2353.4 12 _ __ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 14 of 57 (i) The Properties and Lessee are not in violation of or subject to, any pending or, to Lessee's actual knowledge, threatened investigation or inquiry by any Governmental Authority or to any remedial obligations under any Environmental Laws that could have a Material Adverse Effect, nor has Lessee received any written or oral notice or other communication from any Person (including but not limited to a Governmental Authority) with respect to any Property relating to (A) Hazardous Materials, Regulated Substances or USTs, or Remediation thereof; (B) possible liability of any Person pursuant to any Environmental Law; (C) other environmental conditions; or (D) any actual or potential administrative or judicial proceedings in connection with any of the foregoing that could have a Material Adverse Effect. The foregoing representations and warranties would continue to be true and correct following disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances, if any, pertaining to the Properties. (ii) (A) All uses and operations on or of the Properties, whether by Lessee or, to Lessee's knowledge, any other Person, have been in compliance with all Environmental Laws and environmental permits issued pursuant thereto; (B) there have been no Releases in, on, under or from any of the Properties, or, to Lessee's knowledge, from other property migrating toward any of the Properties, except in Permitted Amounts; (C) there are no Hazardous Materials, Regulated Substances or USTs in, on, or under any of the Properties, except in Permitted Amounts; (D) the Properties have been kept free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law (the "Envi~or~xental Liens"); and (E) Lessee has not allowed any other tenant or other user of the Properties to do any act that materially increased the dangers to human health or the environment, posed an unreasonable risk of harm to any Person (whether on or off any of the Properties), impaired the value of any of the Properties in any material respect, is contrary to any requirement set forth in the insurance policies maintained by Lessor, constituted a public or private nuisance, constituted waste, or violated any covenant, condition, agreement or easement applicable to any of the Properties. (b) Covenants. (i) Lessee covenants to Lessor during the Lease Term, subject to the limitations of subsection (ii) below, as follows: (A) The Properties and Lessee shall not be (1) in violation of any Remediation required by any Governmental Authority, or (2) subject to any Remediation obligations under any Environmental Laws. Lessee shall not be in violation of any investigation or inquiry by any Governmental Authority. (B) All uses and operations on or of the Properties, whether by Lessee or any other Person, shall be in compliance with ali Environmental Laws and permits issued pursuant thereto. 4823-7597-2353.4 13 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 15 of 57 (C) There shall be no Releases in, on, under or from the Properties, except in Permitted Amounts. (D) There shall be no Hazardous Materials, Regulated Substances, USTs in, on or under the Properties, except in Permitted Amounts. (E) Lessee shall keep the Properties or cause the Properties to be kept free and clear of all Environmental Liens, whether due to any act or omission of Lessee or any other Person. (F) Lessee shall not do or allow any other tenant or other user of the Properties to do any act that (1) materially increases the dangers to human health or the environment, (2) poses an unreasonable risk of harm to any Person (whether on or off any of the Properties), (3) has a Material Adverse Effect, (4) is contrary to any material requirement set forth in the insurance policies maintained by Lessee, (5) constitutes a public or private nuisance or constitutes waste, or (6) violates any covenant, condition, agreement or easement applicable to the Properties. (G) Lessee shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Properties as may be reasonably requested by Lessor (including but not limited to sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Lessor the reports and other results thereof, and Lessor and the other Indemnified Parties shall be entitled to rely on such reports and other results thereof. (H) Lessee shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to this Section 8.04, including but not limited to providing all relevant information and making knowledgeable persons available for interviews. (ii) Notwithstanding any provision of this Lease to the contrary, an Event of Default shall not be deemed to have occurred as a result of the failure of Lessee to satisfy any one or more of the covenants set forth in subsections (A) through (F) above provided that Lessee shall be in compliance with the requirements of any Governmental Authority with respect to the Remediation of any Release at the Properties. (c) Notification Requirements. Lessee shall immediately notify Lessor in writing upon Lessee obtaining actual knowledge of (i) any Releases or Threatened Releases in, on, under or from any of the Properties other than in Permitted Amounts, or migrating towazds any of the Properties; (ii) any non compliance with any Environmental Laws related in any way to any of the Properties; (iii) any actual or potential Environmental Lien; (iv) any required or proposed Remediation of environmental 4823-754-2353.4 14 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 16 of 57 conditions relating to any of the Properties required by applicable Governmental Authorities; and (v) any written or oral notice or other communication which Lessee becomes aware from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to Hazardous Materials, Regulated Substances or USTs, or Remediation thereof at or on any of the Properties, other than in Permitted Amounts, possible liability of any Person relating to any of the Properties pursuant to any Environmental Law, other environmental conditions in connection with any of the Properties, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Section. Lessee shall, upon Lessor's written request, deliver to Lessor a certificate stating that Lessee is and has been in full compliance with all of the environmental representations, warranties and covenants in this Lease. (d) Remediation. Lessee shall, at its sole cost and expense, and without limiting any other provision of this Lease, effectuate any Remediation required by any Governmental Authority of any condition (including, but not limited to, a Release) in, on, under or from the Properties and take any other reasonable action deemed necessary by any Governmental Authority for protection of human health ar the environment. Should Lessee fail to undertake such Remediation in accordance with the preceding sentence, Lessor, after written notice to Lessee and Lessee's failure to immediately undertake such Remediation, shall be permitted to complete such Remediation, and all Costs incurred in connection therewith shall be paid by Lessee. (e) Indemntftcation. Lessee shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless each of the Indemnified Parties from and against any and all Losses, including, but not limited to, all Costs of Remediation (whether or not performed voluntarily), azising out of or in any way relating to any Environmental Laws, Hazazdous Materials, Regulated Substances, USTs, or other environmental matters concerning the Properties. It is expressly understood and agreed that Lessee's obligations under this Section shall survive the expiration or earlier termination of this Lease for any reason, for a period of one (1) year. (f) Right of Entry. Upon reasonable written notice, Lessor and any other person or entity designated by Lessor, including but not limited to, any receiver, any representative of a Governmental Authority, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Properties at all reasonable times (including, without limitation, in connection with the exercise of any remedies set forth in this Lease) to assess any and all aspects of the environmental condition of any Property and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in Lessor's sole and absolute discretion) and taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing. Lessee shall cooperate with and provide access to Lessor and any other person or entity designated by Lessor. Any such assessment or investigation shall be at Lessee's sole cost and expense. (g) Inspections. At its sole cost and expense, Lessee shall have the Properties inspected as may be required by any Environmental Law for seepage, spillage and other environmental concerns. Lessee shall maintain and monitor USTs in accordance with all 4823-7597-2353.4 15 _ __ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 17 of 57 Environmental Laws. Lessee shall provide Lessor with written certified results of all inspections performed on the Properties. All costs and expenses associated with the inspection, preparation and certification of results, as well as those associated with any corrective action, shall be paid by Lessee. All inspections and tests performed on the Properties shall be in compliance with all Environmental Laws. (h) UST Compliance. Lessee shall comply or cause the compliance with all applicable federal, state and local regulations and requirements regarding USTs, including, without limitation, any of such regulations or requirements which impose (i) technical standards, including, without limitation, performance, leak prevention, leak detection, notification reporting and recordkeeping; {ii) corrective action with respect to confirmed and suspected Releases; and {iii) financial responsibility for the payment of costs of corrective action and compensation to third parties for injury and damage resulting from Releases. Lessee shall immediately notify Lessor, in writing, of (A) the presence on or under the Properties, or the escape, seepage, leakage, spillage, discharge, emission or release from any USTs on, above or under the Properties, of any Hazardous Materials or Regulated Substances, apparent or real; and (B) any and all enforcement, clean up, remedial, removal or other governmental or regulatory actions threatened, instituted or completed pursuant to any of the Environmental Laws affecting the Properties. Upon any such Release, escape, seepage, leakage, spillage, discharge, emission or release from any USTs on, above or under the Properties of any Hazardous Materials or Regulated Substances, Lessee shall immediately remedy such situation in accordance with all Environmental Laws and any request of Lessor. Should Lessee fail to remedy or cause the remedy of such situation in accordance with all Environmental Laws, Lessor shall be permitted to take such actions in its sole discretion to remedy such situation and all Costs incurred in connection therewith will be paid by Lessee. (i) Survival. The obligations of Lessee and the rights and remedies of Lessor under this Section 8.04 shall survive the termination, expiration and/or release of this Lease, for a period of one (1) year. Section 8.05. Franchisor Requirements. In addition to the requirements set forth in this Lease, Lessee, in its use, occupancy and maintenance of the Properties, shall comply with all requirements of its Franchise Agreement. Lessee hereby consents to Lessor providing information it obtains to Franchisor, and to Lessor obtaining from Franchisor information which Franchisor receives relating to Lessee's operation of its business on the Properties. ARTICLE IX ADDITIONAL COVENANTS Section 9.01. Performance at Lessee's Expense. Lessee acknowledges and confirms that in an Event of Default or in the event Lessee requests any of the following, Lessor may impose reasonable administrative, processing or servicing fees, and collect its attorneys' fees, costs and expenses in connection with (a) any extension, renewal, modification, amendment and termination of this Lease;. (b) any release or substitution of Properties; (c) the procurement of consents, waivers and approvals with respect to the Properties or any matter related to this Lease; 4823-7397.2353.4 16 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 18 of 57 • (d) the review of any assignment or sublease or proposed assignment or sublease or the preparation or review of any subordination or non disturbance agreement; (e) the collection, maintenance and/or disbursement of reserves created under this Lease or the other Transaction Documents; and (f) inspections required to make certain determinations under this Lease or the other Transaction Documents. Section 9.02. Inspection. Lessor and its authorized representatives shall have the right, at all reasonable times and upon giving reasonable prior notice (except in the event of an emergency, in which case no prior notice shall be required), to enter the Properties or any part thereof and inspect the same. Lessee hereby waives any claim for damages for any injury or inconvenience to or interference with Lessee's business, any loss of occupancy or quiet enjoyment of the Properties and any other toss occasioned by such entry, but, subject to Section 10.01, excluding damages arising as a result of the negligence or intentional misconduct of Lessor. Section 9.03. Financial Information. • (a) Financial Statements. Within forty five (45) days after the end of each fiscal quarter and within one hundred twenty (120) days after the end of each fiscal year of Lessee, Lessee shall deliver to Lessor (i) complete financial statements of the Lessee including a balance sheet, profit and loss statement, statement of changes in financial condition and all other related schedules for the fiscal period then ended; and {ii} income statements for the business at the Properties. All such financial statements shall be prepazed in accordance with GAAP, and shall be certified to be accurate and complete by an officer or director of Lessee. Lessee understands that Lessor will rely upon such financial statements and Lessee represents that such reliance is reasonable. In the event that Lessee's property and business at the Properties are ordinarily consolidated with other business for financial statements purposes, such financial statements shall be prepared on a consolidated basis showing separately the sales, profits and losses, assets and liabilities pertaining to the Properties with the basis for allocation of overhead of other charges being clearly set forth. The financial statements delivered to Lessor need not be audited, but Lessee shall deliver to Lessor copies of any audited financial statements of the Lessee which may be prepared, as soon as they are available. Within thirty (30} days after the end of each fiscal year of Lessee, and upon prior written request by Lessor, Lessee shall deliver such compliance certificate to Lessor as Lessor may reasonably require in order to establish that Lessee is in compliance with all of its obligations, duties and covenants under this Lease. (b) Other Information. Notwithstanding any provision contained herein, upon request at any time, Lessee will provide to Lessor, any and all financial information and/or financial statements (and in the form or forms) {i) reasonably requested by Lessor in connection with Lessor's filings with or disclosures to any Governmental Authority, including, without limitation, the financial statements required in connection with Securities and Exchange Commission filings by Lessor or its Affiliates; and (ii) as reasonably requested by Lessor. • 4823.7597.2353.4 _ __ 17 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 19 of 57 Section 9.04. OFAC Laws. Upon receipt of notice or upon actual knowledge thereof, Lessee shall immediately notify Lessor in writing if any Person owning (directly or indirectly) any interest in any of the Lessee Entities, or any director, officer, member, manager or partner of any of such holders is a Person whose properly or interests are subject to being blocked under any of the OFAC Laws, or is otherwise in violation of any of the OFAC Laws, or is under investigation by any Governmental Authority for, or has been charged with, or convicted of, drug trafficking, terrorist related activities or any violation of the Anti Money Laundering Laws, has been assessed civil penalties under these or related laws, or has had funds seized or forfeited in an action under these or related laws; provided, however, that the covenant in this Section 9.04 shall not apply to any Person to the extent such Person's interest is in or through a U.S. Publicly Traded Entity. Section 9.05. Estoppel Certificate. At any time, and from time to time, Lessee shall, promptly and in no event later than ten (10) days after a request from Lessor or any lender or mortgagee of Lessor, execute, acknowledge and deliver to Lessor or such lender or mortgagee, as the case may be, a certificate in the form supplied by Lessor, certifying: (a) that Lessee has accepted the Properties; (b) that this Lease is in full force and effect and has not been modified (or if modified, setting forth all modifications), or, if this Lease is not in full force and effect, the certificate shall so specify the reasons therefor; (c) the commencement and expiration dates of the Lease Term; (d) the date to which the Rentals have been paid under this Lease and the amount thereof then payable; (e) whether there are then any existing defaults by Lessor in the performance of its obligations under this Lease, and, if there are any such defaults, specifying the nature and extent thereof; (f) that no notice has been received by Lessee of any default under this Lease which has not been cured, except as to defaults specified in the certificate; (g) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Lessee; (h) that neither Lessor nor any lender or mortgagee has actual involvement in the management or control of decision making related to the operational aspects or the day to day operation of the Properties, including any handling or disposal of Hazardous Materials or Regulated Substances; and (i) any other information reasonably requested by Lessor or any lender or mortgagee, as the case may be. If Lessee shalt fail or refuse to sign a certificate in accordance with the provisions of this Section within ten (10) days following a request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney in fact to execute and deliver the certificate to any such third party, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding. Section 9.06. Franchise Agreement Renewal Options. Lessee shall use commercially reasonable efforts to negotiate extension options with respect to the Franchise Agreement, whereby the terms of the Franchise Agreement will not expire prior to the term of this Lease (including all possible extensions thereof). Section 9.07. Franchise Agreement Default Notices. Lessee shall promptly send copies of any "notice of default and demand to cure" letters sent to the Lessee by Franchisor. In addition, Lessee shall immediately notify Lessor of the intent of Franchisee to cancel or terminate the Franchise Agreement and the effective date of such intended cancellation or termination 4823-'T597-2353.4 18 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 20 of 57 ARTICLE X RELEASE AND INDEMNIFICATION Section 10.01. Release and Indemnification. Lessee agrees to use and occupy the Properties at its own risk and hereby releases Lessor and Lessor's agents and employees from all claims for any damage or injury to the full extent permitted by law. Lessee agrees that Lessor shall not be responsible or liable to Lessee or Lessee's employees, agents, customers, licensees or invitees for bodily injury, personal injury or property damage occasioned by the acts or omissions of any other lessee or any other Person. Lessee agrees that any employee or agent to whom the Properties or any part thereof shall be entrusted by or on behalf of Lessee shall be acting as Lessee's agent with respect to the Properties or any part thereof, and neither Lessor nor Lessor's agents, employees or contractors shall be liable for any loss of or damage to the Properties or any part thereof. Lessee shall indemnify, protect, defend and hold harmless each of the Indemnified Parties from and against any and all Losses (excluding Lasses suffered by an Indemnified Party arising out of the gross negligence or willful misconduct of such Indemnified party; provided, however, that the term "gross negligence" shall not include gross negligence imputed as a matter of law to any of the Indemnified Parties solely by reason of Lessor's interest in any Property or Lessor's failure to act in respect of matters which are or were the obligation of Lessee under this Lease) caused by, incurred or resulting from Lessee's operations or by Lessee's use and occupancy of the Properties, whether relating to its original design or construction, latent defects, alteration, maintenance, use by Lessee or any Person thereon, supervision or otherwise, or from any breach of, default under, or failure to perform, any term or provision of this Lease by Lessee, its officers, employees, agents or other Persons. It is expressly understood and agreed that Lessee's obligations under this Section shall survive the expiration or eazlier termination of this Lease for any reason whatsoever, for a period of one (1) year. ARTICLE XI CONDEMNATION AND CASUALTY SeMion 11.01. Notification. Lessee shall promptly give Lessor written notice of (a) any Condemnation of any of the Properties, (b) the commencement of any proceedings or negotiations which might result in a Condemnation of any of the Properties, and (c) any Casualty to any of the Properties or any part thereof. Such notice shall provide a general description of the nature and extent of such Condemnation, proceedings, negotiations or Casualty, and shall include copies of any documents or notices received in connection therewith. Thereafter, Lessee shall promptly send Lessor copies of all notices, correspondence and pleadings relating to any such Condemnation, proceedings, negotiations or Casualty. Section 11.02. Partial Condemnation or Casualty. Except as otherwise provided in Section 11.03, in the event of a Partial Condemnation or a Casualty: (a) Net Awards. All Net Awards shall be paid to Lessor. (b) Lessor Election To Continue or Terminate Lease. Lessor shall have the option, (i) subject to the right of Lessee to elect otherwise as set forth in subsection (c) 4823-759?-2353.4 _ 19_ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 21 of 57 below, to terminate this Lease with respect to the applicable Property affected, by notifying Lessee in writing within thirty (30) days after Lessee gives Lessor notice (A) of such Partial Condemnation or Casualty, or (B) that title has vested in the condemning authority; or (ii) to continue this Lease in effect, which election shall be evidenced by either a notice from Lessor to Lessee, or Lessor's failure to notify Lessee in writing that Lessor has elected to terminate this Lease with respect to such Property within such thirty (30) day period. Lessee shall have a period of sixty (60) days after receipt of Lessor's notice to terminate referenced above during which to elect, despite such Lessor notice of termination, to continue this Lease with respect to such Property on the terms herein provided. (c) No Continuance of Lease. If Lessee does not elect to continue this Lease with respect to such Property or shall fail during such sixty (60) day period to notify Lessor of Lessee's intent to continue this Lease with respect to such Property, then this Lease shall terminate with respect to such Property as of the last day of the month during which such sixty (60) day period expired. Lessee shall vacate and surrender such Property by such termination date, in accordance with the provisions of this Lease, and all obligations of either party hereunder with respect to such Property shall cease as of the date of termination; provided, however, Lessee's obligations to the Indemnified Parties under any indemnification provisions of this Lease with respect to such Property and Lessee's obligations to pay Rental and all other Monetary Qbligations (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the date of termination shall survive such termination. In such event, Lessor may retain all Net Awards related to the Partial Condemnation or Casualty, and Lessee shall immediately pay Lessor an amount equal to the insurance deductible applicable to any Casualty. (d) Continuance of Lease. If Lessor elects not to terminate this Lease, or if Lessor elects to terminate this Lease with respect to such Property but Lessee elects to continue this Lease with respect to such Property, then this Lease shall continue in full force and effect upon the following terms: (i) All Rental and other Monetary Obligations due under this Lease shall continue unabated. (ii) Lessee shall promptly select a contractor and commence and diligently prosecute restoration of such Property to the same condition, as nearly as practicable, as prior to such Partial Condemnation or Casualty as approved by Lessor. Subject to the terms and provisions of the Mortgages and upon the written request of Lessee (accompanied by evidence reasonably satisfactory to Lessor that such amount has been paid or is due and payable and is properly part of such costs, and that Lessee has complied with the terms of Section 7.02 in connection with the restoration), Lessor shall promptly make available in installments, subject to reasonable conditions for disbursement imposed by Lessor, an amount up to but not exceeding the amount of any Net Award (after deducting all Costs incidental to the collection of the Net Award) received by Lessor with respect to such Partial Condemnation or Casualty. Prior to the 4823-7597-2353.4 2U - Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 22 of 57 disbursement of any portion of the Net Award with respect to a Casualty, Lessee shall provide evidence reasonably satisfactory to Lessor of the payment of restoration expenses by Lessee up to the amount of the insurance deductible applicable to such Casualty. Lessor shall be entitled to keep any portion of the Net Award which may be in excess of the cost of restoration, and Lessee shall bear all additional Costs of such restoration in excess of the Net Award. Section 11.03. Total Condemnation. In the event of a Total Condemnation of any Properly, other than a Temporary Taking, then, in such event: (a) Termination of Lease. All obligations of either party hereunder with respect to the applicable Property shall cease as of the date of the Total Condemnation; provided, however, that Lessee's obligations to the Indemnified Parties under any indemnification provisions of this Lease with respect to such Property and Lessee's obligation to pay Rental and all other Monetary Obligations (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the date of termination shall survive such termination. If the date of such Total Condemnation is other than the first day of a month, the Base Annual Rental for the month in which such Total Condemnation occurs shall be apportioned based on the date of the Total Condemnation. (b) Net Award. Lessor shall be entitled to receive the entire Net Award in connection with a Total Condemnation without deduction for any estate vested in Lessee by this Lease, and Lessee hereby expressly assigns to Lessor all of its right, title and interest in and to every such Net Award and agrees that Lessee shall not be entitled to any Net Award or other payment for the value of Lessee's leasehold interest in this Lease. Lessee shall be entitled to claim and receive any award or payment from the condemning authority expressly granted for the taking of the Lessee Personalty, any insurance proceeds with respect to the Lessee Personalty, the interruption of its business and moving expenses, but only if such claim or award does not adversely affect or interfere with the prosecution of Lessor's,.claim for the Total Condemnation or otherwise reduce the amount recoverable by Lessor for the Total Condemnation. Section 11.04, Temporary Taking. In the event of a Condemnation of all or any part of any Property for a temporary use (a "Temporary Taking"), this Lease shall remain in full force and effect without any reduction of Base Annual Rental, Additional Rental or any other Monetary Obligation payable hereunder. Except as provided below and subject to the terms and provisions of the Mortgages, Lessee shall be entitled to the entire Net Awazd for a Temporary Taking, unless the period of occupation and use by the condemning authorities shall extend beyond the date of expiration of this Lease, in which event the Net Award made for such Temporary Taking shall be apportioned between Lessor and Lessee as of the date of such expiration. At the termination of any such Temporary Taking, Lessee will, at its own cost and expense and pursuant to the provisions of Section 7.02, promptly commence and complete restoration of such Property. Section 11.05. Adjustment of Losses. Any lass under any property damage insurance required to be maintained by Lessee shall be adjusted by Lessor and Lessee. Subject to the terms 4823-9597-2353.4 _ __ _ 21 _ __ _ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 23 of 57 and provisions of the Mortgages, any Net Award relating to a Total Condemnation or a Partial Condemnation shall be adjusted by Lessor or, at Lessor's election, Lessee. Notwithstanding the foregoing or any other provisions of this Section 11.05 to the contrary, but subject to the terms and provisions of the Mortgages, if at the time of any Condemnation or any Casualty or at any time thereafter an Event of Default shall have occurred and be continuing, Lessor is hereby authorized and empowered but shall not be obligated, in the name and on behalf of Lessee and otherwise, to file and prosecute Lessee's claim, if any, for a Net Award on account of such Condemnation or such Casualty and to collect such Net Award and apply the same to the curing of such Event of Default and any other then existing Event of Default under this Lease and/or to the payment of any amounts owed by Lessee to Lessor under this Lease, in such order, priority and proportions as Lessor in its discretion shall deem proper. Section 11.06. Lessee Obligation in Event of Casualty. During all periods of time following a Casualty, Lessee shall take reasonable steps to ensure that the related Property is secure and does not pose any risk of harm to any adjoining property and Persons (including owners or occupants of such adjoining property). ARTICLE XII DEFAULT, CONDITIONAL LIMITATIONS, REMEDIES AND MEASURE OF DAMAGES. Section 12.01. Event of Default. Each of the following shall be an event of default by Lessee under this Lease (each, an "Event of Default"): (a) if any representation or warranty of Lessee set forth in this Lease is false in any material respect when made, or if Lessee renders any false statement or account when made; (b) if any Rental due under this Lease is not paid when due; (c) if any Monetary Obligation (other than Rental) due under this Lease is not paid within five (5) days of when due; (d) (e) if Lessee fails to pay, prior to delinquency, any taxes, assessments or other charges the failure of which to pay will result in the imposition of a lien against any of the Properties; (f) if there is an Insolvency Event affecting Lessee or any Guarantor; (g) if Lessee vacates or abandons the Property; (h) if Lessee fails to observe or perform any of the other covenants, conditions or obligations of Lessee in this Lease; provided, however, if any such failure does not involve the payment of any Monetary Obligation, is not willful or intentional, does not place any rights or property of Lessor in immediate jeopardy, and is within the reasonable 4823-7597-2353.4 ~~ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 24 of 57 power of Lessee to promptly cure, all as determined by Lessor in its reasonable discretion, then such failure shall not constitute an Event of Default hereunder, unless otherwise expressly provided herein, unless and until Lessor shall have given Lessee notice thereof and a period of thirty (30) days shall have elapsed, during which period Lessee may correct or cure such failure, upon failure of which an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required If such failure cannot reasonably be cured within such thirty (30) day period, as determined by Lessor in its reasonable discretion, and Lessee is diligently pursuing a cure of such failure, then Lessee shall have a reasonable period to cure such failure beyond such thirty (30) day period, which shall in no event exceed ninety (90) days after receiving notice of such failure from Lessor. If Lessee shall fail to correct or cure such failure within such ninety (90) day period, an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required; (i) if a final, nonappealabte judgment is rendered by a court against Lessee which has a Material Adverse Effect, or which does not have a Material Adverse Effect but which is in the amount of $50,000 or more, and in either event is not discharged or provision made for such discharge within ninety (90) days from the date of entry thereof; (j) if Lessee shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution; (k) if the estate or interest of Lessee in any of the Properties shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within ninety (90) days after it is made; (1) if there is a material breach or default under the Franchise Agreement with respect to the Properties or, subject to Section 9.06, if such Franchise Agreement terminates or expires prior to the expiration of the Lease and a substitute agreement for the terminated or expired Franchise Agreement is not entered into prior to such expiration or termination, which substitute agreement shall be in form and substance reasonably satisfactory to Lessor; or (m) if there is an "Event of Default" or other breach or default by Lessee under any of the other Transaction Documents or any Other Agreement, after the passage of all applicable notice and cure or grace periods. Section 12.02. Remedfes. Upon the occurrence of an Event of Default, with or without notice or demand, except as otherwise expressly provided herein or such other notice as may be required by statute and cannot be waived by Lessee, Lessor shall be entitled to exercise, at its option, concurrently, successively, or in any combination, all remedies available at law or in equity, including, without limitation, any one or more of the following: (a) to terminate this Lease, whereupon Lessee's right to possession of the Properties shall cease and this Lease, except as to Lessee's liability, shall be terminated; 4823-7597-2353.4 _ 23 __ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 25 of 57 (b) to the extent not prohibited by applicable law, to (i) re-enter and take possession of the Properties (or any part thereof), any or all personal property or fixtures of Lessee upon the Properties and, to the extent permissible, all Franchise Agreements, permits and other rights or privileges of Lessee pertaining to the use and operation of the Properties, and in connection therewith, Lessee hereby agrees and covenants that, upon the request of Lessor, Lessee shall execute and deliver such documents and take all actians as aze necessary to permit Lessor or its designee to continue the operation of Properties, including without limitation, the transfer of all right, title and interest in and to Lessee's name, tradename or trademark, or any proprietary rights thereto, to Lessor or its designee, and if Lessee shall fail or refuse to effect such transfer in accordance with the provisions of this Section 12.02(b) within ten (10) days following a request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney in fact to execute and deliver all necessary documents to any third party to effect the same, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding, and (ii) expel Lessee and those claiming under or through Lessee, without being deemed guilty in any manner of trespass or becoming liable for any loss ar damage resulting therefrom, without resort to legal or judicial process, procedure or action. No notice from Lessor hereunder or under a forcible entry and detainer statute or similaz law shall constitute an election by Lessor to terminate this Lease unless such notice specifically so states. If Lessee shall, after default, voluntarily give up possession of the Properties to Lessor, deliver to Lessor or its agents the keys to the Properties, or both, such actions shall be deemed to be in compliance with Lessor's rights and the acceptance thereof by Lessor or its agents shall not be deemed to constitute a termination of the Lease. Lessor reserves the right following any re entry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate; (c) to bring an action against Lessee for any damages sustained by Lessor or any equitable relief available to Lessor and to the extent not prohibited by applicable law, to seize all personal property or fixtures upon the Properties which Lessee owns or in which it has an interest, in which Lessor shall have a landlord's lien and/or security interest, and to dispose thereof in accordance with the laws prevailing at the time and place of such seizure or to remove all or any portion of such property and cause the same to be stored in a public warehouse or elsewhere at Lessee's sole expense, without becoming liable for any loss or damage resulting therefrom and without resorting to legal or judicial process, procedure or action; (d) to relet the Properties or any part thereof for such term or terms (including a term which extends beyond the original Lease Term), at such rentals and upon such other terms as Lessor, in its sole discretion, may determine, with all proceeds received from such reletting being applied to the Rental and other Monetary Obligations due from Lessee in such order as Lessor may, in it sole discretion, determine, which other Monetary Obligations include, without limitation, all repossession casts, brokerage commissions, reasonable attorneys' fees and expenses, alteration, remodeling and repair costs and expenses of preparing for such reletting. Except to the extent required by applicable Law, Lessor shalt have no obligation to relet the Properties or any part thereof and shall in no event be liable for refusal or failure to relet the Properties or any part 4823-7597-2353.4 2[~ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 26 of 57 thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon such reletting, and no such refusal or failure shall operate to relieve Lessee of any liability under this Lease or otherwise to affect any such liability. Lessor reserves the right following any re entry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate as specified in said notice; (e) to accelerate and recover from Lessee all Rental and other Monetary Obligations due and owing and scheduled to become due and owing under this Lease both before and after the date of such breach for the entire original scheduled Lease Term; (f) to recover from Lessee all Costs paid or incurred by Lessor as a result of such breach, regardless of whether or not legal proceedings are actually commenced; (g) to immediately or at any time thereafter, and with or without notice, at Lessor's sole option but without any obligation to do so, correct such breach or default and charge Lessee all Costs incurred by Lessor therein. Any sum or sums so paid by Lessor, together with interest at the Default Rate, shall be deemed to be Additional Rental hereunder and shall be immediately due from Lessee to Lessor. Any such acts by Lessor in correcting Lessee's breaches or defaults hereunder shall not be deemed to cure said breaches or defaults or constitute any waiver of Lessor's right to exercise any or all remedies set forth herein; (h) to immediately or at any time thereafter, and with or without notice, except as required herein, set off any money of Lessee held by Lessor under this Lease or any other Transaction Document or any Other Agreement against any sum owing by Lessee hereunder; and /or (i) to seek any equitable relief available to Lessor, including, without limitation, the right of specific performance. Section 12.03. Cumulative Remedies. All powers and remedies given by Section 12.02 to Lessor, subject to applicable Law, shall be cumulative and not exclusive of one another or of any other right or remedy or of any other powers and remedies available to Lessor under this Lease, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements of Lessee contained in this Lease, and no delay or omission of Lessor to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any other or subsequent Event of Default or impair any rights or remedies consequent thereto. Every power and remedy given by this Section or by Law to Lessor may be exercised from time to time, and as often as may be deemed expedient, by Lessor, subject at all times to Lessor's right in its sole judgment to discontinue any work commenced by Lessor or change any course of action undertaken by Lessor. Section 12.04. Lessee Waiver. Lessee hereby expressly waives, for itself and all Persons claiming by, through and under Lessee, including creditors of all kinds, (a) any right and privilege which Lessee has under any present or future Legal Requirements to redeem the 4823-7597-2353.4. _ __ 2~ __ _ _ __ _ __ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 27 of 57 Properties or to have a continuance of this Lease for the Lease Term after termination of Lessee's right of occupancy by order or judgment of any court or by any legal process or writ, or under the temis of this Lease; (b) the benefits of any present or future Legal Requirement that exempts property from liability for debt or for distress for rent; (c) any present or future Legal Requirement relating to notice or delay in levy of execution in case of eviction of a tenant for nonpayment of rent; and (d) any benefits and lien rights which may arise pursuant to any present or future Legal Requirement. ARTICLE XIII MORTGAGE, SUBORDINATION AND ATTORNMENT Section 13.01. No Liens. Lessor's interest in this Lease and/or the Properties shall not be subordinate to any liens or encumbrances placed upon the Properties by or resulting from any act of Lessee, and nothing herein contained shall be construed to require such subordination by Lessor. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST, DEED TO SECURE DEBT, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE PROPERTIES OR LESSEE'S LEASEHOLD INTEREST THEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD, CONDITIONED OR DELAYED, AND ANY SUCH PURPORTED TRANSACTION SHALL BE VOID. Section 13.02. Subordination. This Lease at all times shall automatically be subordinate to the lien of any and all ground leases and Mortgages now or hereafter placed upon any of the Properties by Lessor, and Lessee covenants and agrees to execute and deliver, upon demand, such further instruments subordinating this Lease to the lien of any or all such ground leases and Mortgages as shall be desired by Lessor, or any present or proposed mortgagees under trust deeds, upon the condition that Lessee shall have the right to remain in possession of the Properties under the terms of this Lease, notwithstanding any default in any or all such ground leases or Mortgages, or after the foreclosure of any such Mortgages, so long as no Event of Default shall have occurred and be continuing. Lessor agrees to use its best efl•orts to provide Lessee with a SNDA executed by each Lender holding a Mortgage, and Lessee agrees to promptly execute and return such SNDA to Lessor. Section 13.03. Election To Declare Lease Superior. If any mortgagee, receiver or other secured party elects to have this Lease and the interest of Lessee hereunder, be superior to any Mortgage and evidences such election by notice given to Lessee, then this Lease and the interest of Lessee hereunder shall be deemed superior to any such Mortgage, whether this Lease was executed before or after such Mortgage and in that event such mortgagee, receiver or other secured party shall have the same rights with respect to this Lease as if it had been executed and delivered prior to the execution and delivery of such Mortgage and had been assigned to such mortgagee, receiver or other secured party. Section 13.04. Attornment. In the event any purchaser or assignee of any Lender at a foreclosure sale acquires title to any of the Properties, or in the event that any Lender or any purchaser or assignee otherwise succeeds to the rights of Lessor as landlord under this Lease, 4823-7597-2353.4 26 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11!26/12 20:20:26 Desc Exhibit(s) A Page 28 of 57 Lessee shall attorn to Lender or such purchaser or assignee, as the case may be (a "Successor Lessor"), and recognize the Successor Lessor as lessor under this Lease, and, subject to the provisions of this Article XIII, this Lease shall continue in full force and effect as a direct lease between the Successor Lessor and Lessee, provided that the Successor Lessor shall only be liable for any obligations of Lessor under this Lease which accrue after the date that. such Successor Lessor acquires title. The foregoing provision shall be self operative and effective without the execution of any further instruments. Section 13.05. Execution of Additional Documents. Although the provisions in this Article XIII shall be self operative and no future instrument of subordination shall be required, upon request by Lessor Lessee shall execute and deliver whatever instruments may be reasonably required for such purposes. Section 13.06. Notice to Lender. Lessee shall give written notice to any Lender having a recorded lien upon any of the Properties or any part thereof of which Lessee has been notified of any breach or default by Lessor of any of its obligations under this Lease and give such Lender at least sixty (60) days beyond any notice period to which Lessor might be entitled to cure such default before Lessee may exercise any remedy with respect thereto. ARTICLE XIV ASSIGNMENT Section 14.01. Assignment by Lessor. As a material inducement to Lessor's willingness to complete the transactions contemplated by this Lease (the `Transaaction") and the other Transaction Documents, Lessee hereby agrees that Lessor may, from time to time and at any time and without the consent of Lessee, engage in all or any combination of the following, or enter into agreements in connection with any of the following or in accordance with requirements that may be imposed by applicable securities, tax or other Laws: (a) subject to the limitations in Article XVII, the sale, assignment, grant, conveyance, transfer, financing, re- financing, purchase or re acquisition of all, less than all or any portion of the Properties, this Lease or any other Transaction Document, Lessor's right, title and interest in this Lease or any other Transaction Document, the servicing rights with respect to any of the foregoing, or participations in any of the foregoing; or (b) a Securitization and related transactions. Without in any way limiting the foregoing, the parties acknowledge and agree that Lessor, in its sole discretion, may assign this Lease or any interest herein to another Person (including without limitation, a taxable REIT subsidiary) in order to maintain Lessor's or any of its Affiliates' status as a REIT. In the event of any such sale or assignment other than a security assignment, Lessee shall attorn to such purchaser or assignee (so long as Lessor and such purchaser or assignee notify Lessee in writing of such transfer and such purchaser or assignee expressly assumes in writing the obligations of Lessor hereunder). At the reasonable request of Lessor, Lessee will execute such documents confirming the sale, assignment or other transfer and such other agreements as Lessor may reasonably request, provided that the same do not increase the liabilities and obligations of Lessee hereunder. Lessor shall be relieved, from and after the date of such transfer or conveyance, of liability for the performance of any obligation of Lessor contained herein, except for obligations or liabilities accrued prior to such assignment or sale. 4823-7597-2353.4 _ _ _ _ _ 27 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 29 of 57 Section 14.02. No Assignment by Lessee. Lessee acknowledges that Lessor has relied both on the business experience and creditworthiness of Lessee and upon the particular purposes for which Lessee intends to use the Properties in entering into this Lease. Lessee shall not assign, transfer, convey, pledge or mortgage this Lease or any interest therein, whether by operation of law or otherwise without the prior written consent of Lessor, which consent will not be unreasonably withheld, conditioned or delayed, considering such matters as the experience and financial strength of any assignee, the assumption by any assignee of all of Lessee's obligations hereunder by undertakings enforceable by Lessor, and the transfer to or procurement of all necessary licenses and franchises to an assignee in order to continue operating the Properties for the purposes herein provided. At the time of any assignment of this Lease which is approved by Lessor, the assignee shall assume all of the obligations of Lessee under this Lease pursuant to a written assumption agreement in form and substance reasonably acceptable to Lessor. Such assignment of the Properties shall not relieve Lessee of its obligations respecting this Lease unless otherwise agreed to by Lessor. Any assignment, transfer, conveyance, pledge or mortgage in violation of this Section 14.02 shall be voidable at the sole option of Lessor. Any consent to an assignment given by Lessor hereunder shall not be deemed a consent to any subsequent assignment. Section 14.03. No Subletting. Lessee shall not sublet any or all of the Properties without the prior written consent of Lessor, which may be withheld by Lessor in its sole discretion and any such purported subletting shall be void. ARTICLE XV NOTICES Section 15.01. Notices. All notices, demands, designations, certificates, requests, offers, consents, approvals, appointments and other instruments given pursuant to this Lease shall be in writing and given by any one of the following: (a) hand delivery; (b) express overnight delivery servicek(c) certified oar registered mail, return receipt requested; or (d} electronic mail message, provided that a copy of such electronic mail message is also sent via certified or registered mail, return receipt requested, within one Business Day of the transmission of such electronic mail message, and shall be deemed to have been delivered upon (i) receipt, if hand delivered; (ii) the next Business Day, if delivered by a reputable express overnight delivery service; (iii) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested; or (iv) transmission, if delivered by electronic mail pursuant to the requirements of clause (d) above. Notices shall be provided to the parties and addresses (or electronic mail addresses) specified below: If to Lessee: Cornett Hospitality, LLC 2120 Staples Mill Road, Suite 300 Richmond, Virginia 23230 Attn: James E. Cornett III and J. Philip Cornett Telephone: (804) 6'78-9000 Telecopy: (804} 678-9001 E-mail :pcomett(g~cmcch,~.com; hootcmcpa@aol.com 4823-7597-2353.4 _ 28 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 30 of 57 With a copy to: Spotts Fain PC 411 E. Franklin Street, Suite 600 Richmond, VA 23219 Attn: Meade A. Spotts, Esq. Telephone: (804) 697-2080 Telecopy: (804) 697-2081 E-mail: mspotts<a?,~pottsfain.com If to Lessor: Spirit Master Funding III, LLC 14631 N. Scottsdale Road, Suite 200 Scottsdale, Arizona 85254 2711 Attention: Michael T. Bennett, SVP, Operations Telephone: (480) 606 0820 Telecopy: (480) 606 0826 E-Mail: mbennett@spiritfinance.com With a copy to: Kutak Rock LLP 1801 California Street, Suite 3100 Denver, Colorado 80202 Attention: Peggy A. Richter, Esq. Telephone: (303) 297 2400 Telecopy: (303) 292 7799 E-Mail: peg~richter~a,kutakrock.com or to such other address or such other person as either party may from time to time hereafter specify to the other party in a notice delivered in the manner provided above. ARTICLE XVI LANDLORD'S LIEN /SECURITY INTEREST Section 16.01. Landlord's Lien and Security Interest. Lessee agrees that Lessor shall have a landlord's lien, and additionally hereby separately grants to Lessor a security interest, in, on and against all personal property, appliances, furniture and equipment of Lessee from time to time situated on or used in connection with any of the Properties (the " ers "), which lien and security interest shall secure the payment of all Rental and other Monetary Obligations payable by Lessee to Lessor under the terms hereof and all other obligations of Lessee to Lessor under this Lease; provided, however, Lessor agrees to subordinate its Landlord Lien with respect to any equipment purchased by Lessee as of the Effective Date or subsequent thereto, to a purchase money lien of a third party lender providing funds to purchase such equipment. Lessee agrees that Lessor may file such documents as Lessor then deems appropriate or necessary to perfect and maintain said lien and security interest, and expressly acknowledges and agrees that, in addition to any and all other rights and remedies of Lessor whether hereunder or at law or in equity, in the Event of Default of Lessee hereunder, Lessor shall have any and all rights and remedies granted a secured party under the Uniform Commercial Code then in effect in the states 4823-7597.2353.4 29 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 31 of 57 where the Properties are located. Lessee covenants to promptly notify Lessor of any changes in Lessee's name and/or organizational structure which may necessitate the execution and filing of additional financing statements; provided, however, the foregoing shall not be construed as Lessor's consent to such changes. ARTICLE XVII RIGHT OF FIRST REFUSAL Section 17.01. Offer. Subject to the terms and conditions set forth in this Article XVIII (including, without limitation, the condition set forth in Section 17.02(a}(5) below), if Lessor desires to sell any Property and receives a bona fide written offer from a third party which offer is in all respects acceptable to Lessor, Lessor shall deliver a complete copy of such bona ftde third party offer to Lessee (``Thy' ,, Party Offer"). Within five (5) Business Days of Lessee's receipt of such Third Party Offer from Lessor, and a written statement of Lessor's desire to sell the Property in accordance with such Third Party Offer, Lessee shall have the right to deliver an offer to Lessor ("Purchase Offer") to purchase Lessor's interest in any such Property for the amount of the bona fide third party offer to purchase such Property (the "Subiec__ t .Purchase Price"). Lessor shall not allow any Third Parry Offer to close in less than thirty (30) days from the date Lessor provides written notice to Lessee of the Third Party Offer. Lessee shall complete such purchase, subject to the satisfaction of each of the terms and conditions set forth in Section 17.02 below. Section 17.02. Conditions Precedent. (a) The purchase of Lessor's interest in a Property pursuant to Section 17.01 shall be subject to the fulfillment of all of the following terms and conditions: (1) no Event of Default shall have occurred and be continuing under this Lease or other Transaction Documents; (2) Lessee shall have paid to Lessor the Subject Purchase Price, together with all Rental and other Monetary Obligations then due and payable under this Lease as of the date of the closing of such purchase; (3) in addition to payment of the Subject Purchase Price, Lessee shall have satisfied its obligations under Section 17.03 below; and (4) the date of the closing of such purchase shall occur on the next scheduled Base Monthly Rental payment date following Lessor's acceptance of the Purchase Offer. (b) On the date of the closing of the purchase of a Property by Lessee pursuant to this Section (the "Purchase Closing Date"), subject to satisfaction of the foregoing conditions: (1) this Lease shall be deemed terminated with respect to such Property only, and this Lease shall continue in full force and effect with respect to all of the other Properties; provided, however, such termination shall not limit Lessee's obligations to Lessor with respect to such Properly under any indemnification provisions of this Lease and Lessee's obligations to pay any Monetary Obligations (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Purchase Closing Date shall survive the termination of this Lease; (2) the Base Monthly Rental with respect to the remaining Properties shall be proportionately reduced based upon the values attributed to all of the Properties at the time of Lessor's acquisition of the Properties; and (3) Lessor shall convey such Property to Lessee or, at Lessee's 4823-7597-2353.4 _ _ _ _ 30 _ _ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 32 of 57 request, the third parry offeree "as is" by special warranty deed, subject to all matters of record (except for any consensual liens granted by Lessor other than those granted by Lessor at the request of Lessee), and without representation or warranty. Section 17.03. Costs. Lessee shall be solely responsible for the payment of all Costs resulting from any proposed purchase pursuant to this Article XVII, regardless of whether the purchase is consummated, including, without limitation, to the extent applicable, the cost of title insurance and endorsements, including, survey charges, stamp taxes, mortgage taxes, transfer taxes and fees, escrow and recording fees, taxes imposed on Lessor as a result of such purchase, the attorneys' fees of Lessee and the reasonable attorneys' fees and expenses of counsel to Lessor. Section 17.04. Termination of Right. NOTWITHSTANDING ANYTHING TO THE CONTRARY, LESSEE'S RIGHTS UNDER THIS SECTION ARTICLE XVIII SHALL TERMINATE AND BE NULL AND VOID AND OF NO FURTHER FORCE AND EFFECT IF (i) LESSEE FAILS TO EXERCISE THE RIGHT GRANTED PURSUANT TO THIS SECTION 17.04, AND THE SALE TO THE THIRD PARTY PURCHASER IS CONSUIvIIviATED, PROVIDED LESSEE HAS ACTUALLY RECEIVED THE THIRD PARTY OFFER; (ii) THIS LEASE TERMINATES OR THE LEASE TERM EXPIRES; (iii) THE PROPERTIES ARE SOLD OR TRANSFERRED PURSUANT TO THE EXERCISE OF A PRIVATE POWER OF SALE OR JUDICIAL FORECLOSURE OR ACCEPTANCE OF A DEED 1N LIEU THEREOF; OR (iv) LESSEE SHALL BE IN DEFAULT OF ANY OF THE TERMS AND CONDITIONS OF THIS LEASE OR IF ANY CONDITION SHALL EXIST WHICH UPON THE GIVING OF NOTICE OR THE PASSAGE OF TIME, OR BOTH, WOULD CONSTITUTE A DEFAULT BY LESSEE UNDER THIS LEASE. IN ANY SUCH EVENT, LESSEE SHALL EXECUTE A QUITCLAIM DEED AND SUCH OTHER DOCUMENTS AS LESSOR SHALL REASONABLY REQUEST EVIDENCING THE TERMINATION OF ITS RIGHT UNDER THIS ARTICLE XVII. Section 17.05. Attornment. If Lessee does not deliver its Purchase Offer to purchase any of the Properties and such Properties are transferred to a third party purchaser, Lessee will attorn to any third party purchaser as Lessor so long as such third party purchaser and Lessor notify Lessee in writing of such transfer. At the request of Lessor, Lessee will execute such documents confirming the agreement referred to above and such other agreements as Lessor may reasonably request, provided that such agreements do not increase the liabilities and obligations of Lessee hereunder. Section 17.06. Exclusions. The provisions of this Article XVII shall not apply to or prohibit (i) any mortgages or other hypothecation of Lessor's interest in the Propefies; (ii) any sale of the Properties pursuant to a private power of sale under or judicial foreclosure of any mortgage or other security instrument or device to which Lessor's interest in the Properties is now or hereafter subject; (iii) any transfer of Lessor's interest in the Properties to a mortgagee or other holder of a security interest therein or their designees by deed in lieu of foreclosure; (iv) any transfer of the Properties to any governmental or quasi governmental agency with power of Condemnation; (v) any transfer of the Properties to any Affiliate of Lessor; (vi) any transfers of interests in Lessor by any member, shareholder, partner or other owner to any other member, shareholder, partner or other owner; (vii) any transfers to any Person to whom Lessor sells all or 4823-7597-2333.4 31 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 33 of 57 substantially all of its assets; or (viii) any transfer of the Properties to any of the successors or assigns of any of the Persons referred to in this Article XVII. ARTICLE XVIII MISCELLANEOUS Section 18.01. Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts, acts of God, enemy or hostile governmental action, civil commotion, fire or other casualty beyond the control of the party obligated to perform (each, a "Force Majeure Event") shall excuse the performance by such party for a period equal to any such prevention, delay or stoppage, expressly excluding, however, the obligations imposed upon Lessee with respect to Rental and other Monetary Obligations to be paid hereunder. Section 18.02. No Merger. There shall be no merger of this Lease nor of the leasehold estate created by this Lease with the fee estate in or ownership of any of the Properties by reason of the fact that the same person, corporation, firm or other entity may acquire or hold or own, directly or indirectly, (a) this Lease or the leasehold estate created by this Lease or any interest in this Lease or in such leasehold estate, and (b) the fee estate or ownership of any of the Properties or any interest in such fee estate or ownership. No such merger shall occur unless and until all persons, corporations, firms and other entities having any interest in (i) this Lease or the leasehold estate created by this Lease, and (ii) the fee estate in or ownership of the Properties or any part thereof sought to be merged shall join in a written instrument effecting such merger and shall duly record the same. Section 18.03. Interpretation. Lessor and Lessee acknowledge and warrant to each other that each has been represented by independent counsel and has executed this Lease after being fully advised by said counsel as to its effect and significance. This Lease shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of the parties or the domicile of any party. Whenever in this Lease any words of obligation or duty are used, such words or expressions shall have the same force and effect as though made in the forth of a covenant. Section 18.04. Characterization. The following expressions of intent, representations, warranties, covenants, agreements, stipulations and waivers are a material inducement to Lessor entering into this Lease: (a) Lessor and Lessee intend that {i) this Lease constitutes an unseverable, unitary and single lease of all, but not less than all, of the Properties, and, if at any time this Lease covers other real property in addition to the Properties, neither this Lease, nor Lessee's obligations or rights hereunder may be allocated or otherwise divided among such properties by Lessee; (ii) this Lease is a "true lease," is not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Lease are those of a true lease; and (iii) the business relationship created by this Lease and any related documents is solely that of a long term commercial lease between Lessor and Lessee, the Lease has been entered into by both parties in reliance upon the economic and legal 4823-7597-2353.4 32 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 34 of 57 bargains contained herein, and none of the agreements contained herein is intended, nor shall the same be deemed or construed, to create a partnership (de facto or de jure) between Lessor and Lessee, to make them joint venturers, to make Lessee an agent, legal representative, partner, subsidiary or employee of Lessor, nor to make Lessor in any way responsible for the debts, obligations or losses of Lessee. (b) Lessor and Lessee covenant and agree that: (i) each will treat this Lease as an operating lease pursuant to Statement of Financial Accounting Standards No. 13, as amended, and as a true lease for state law reporting purposes and for federal income tax purposes; {ii) each party will not, nor will it permit any Affiliate to, at any time, take any action or fail to take any action with respect to the preparation or filing of any statement or disclosure to Governmental Authority, including without limitation, any income tax return (including an amended income tax return), to the extent that such action or such failure to take action would be inconsistent with the intention of the parties expressed in this Section 18.04; (iii) with respect to the Properties, the Lease Term (including any Extension Term) is less than eighty percent (80%) of the estimated remaining economic life of the Properties; and (iv) the Base Annual Rental is the fair market value for the use of the Properties and was agreed to by Lessor and Lessee on that basis, and the execution and delivery of, and the performance by Lessee of its obligations under, this Lease do not constitute a transfer of all or any part of the Properties. (c) Lessee waives any claim or defense based upon the characterization of this Lease as anything other than a tnze lease and as a master lease of all of the Properties. Lessee stipulates and agrees (i) not to challenge the validity, enforceability or characterization of the lease of the Properties as a true lease and/or as a single, unitary, unseverable instrument pertaining to the lease of all, but not less than all, of the Properties; and (ii) not to assert or take or omit to take any action inconsistent with the agreements and understandings set forth in this Section 18.04. Section 18.05. Disclosure. The parties agree that, notwithstanding any provision contained in this Lease, any party (and each employee, representative or other agent of any party) may disclose to any and all persons, without limitation of any kind, any matter required under the Securities Act or the Exchange Act. Section 18.06. Bankruptcy. As a material inducement to Lessor executing this Lease, Lessee acknowledges and agrees that Lessor is relying upon (a) the financial condition and specific operating experience of Lessee and Lessee's obligation to use the Properties as Permitted Facilities specifically in accordance with a Franchise Agreement, where applicable; (b) Lessee's timely performance of all of its obligations under this Lease notwithstanding the entry of an order for relief under the Bankruptcy Code for Lessee; and (c) all defaults under this Lease being cured promptly and this Lease being assumed within sixty (60) days of any order for relief entered under the Bankruptcy Code for Lessee, or this Lease being rejected within such sixty (60) day period and the Properties surrendered to Lessor. Accordingly, in consideration of the mutual covenants contained in this Lease and for other good and valuable consideration, Lessee hereby agrees that: (i) all obligations that accrue under this Lease (including the obligation to pay Rentals), from and after an Insolvency Event shall be timely performed exactly as provided in this Lease and any failure to so perform shall be harmful and prejudicial to Lessor; (ii) any and 4823-7597-2353.4 _ _ _ _ _ _ 33 _ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 35 of 57 all Rentals that accrue from and after an Insolvency Event and that are not paid as required by this Lease shall, in the amount of such Rentals, constitute administrative expense claims allowable under the BanlQUptcy Code with priority of payment at least equal to that of any other actual and necessary expenses incurred after an Insolvency Event; (iii) any extension of the time period within which Lessee may assume or reject this Lease without an obligation to cause all obligations under this Lease to be performed as and when required under this Lease shall be harmful and prejudicial to Lessor; (iv) any time period designated as the period within which Lessee must cure all defaults and compensate Lessor for all pecuniary losses which extends beyond the date of assumption of this Lease shall be harmful and prejudicial to Lessor; (v) any assignment of this Lease must result in all terms and conditions of this Lease being assumed by the assignee without alteration or amendment, and any assignment which results in an amendment or alteration of the terms and conditions of this Lease without the express written consent of Lessor shall be harmful and prejudicial to Lessor; (vi) any proposed assignment of this Lease shall be harmful and prejudicial to Lessor if made to an assignee: (A) that does not possess financial condition adequate to operate Permitted Facilities upon the Properties or operating performance and experience characteristics satisfactory to Lessor equal to or better than the financial condition, operating performance and experience of Lessee as of the Effective Date; (B) that does not provide guarantors of the lease obligations with financial condition equal to or better than the financial condition of the Guazantor as of the Effective Date; or (C) that will not use the Properties specifically in accordance with a Franchise Agreement; and (vii) the rejection (or deemed rejection) of this Lease for any reason whatsoever shall constitute cause for immediate relief from the automatic stay provisions of the Bankruptcy Code, and Lessee stipulates that such automatic stay shall be lifted immediately and possession of the Properties will be delivered to Lessor immediately without the necessity of any further action by Lessor. No provision of this Lease shall be deemed a waiver of Lessor's rights or remedies under the Bankruptcy Code or applicable Law to oppose any assumption and/or assignment of this Lease, to require timely performance of Lessee's obligations under this Lease, or to regain possession of the Properties as a result of the failure of Lessee to comply with the terms and conditions of this Lease or the Bankruptcy Code. Notwithstanding anything in this Lease to the contrary, all amounts payable by Lessee to or on behalf of Lessor under this Lease, whether or not expressly denominated as such, shall constitute "rent" for the purposes of the Bankruptcy Code. For purposes of this Section addressing the rights and obligations of Lessor and Lessee upon an Insolvency Event, the term "Lessee" shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as debtor in possession or other responsible person. Section 18.07. Attorneys' Fees. In the event of any controversy, claim, dispute or proceeding between the parties concerning this Lease, to the extent permitted by Law, the prevailing party shall be entitled to recover all of its reasonable attorneys' fees and other Costs in addition to any other relief to which it may be entitled. In addition, Lessor shall, upon demand, be entitled to all attorneys' fees and all other reasonable Costs incurred in the preparation and service of any notice or demand hereunder as a result of an Event of Default, whether or not a legal action is subsequently commenced. Sectton 18.08. Memoranda of Lease. Concurrently with the execution of this Lease, Lessor and Lessee aze executing Lessor's standard form memorandum of lease in recordable form, indicating the names and addresses of Lessor and Lessee, a description of the Properties, the Lease Term, Lessee's right of first refusal as described in Section XVII, but omitting Rentals aszs-~s9~-sss3,a _ _ _ 34 _ Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 36 of 57 and such other terms of this Lease as Lessor may not desire to disclose to the public. Further, upon Lessor's request, Lessee agrees to execute and acknowledge a termination of lease and/or quitclaim deed in recordable form to be held by Lessor until the expiration or sooner termination of the Lease Term; provided, however, if Lessee shall fail or refuse to sign such a document in accordance with the provisions of this Section within ten (10) days following a request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney in fact to execute and record such document, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding. Section 18.09. No Brokerage. Lessor and Lessee represent and warrant to each other that they have had no conversation or negotiations with any broker concerning the leasing of the Properties. Each of Lessor and Lessee agrees to protect, indemnify, save and keep harmless the other, against and from all liabilities, claims, losses, Costs, damages and expenses, including attorneys' fees, arising out of, resulting from or in connection with their breach of the foregoing warranty and representation. Section 18.10. Waiver of Jury Trial and Certain Damages. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAX HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF THE PROPERTIES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE OTHER PARTY AND ANY OF THE AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, MANAGERS OR EMPLOYEES OF THE SAME PARTY OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY THE PARTIES OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. Section 18.11. Securitizations. As a material inducement to Lessor's willingness to complete the Transactions contemplated by this Lease and the other Transaction Documents, Lessee hereby acknowledges and agrees that Lessor may, from time to time and at any time (a) advertise, issue press releases, send duect mail or otherwise disclose information regarding the Transaction for marketing purposes; and (b) (i) act or permit another Person to act as sponsor, settler, transferor or depositor of, or a holder of interests in, one or more Persons or other arrangements formed pursuant to a trust agreement, indenture, pooling agreement, participation 4823-9591-2353.4 35 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 37 of 57 agreement, sale and servicing agreement, limited liability company agreement, partnership agreement, articles of incorporation or similaz agreement or document; and (ii) permit one or more of such Persons or arrangements to offer and sell stock, certificates, bonds, notes, other evidences of indebtedness or securities that are directly or indirectly secured, collateralized or otherwise backed by or represent a direct or indirect interest in whole or in part in any of the assets, rights or properties described in Section 14.01 of this Lease, in one or more Persons or arrangements holding such assets, rights or properties, or any of them (collectively, the "Securities"), whether any such Securities are privately or publicly offered and sold, or antdd or unrated (any combination of which actions and transactions described in both clauses (i) (~~) in this paragraph, whether proposed or completed, are referred to in this Lease as a "~ecuritization"). Lessee shall cooperate fully with Lessor, at no additional out of pocket expense to Lessee and any Affected Party with respect to all reasonable requests and due diligence procedures and to use reasonable efforts to facilitate such Securitization, including, without limitation, providing for inclusion in any prospectus or other Securities offering material such documents, financial and other data, and other information and materials which would customarily be required with respect to Lessee by a purchaser, transferee, assignee, servicer, participant, investor or rating agency involved with respect to such Securirization, and Lessee shall indemnify and hold harmless Lessor for any and all liabilities, losses and expenses arising under the Securities Act, or the Exchange Act, in connection with any material misstatement (or alleged misstatement) contained in such information provided in writing (including, without limitation, electronically) by Lessee or its officers, managers, members, employees, or agents, or any omission (or alleged omission) of a material fact by Lessee or its officers, managers, members, employees, or agents, the inclusion of which was necessary to make such written infarmation not misleading, unless such material misstatement or alleged misstatement or omission or alleged omission is caused by Lessor or its directors, officers, managers, members, shareholders, employees, or agents. Lessee shall deliver to Lessor, any Affected Party and to any Person designated by Lessor, such statements and audit letters of reputable, independent certified public accountants pertaining to the written information provided by Lessee pursuant to this Section as shall be requested by Lessor or such Affected Party, as the case may be. Lessee also shall deliver to Lessor, any Affected Party and to any Person designated by Lessor or any Affected Party, such opinions of counsel (including, without limitation, local counsel opinions), appraisals, environmental reports and zoning letters, or updates of any of the foregoing, as are customarily delivered in connection with Securitizations or as may be required by any rating agency in connection with any Securitization. Section 18.12. State Specific Provisions. The provisions and/or remedies which are set forth on the attached Exhibit D shall be deemed a part of and included within the teens and conditions of this Lease. Section 18.13. Time Is of the Essence. Time is of the essence with respect to each and every provision of this Lease. Section 18.14. Waiver and Amendment. No provision of this Lease shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion. No acceptance by Lessor of an amount less than the Rental 36 4823-7597-2353.4 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 38 of 57 and other Monetary Obligations stipulated to be due under this Lease shall be deemed to be other than a payment on account of the earliest such Rental or other Monetary Obligations then due or in arrears nor shall any endorsement or statement on any check or letter accompanying any such payment be deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and satisfaction. Section 18.15. Successors Bound. Except as otherwise specifically provided herein, the terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of the respective heirs, successors, executors, administrators and assigns of each of the parties hereto. Section 18.16. Captions. Captions are used throughout this Lease for convenience of reference only and shall not be considered in any manner in the construction or interpretation hereof. Section 18.17. Other Documents. Each of the parties agrees to sign such other and further documents as may be necessary or appropriate to carry out the intentions expressed in this Lease. Section 18.18. Entire Agreement. This Lease and any other instruments or agreements referred to herein, constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no other representations, warranties or agreements except as herein provided. Section 18.19. Forum Selection; Jurisdiction; Venue; Choice of Law. For purposes of any action or proceeding arising out of this Lease, the parties hereto expressly submit to the jurisdiction of all federal and state courts located in the Commonwealth of Virginia. Section 1$.20. Counterparts. This Lease may be executed in one or more counterparts, each of which shall be deemed an original. [Remainder of page intentionally left blank; signature page(s) to follow) • 4823-7597-2353.4 37 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 39 of 57 • IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of the date first above written. LESSOR: SPIRIT MASTER FUNDING III, LLC, a Delawaze limited liability,.rompany sy: • STATE OF ARIZONA COUNTY OF MARICOPA ss The fore oYi'ng -instrument was acknowledged before me on November '~, 2006 by _ ~ ~ ,Senior Vice President of SPIRIT MASTER FUNDING III, LLC, a Delaware limited liability company, on behalf of the limited liability company. thl. No Pu is My Commission Expires: ~ ~~ QFFICiAL SEAL. HEDY NELSON NOTARY PUBLIC • State of Arizona MARICOPA COUNTY My Comm. Expires Aptfl 30, 2010 4823-7399-2331.4 _ - - - 38 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 40 of 57 J]V W]TNESS WHEREOF, Lessor and Lessee have entered into this Lease as of the dale first above written. LESSEE: CORNETT HOSPITALITY, LLC, a Virginia limited liability company STATE OF Virginia ) C-4 , ) SS OF ) By: Printed Name: P i Cornett Title: Chai n The foregoing instrument was acknowledged before me on November 20:2006 by J. Philip Cornett, Chairman of CORNETT HOSPITALITY, LLC, a Virginia limited liability company, on behalf of the company. My Commission Expires: // (/ N ary Pubic y,. ~~~ Y (t. ~ ; ~i t SOTq~y ;~~ ~~ Eql n :" ~BIIC ~'`' •;~ :.~ EY{u~ • 482?-7597.2353.4 39 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc , Exhibit(s) A Page 41 of 57 EXHIBITS Exhibit A: Defined Terms Exhibit B: Legal Descriptions and Street Addresses of Properties Exhibit C: Authorization Agreement -Pre-Arranged Payments Exhibit D: State Specific Provisions Schedule 8.04: Environmental Disclosures 4823-7597-2353.4 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 42 of 57 EXHIBIT A DEFINED TERMS The following terms shall have the following meanings for all purposes of this Lease: "Additional Rental" has the meaning set forth in Section 4.03. "Adjustment Date" means December 1, 2007, and every one year anniversary thereafter during the Lease Term (including any Extension Term). "Affected Party" means each direct or indirect participant or investor in a proposed or completed Securitization, including, without limitation, any prospective owner, any rating agency or any party to any agreement executed in connection with the Securitization. "Affiliate" means any Person which directly or indirectly controls, is under common control with or is controlled by any other Person. For purposes of this definition, "controls," "under common control with," and "controlled by" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise. "Anti-Money Laundering Laws" means all applicable laws, regulations and government guidance on the prevention and detection of money laundering, including, without limitation, (a) 18 U.S.C. §§ 1956 and 1957; and (b) the Bank Secrecy Act, 31 U.S.C. §§ 5311 et seq., and its implementing regulations, 31 CFR Part 103. "Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 et seq., as amended. "Base Annual Rental' means $703,339.93 "Base Monthly RentaP' means an amount equal to 111 Z of the applicable Base Annual Rental. "Business Day" means a day on which banks located in Scottsdale, Arizona are not required or authorized to remain closed. "Casualty" means any loss of or damage to any property included within or related to the Properties or arising from an adjoining property caused by fire, flood or other casualty. "Code" means the Internal Revenue Code of 1986, as the same may be amended from time to time. "Condemnation" means a Taking and/or a Requisition. "Costs" means all reasonable costs and expenses incurred by a Person, including, without limitation, reasonable attorneys' fees and expenses, court costs, expert witness fees, costs of tests and analyses, travel and accommodation expenses, deposition and trial transcripts, copies and 4823-7547-2353.4 A-1 Case 12-36693-DOT Doc 16-1 Filed 11 /26!12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 43 of 57 other similar costs and fees, brokerage fees, escrow fees, title insurance premiums, appraisal fees, stamp taxes, recording fees and transfer taxes or fees, as the circumstances require. "Default Rate" means 18% per annum or the highest rate permitted by law, whichever is less. "Effective Date" has the meaning set forth in the introductory paragraph of this Lease. "Environmental Laws" means federal, state and local laws, ordinances, common law requirements and regulations and standards, rules, policies and other governmental requirements, administrative rulings and court judgments and decrees having the effect of law in effect now or in the future and including all amendments, that relate to Hazardous Materials, Regulated Substances, USTs, and/or the protection of human health or the environment, or relating to liability for or Costs of Remediation or prevention of Releases, and apply to Lessee and/or the Properties. "Environmental Liens" has the meaning set forth in Section 8.04(a)(ii). "Event of Default" has the meaning set forth in Section 12.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Expiration Date" has the meaning set forth in Section 3.01. "Extension Option" has the meaning set forth in Section 3.02. "Extension Term" has the meaning set forth in Section 3.02. "Force Majeure Event" has the meaning set forth in Section 18.01. "Franchise Agreement" has the meaning set forth in Section 5.11. "Franchisor" means Hooters, Inc., a Florida corporation, or their successors and permitted assigns. In no event shall Franchisor mean Topeka's Steakhouse N' Saloon. "GAAP" means generally accepted accounting principles, consistently applied from period to period. "Governmental Authority" means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi governmental authority of the United States, any state or any political subdivision thereof with authority to adopt, modify, amend, interpret, give effect to or enforce any federal, state and local laws, statutes, ordinances, rules or regulations, including common law, or to issue court orders. "Guarantor" means James E. Cornett III and J. Philip Cornett, or any other additional or replacement guarantor approved by Lessor in its sole and absolute discretion. • 4823-7597-2353.4 A-2 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26!12 20:20:26 Desc Exhibit(s) A Page 44 of 57 "Guaranty" means that certain Unconditional Guaranty of Payment and Performance dated as of the date hereof between Guarantor and Lessor, as the same may be amended from time to time. "Hazardous Materials" includes: (a) oil, petroleum products, flammable substances, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances or any other materials, contaminants or pollutants which pose a hazard to any of the Properties or to Persons on or about any of the Properties, cause any of the Properties to be in violation of any local, state or federal law or regulation, (including without limitation, any Environmental Law), or are defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "toxic substances," "contaminants," "pollutants," or words of similar import under any applicable local, state or federal law or under the regulations adopted, orders issued, or publications promulgated pursuant thereto, including, but not limited to: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq.; (ii) the Hazardous Materials Transportation Act, as amended, 49 U.S.C. § 1801, et seq.; (iii) the Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et seq.; and (iv) regulations adopted and publications promulgated pursuant to the aforesaid laws; (b) asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contain dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty (50) parts per million; (c) underground storage tanks; and (d) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or which may or could pose a hazard to the health and safety of the occupants of any of the Properties or the owners and/or occupants of any adjoining property. `Yndemni~ed Parties" means Lessor, and its members, managers, officers, directors, shareholders, partners, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns, including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of the assets and business of Lessor. "Initial Term" has the meaning set forth in Section 3.01. "Insolvency Event" means (a) a Person's (i) failure to generally pay its debts as such debts become due; (ii) admitting in writing its inability to pay its debts generally; or (iii) making a general assignment for the benefit of creditors; (b) any proceeding being instituted by or against any Person (i) seeking to adjudicate it bankrupt or insolvent; (ii) seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors; or (iii) seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property, and in the case of any such proceeding instituted against any Person, either such proceeding shall remain undismissed for a period of one hundred twenty (120) days or any of the actions sought in such proceeding shall occur; or (c) any Person taking any corporate action to authorize any of the actions set forth above in this definition. 48'23-75-7-2353.4 A-3 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 1 1126/1 2 20:20:26 Desc Exhibit(s) A Page 45 of 57 "Law(s)" means any constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, policy, requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted Governmental Authority, court or agency, now or hereafter enacted or in effect. "Lease Term" shall have the meaning described in Section 3.01. "Legal Requirements" means the requirements of all present and future Laws (including, without limitation, Environmental Laws and Laws relating to accessibility to, usability by, and discrimination against, disabled individuals), all judicial and administrative interpretations thereof, including any judicial order, consent, decree or judgment, and all covenants, restrictions and conditions now or hereafter of record which may be applicable to Lessee or to any of the Properties, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the Properties, even if compliance therewith necessitates structural changes or improvements or results in interference with the use or enjoyment of any of the Properties. "Lender" means any lender in connection with any loan secured by Lessor's interest in any or all of the Properties, and any servicer of any loan secured by Lessor's interest in any or all of the Properties. "Lessee Entities" means, collectively, Lessee and Guarantor, and all Affiliates thereof. "Lessor Entities" means, collectively, Lessor and all Affiliates of Lessor. "Lessee's Knowledge" shall mean the knowledge of the Managers of Cornett Hospitality, LLC, with due inquiry. "Losses" means any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, Costs, diminutions in value, fines, penalties, interest, charges, fees, judgments, awards, amounts paid in settlement and damages of whatever kind or nature, inclusive of bodily injury and property damage to third parties (including, without limitation, attorneys' fees and other Costs of defense}. "Material Adverse E,,~ect" means a material adverse effect on (a) any of the Properties, including, without limitation, the operation of any of the Properties as Permitted Facilities and/or the value of any of the Properties; (b) Lessee's ability to perform its obligations under this Lease; (c} Lessor's interests in any of the Properties, this Lease or the other Transaction Documents; or (d) any Guarantor's ability to perform its obligations under the Guaranty. "Monetary Obligations" means all Rental and all other sums payable or reimbursable by Lessee under this Lease to Lessor, to any third party on behalf of Lessor, or to any Indemnified Party. "Mortgages" means, collectively, the mortgages, deeds of trust or deeds to secure debt, assignments of rents and leases, security agreements and fixture filings executed by Lessor for the benefit of Lender with respect to any or all of the Properties, as such instruments may be 4823-7597-2333.4._ _ _ _A-4 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 46 of 57 amended, modified, restated or supplemented from time to time and any and all replacements or substitutions. "Net Award" means (a) the entire award payable with respect to a Property by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise; or (b) the entire proceeds of any insurance required under Section 6.03 payable with respect to a Property, as the case may be, and in either case, less any Costs incurred by Lessor in collecting such award or proceeds. "OFAC Laws" means Executive Order 13224 issued by the President of the United States, and all regulations promulgated thereunder, including, without limitation, the Terrorism Sanctions Regulations (31 CFR Part 595), the Terrorism List Governments Sanctions Regulations (31 CFR Part 596), the Foreign Terrorist Organizations Sanctions Regulations (31 CFR Part 597), and the Cuban Assets Control Regulations (31 CFR Part 515), and all other present and future federal, state and local laws, ordinances, regulations, policies, lists (including, without limitation, the Specially Designated Nationals and Blocked Persons List) and any other requirements of any Governmental Authority (including without limitation, the U.S. Department of the Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to elirninate, terrorist acts and acts of war, each as supplemented, amended or modified from time to time after the Effective Date, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing, or under similar laws, ordinances, regulations, policies or requirements of other states or localities. "Other Agreements" means, collectively, all agreements and instruments now or hereafter entered into between, among or by (a) any of the Lessee Entities; and, or for the benefit of, (b) any of the Lessor Entities, including, without limitation, leases, promissory notes and guaranties, but excluding this Lease and all other Transaction Documents. "Partial Condemnation" means a Condemnation which is not a Total Condemnation. "Permitted Amounts" shall mean, with respect to any given level of Hazardous Materials or Regulated Substances, that level or quantity of Hazardous Materials or Regulated Substances in any form or combination of forms which does not constitute a violation of any Environmental Laws and is customarily employed in, or associated with, similar businesses located in the states where the Properties are located. "Permitted Facilities" means a Hooters, Max & Erma's or Topeka's restaurant, all related purposes such as ingress, egress and parking, and uses incidental thereto. "Person" means any individual, partnership, corporation, limited liability company, trust, unincorporated organization, Governmental Authority or any other form of entity. "Personalty" has the meaning set forth in Section 16.01. "Price Index" means the Consumer Price Index which is designated for the applicable month of determination as the United States City Average for All Urban Consumers, All Items, Not Seasonally Adjusted, with a base period equaling 100 in 1982 19$4, as published by the United States Department of Labor's Bureau of Labor Statistics or any successor agency. In the 4823-7597-2353:4 A-~ _ _ _ _ _ . . Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 47 of 57 event that the Price Index ceases to be published, its successor index as published by the same Goveramental Authority which published the Price Index shall be substituted and any necessary reasonable adjustments shall be made by Lessor and Lessee in order to carry out the intent of Section 4.02. In the event there is no successor index, Lessor shall reasonably select an alternative price index that will constitute a reasonable substitute for the Price Index. "Properties" means those parcels of real estate legally described on Exhibit B attached hereto, all rights, privileges, and appurtenances associated therewith, all buildings, fixtures and other improvements now or hereafter located on such real estate (whether or not affixed to such real estate). "Purchase Closing Date" has the meaning set forth in Section 17.02(b). "Purchase Offer" has the meaning set forth in Section 17.01. "Purchase and Sale Agreement" means that certain Purchase and Sale Agreement dated September 29, 2006 between Lessor and Seller with respect to the Properties. "Regulated Substances" means "petroleum" and "petroleum based substances" or any similar terms described or defined in any of the Environmental Laws and any applicable federal, state, county or local laws applicable to or regulating USTs. "REIT' means a real estate investment trust as defined under Section 856 of the Code. "Release" means any presence, release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials, Regulated Substances or USTs. "Remediation" means any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Materials, Regulated Substances or USTs, any actions to prevent, cure or mitigate any Release, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or any evaluation relating to any Hazardous Materials, Regulated Substances or USTs. "Rental Adjustment" means an amount equal to the lesser of (a} two percent (2%) of the Base Annual Rental in effect immediately prior to the applicable Adjustment Date, or (b) 1.25 times the product of (i) the percentage change between the Price Index for the month which is two months prior to the Effective Date or the Price Index used for the immediately preceding Adjustment Date, as applicable, and the Price Index for the month which is two months prior to the applicable Adjustment Date; and (ii) the then current Base Annual Rental. "RentaP' means, collectively, the Base Annual Rental and the Additional Rental. "Requisition" means any temporary requisition or confiscation of the use or occupancy of any of the Properties by any Governmental Authority, civil or military, whether pursuant to an 4823-7597-2353.4 _ A..6 Case 12-36693-DOT Doc 16-1 Filed 11 /26/12 Entered 11 /26/12 20:20:26 Desc Exhibit(s) A Page 48 of 57 agreement with such Governmental Authority in settlement of or under threat of any such requisition or confiscation, or otherwise. "Securities" has the meaning set forth in Section 18.11. "Securities Act" means of the Securities Act 1933, as amended. "Securitization" has the meaning set forth in Section 18.11. "Seller" means the Seller of the Properties, as identified in the Purchase and Sale Agreement. "SNDA" means subordination, nondisturbance and attornment agreement. "Subject Purchase Price" has the meaning set forth in Section 17.01. "Successor Lessor'' has the meaning set forth in Section 13.04. "Taking" means (a) any taking or damaging of all or a portion of the Properties (i) in or by condemnation or other eminent domain proceedings pursuant to any Law, general or special; (ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding; or (iii) by any other means; or (b) any de facto condemnation. The Taking shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the law applicable to the Properties. "Temporary Taking" has the meaning set forth in Section 11.04. "Third Party O}j'er" has the meaning set forth in Section 17.01 "Threatened Release" means a substantial likelihood of a Release which requires action to prevent or mitigate damage to the soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air or any other environmental medium comprising or surrounding any Property which may result from such Release. "Total Condemnation" means a Condemnation of all or substantially all of any Property, including a Condemnation (other than for a temporary use) of such a substantial part of such Property resulting in the portion of the Property remaining after such Condemnation being unsuitable for use as a Permitted Facility, as determined by Lessee in the exercise of good faith business judgment. "Transaction" has the meaning set forth in Section 14.01. "Transaction Documents" means this Lease, the Purchase and Sale Agreement, the Guaranty and all documents related thereto. 4823-7597-2353.4 A-7 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc . Exhibit(s) A Page 49 of 57 "U.S. Publicly Traded Entity" means an entity whose securities are listed on a national securities exchange or quoted on an automated quotation system in the United States or a wholly owned subsidiary of such an entity. "USTs" means any one or combination of tanks and associated product piping systems used in connection with storage, dispensing and general use of Regulated Substances. 4823-7597.2353.4 __ _.A-$ Case 12-36693-DOT Doc 16-1 Filed 11 /26/12 Entered 11 /26/12 20:20:26 Desc Exhibit(s) A Page 50 of 57 • EXHIBIT B LEGAL DESCRIPTIONS AND STREET ADDRESSES OF THE PROPERTIES (Legais attached) • Topekas 1776 Parham Richmond VA 23294 Rd. Hooters 7912 West Richmond VA 23294 Broad Street Hooters 1211 Huguenot Midlothian VA 23113 Rd. 4823-7597-2353.4 B-1 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 51 of 57 ~Bxx A ALL of that certain tract containing 1.3$4 acres and fronting 268.29 feet on the eastern margin of Huguenot Road (Route #147) as shown on Plat Showing 1.384 Acres of Land Lying on the East Line of Huguenot Road (Route #147), dated Tune 30, 1993, made by J. K. Timmons and Associates P.C. (the "Plat"), recorded in the Clerk's Office, Circuit Court, Chesterfield County, Virginia, in Plat Book 82, page 11, reference to which plat is hereby made for a more particular description of the property. TOGETHER with anon-exclusive easement and right-of--way for ingress and egress over upon and across: (1) that strip of land which adjoins the 1.384 acre tract on the east and is designated on the Plat as "30' Access Easement"; and (2) that strip of land which adjoins the 1.384-acre tract on the north'and is designated on the Plat as "50' Access Easement". . • 4824-8771-8401.1 Spirit/Comett Hospitality 1211 Huguenot Road Richmond, VA 5992/02-5002 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 52 of 57 That certain parcel of land in Brookland Magisterial District, Henrico County, Virginia, in the subdivision known ~as Woodlawn Farms, situated on the northern line of Broad Street Road (treating Broad Street Road as running east and west) between Colyer Street and Hungary Spring Road, with all appurtenances thereto belonging, and further described as follows: BEGINNING at a point in the northern line of Broad Street Road marked by a stone, which is distant eastwazdly twenty (20) feet from the point where the. eastern line of Colyer Street projected southwardly would intersect the northern line of Broad Street Road projected westwardly, and from said point of beginning extending along the said line of Broad Street Road in a eastwardly direction along the course south 36 degrees 20 minutes east and fronting thereon one hundred-eighty (180) feet to a point; thence leaving said line of Broad Street Road in the direction north 45 degrees, 59 minutes east three hundred twenty (320) feet to a point in the southern line of Fountain Avenue; thence with the said line of Fountain Avenue north 36 degrees 20 minutes west one hundred eight (180) feet to a point marked by a stone; thence in a curve to the left, the arc of a circle, having a radius of seventeen and forty-eight one hundredths (17.48) feet, a distance of twenty-nine and eighty one hundredths (29.80) feet to a point in the eastern line of Colyer Street mazked by a stone; thence with the said line of Colyer Street south 45 degrees 59 minutes west two hundred eighty feet (280) to a point having a radius of twenty-two and eighty-eight one hundredths (22.88) feet, a distance of thirty-two and eighty-seven one hundredths (32.87) feet to the point of beginning, and being Lots 1 and Z, Block B, as shown on a certain map entitled "Woodlawn Farms Henrico Co., Va.", dated November 24, 1953, made by Chas. H. Fleet Assoc., Civil Eng'r & Surveyors, a copy of which is duly recorded in the Clerk's Office of the Circuit Court of the said County of Henrico, in Plat Book 23, pages 153, 154, and 155; containing 1.45 acres, more or less, all as shown on that plat of survey prepared by William J. Schmidt & Assoc., Engineers & Surveyors, dated February 19, 1988, entitled "PLAT OF IMPROVEMENTS ON LOTS 1 & 2, BLOCK `B', WOODLAWN FARMS, HENRICO COUNTY, VIRGINIA". • 4852-5766-2977.1 SpiriUComett Hospitality 7912 WestBroadStreet Richmond, VA 5992/02-5003 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26!12 20:20:26 Desc Exhibit(s) A Page 53 of 57 ALL that certain tract or parcel of land, together with buildings and improvements thereon and appurtenances herewith, lying and being in the Tuckahoe Magisterial District of Henrico County, Virginia, more particularly described as follows: Parcel "C", comprising an area of 1.4067 acres, shown an a plat prepared by Charles E. Ross, Certified Land Surveyor, dated October 10, 1977, a copy of which plat was recorded in the Clerk's Office of the Circuit Court of Henrico County, Virginia, on October 14, 1977 in Deed Book 1731, page 1793. Also show by metes and bounds on plat of survey prepared by Landmark fleet Surveyors, P.C., dated October 16, 2006, as Job Number 19423, as follows: Beginning at a stone found, said stone found being along the north line of North Pazham Road at the Northeast corner of the intersection of North Pazham Road and Starling Drive, thence along a curve to the right 39.27 feet to a '/z inch rod set, said curve having a radius of 25.00 feet, a chord bearing of South 63° 22' 00" West, a chord distance of 35.36 feet; thence North 71° 38' 00" West 242.00 feet to a nail set; thence North 18° 22' 00" East 230.00 feet to a nail set; thence South 71° 38' 00" East 267.00 feet to a S/8 inch rod found; thence South 18° 22' 00" West 205.00 feet to a stone found, being the point and place of beginning, containing 1.4067 acres or 61275.8 square feet of land. • 4851-5509-9137.1 Spirit/Comett Hospitality 1776 No. Parham Road Richmond. VA 5992/02-5010 Case 12-36693-DOT Doc 16-1 Filed 11/26!12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 54 of 57 EXHIBIT C FORM OF AUTHORIZATION AGREEMENT -PRE-ARRANGED PAYMENTS [See attached form] • • 4823-7597-2353.4 C-1 - Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 55 of 57 • • AUTHORIZATION. AGREEMENT PRE-ARRANGED PAYMENTS Reference Number I (We) (Tenant) authorize Midland Loan Services, Inc., (servicer) to initiate entries identified below as required. Tenant further authorizes the bank below to post such entries to the identified checking account beginning with the payment draft date of / / A minimum of thirty (30) days advance notice is required to process first payment by ACH. Bank Name Branch City State Zip ***Transit -ABA + `~ Account Number Information ACCOUNT TYPE*** Please specify checking or savings account (CIS) PLEASE FILL IN BANK INFORMATION CAREFULLY A CH VO ED K FOR A N Automatic debits will be made on the payment due date establlshea oy me relevant lease documents, or the next subsequent business day if such date is not a business day. This authority may be terminated upon thirty days prior written notification from the tenant to the servicer. Tenant has the right to stop payment of any entry by notification to the bank prior to the scheduled debit date. If an erroneous entry is initiated by the servicer to the tenant's account, tenant shall have the right to have the amount of such entry reversed by the bank. To initiate a reversal, the tenant must notify the bank in writing that. an error has occurred and. request a reversal. Such notice must be within 15 calendar days after the tenant receives the statement of account or other written notice from the bank identifying the error. Tenant hereby authorizes the servicer to impose a $60.00 returned item processing fee, subject to change, via ACH debit against the above-referenced account of the tenant if a non sufficient funds or stop payment item is char e Tenant Name(s) Date the serv~cer's account. Taz Identification Number Authorized Name Authorized Signature (Print Authorized Name Signature Contact Phone Number, Faz Number Address: Return Original to: Midland Loan Services, Inc. Attn: Portfolio Servicing PO Boa 25965 Shawnee Mission, KS 66225-59b5 Faa Number: (913) 253-9001 4828-3082-7008.1 Spiritt File No Case 12-36693-DOT Doc 16-1 Filed 11 /26/12 Entered 11 /26/12 20:20:26 Desc Exhibits} A Page 56 of 57 • EXHIBIT D STATE-SPECIFIC PROVISIONS None. • • 4823-15Y1-2353.4 D-1 Case 12-36693-DOT Doc 16-1 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) A Page 57 of 57 SCHEDULE 8.04 ENVIRONMENTAL DISCLOSURES None. • • Schedule 8.04 4823-7597-2353.4 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 59 of 137 AMENDMENI TO MASTER LEASE AGREEMENT THIS AIVIENDMENT TO MASTER Y,EASE AGREEMENT (the "Amendment"} is made and entered r`nto effective. as of.Jar~traty ~; 2007, by and between SPIRIT I1~AS'TER FUNDING III, LLG, a Delaware limited liability company ("Lessor"~, and CORNETT IIOSPITA)r,TTY, LLG, a Virginia Iirnited liability company ("L~") Lessor and Lessee entered into that certain lViastei Lease Agreement .dated es of Nvverttber 22, 2046 (the ``Lease'd with respect to the real properly and impiovements mote particularly described in the Lease, Terms not defined in this Atnendmerit have the mesnittgs given to them in the Lease.: Lessor and Lessee wish to modify the Lease as described in this Amendment... In consideration of'the foregoing recitals and other good and valuable consideration, the receipt of which is hereby acknowledged; Lessor and Lessee agree as follows- l Properties,. Exhibit B of the Lease is heteby amended to include and all references to the term "Properties" in the Lease shall be deemed to include those certain real properties more particularly described in Schedule I attached hereto. 2 Baae Annual Rectal. I he definition of "Base Annual Rental" in Exhibit A of the Lease is hereby deleted in its entirety and. the fallowitrg is hereby substituted in lieu thereof: "Base Annual Rental" means $1,021,498 29 3. Ratification,. Except as expressly stated het ein, the Lease shall remain in full force and effect. If there is any conflict between the Lease and the terms of thin Amendment, the terms of-this Amendment shall control. [Remainder of Page Intentionally Left Blank) 4811-Or5b-82511 SpiridCorhett Iiagpiielity 5992/02-5000 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 60 of 137 1N WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of'the Effective Date I,F,;CRf1R SIATE OI ARIZONA ss COUNIY OF MARICQPA ) $Pr Deli sy: I itte: Senior Vice President the ~ instrument was acknowledged before me ors- Ianuary ~2, 2007 by Senior Vice President of SPIRIT MASTER FUNDING III, LLC, a Delaware limited liability company, on behalf`of the limited liability company.. rJ Notairy Public My Commission Expires; ? ~a ~ 4811.0156-8257 r S:piriUCometr Hospitnllty 5992JtY2-5000 ~...r..~.a.~ ~,,...._.~...... C,< ~GtALSEAL l~iEC~Y NELSON ~~~ 1~oiAflY PUBtIC - e: of Arizon8 MAiiiCOpA COUNTY My Comrt~. Expires ARr1130, 2010 2 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 61 of 137 IN WIINESS V~HERBOP, the parties hereto have caused this Amendment to be duly executed ss of the Effective Date LESSEE: CURNF.'Cli Hf)fSPI'IrAL)CTY, LLC, a Vilgirla. limited liab it + eomgar-y By: Printed N Iitle:. __ -- STATE OF __ Virginia )ss K1'm~Yl~l1C~F/ City of Richmond ) the foregoing mstrtunent was aclalowledged before me on )anualy ~ 2UU7 by J. Philip Cornett as Chairman. of C0 HUSPf'I' L~fiX, LLC, a Virginia limited Liability c~paay, on behalf of the company i+tot Public My Commission Expires: ~~ D~ `~,,........,. CJ may.. nf~ ' ~ 8(.!C 4$11-0136-B25~.1 SpiriYCorneti E~spitslity 5992!42-5000 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 62 of 137 Acknowled nt Guata~itor IN WTI'NESS V~HEREOF, Guaaantor hereby acknowledges this Amendment to be duly executed as of'the Effective Date. J. PHTLIl' CORNETT STATE OF ~- ~ COUNTY OF ~ ~ $Y PiintedlVam The foregoing instrument was acknowledged befai~e me ort January) i, 200'7 by J Philip Cameo.,. N©taty Public :vly commission Expires: ~~ 4844-1201-0913.2 Spizit! Cornett Hospitality Gnnranty FiSe No 599Zl02-5000 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23!12 Page 63 of 137 Acknowledgment by Guarantor IN WITI~TESS 'VVi~ItEOF, Guaz~antor hereby acknowledges this Amendment to be duly executed as of the Effective Date, JAMES E, CORNETT, III By: STAIE OF ~A ) ~SS CUUNTYUF ~'f"'~~~ 1 III. the foregoing instrument was acknowledged befor~a.gn January 19, 2447 by .Tames E Cornett, My Commission J?xpires: ~ fj$~~ c(, NA1Mtfr1 PubNo ~a ~ hay Comraiaslon T to Nlemti~r Aennaylvanla Assoda+.~sr ~ A;pindas A&i4-120.10413.2 Spirit / Gotnett iiaspitality Guaranty Fire Nn 5992102 5000 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 64 of 137 SCHEDULEI LEGAL DESCRIPTIONS AND SIREEI ADDRESSES OF THE PROPERTIES (Legals attached) Location 1D Ptvpe;`ty Address City State Zip Hooters 6035 Carli$le Pike Mechanicsburg PA 17050 Hooters 4G27 WOliamson Road Roanoke VA 24012 4$ i !•0756.8257 1 SpiritlCornett Hospitaliry 599'2102-5604 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 65 of 137 ~IBYT A ALI,IHAT G`LRZ~AIlrt piece of parcel of lead inHampdeu Iownship, Crxmbesland County, I'ennsyIvania, bounded and described n accordance ~a+ith a sutveq made by D P Raffensbuzgei, Registered Sruveyoz, dated Qetobes I4, 1954, as follows, to wit: BEGII~iING at a point at the northern edgy of Carlisle Pike (Routs 1.1) vyhich point is Nom sixty-two degrees Went (N 62 deg ~ a distance of sevesr hut~red ninety (79f1) fed fiom t$e dividr~g Line between. other lead now oz late of William. H Nelson and lands zrow of late of Stewart IViyers; thence North twenty-eight iiegrees East {N 28 deg E} a distance of $uee bandied (300) feet to a point; thence South sixty-fovo degree$ Fast (S 62 deg.. E) a distance ai two handcar (240) fete to a poi theuee Soa~th tvVenty~ight degrees West {S 2$ deg ~ ~ distance of tlur~ hundred. (3Q0~ feet. tsi a. poiitt.at the ngrthetu edge of'the Carlisle Fike (Route 11); thence along ~e northern edge ofthe Carlislel~ce (Route 1I) ~ North sixtyfivo degtces '1lTest (N 62 d.eg.. W) a distance of itivo luindisd (2d0) Feet to ~ po'mt, the place of BEGINNING COI~ilAIN'INt3 a frontage of two hundred (200) feet on the northern edge of the said CailislePike {Route 11) and extending heels at even width a distance of three hundred (300) feet. BEING known as &035 Carlisle.. Pike BEINC3 the same promises which Ft+nske Track Leasing Co. , L P. ley Deed dated Jar-uazy 2 U, 2Q02 end recordedFebruary 1, 2002 in 13eed Book 250 page 1121, granted and ooaveyed urrto Knsic Capital Cnoztg, I'V, I.I, C , itz fee i i f r i 3pix3LjCornett tfospita33ty 15035 Car3is3.e Pike, Mechanicsburg PA 17060 599Z/02-5001 Case 2:12-cv-02270-FJM Document 1-1 Filed 10/23/12 Page 66 of 137 ALL that certain lot or parcel of land lying and being in the City of Roanoke, Commonwealth of Virginia, and being mote particularly described as follows: PARCEL ONE: BEGINNING at an iron on the easterly side of Williamson Road located South 3S degrees 47' Fast 100.0 feet finzn the intersection with the southerly side of Oaklawn Avenue, N. W., said point being the northwesterly corner of the said Smoker property aad being also corner to Fxalin & Grasse pznperty; thence with the line between said pznpezties North 62 degrees 47' East 170.0 feet to a z~alr'oad spike; thence with the easberly line of the Fzalin & Chasse property North 35 degrees 47 West 100..0 feet to an iron on the southerly side of'Oals]awn Avenue, N. W.,; thence with the southerly side of`Oaklawn Avenue, N . W., North 62 degrees 47' East 43..65 feet to an irnn; thence still with Oak'Iawn, N., oV., South 27 degrees 13' Fast S..OO feet to an iron; thence still with Oaklawn Avenue, N. W., North 62 degrees 47' East 50..00 feet to an iron; thence with the westerly line of'Lot 1 of'the lingram Building and Supply Co Snbd.. South 27 degrees 19' East 185.85 feet to an izrni; thence with the northerly line of Lot 34 of the Mountain Scenery Subdivision, South 62 degrees 47' West SO feet to an izon on line of Lot 37 of sa{d subdivision; thence with the line o#'Lot 37, North 27 degrees 13' West 10.,$5 feet to an iron at the northwesterly coxi7er of Lot 37; thence with the southerly line of the Smoker .property and the northerly line of said Lot 3'7, South 62 degrees 47' West 186.50 feet to an iron an the easterly side of Williamson Road; thence with the easterly side of Williamson Road North 35 degrees 4'7' West 82..03 feet to the beginaing and containing 28.496 square feet, 0..654 acre„ PARCEL TWO: BEGINNING at an imn at the. intersection of the easterly side. of Williamson Road with the southerly side of` Oaklawn Avenue, N. W,, N. 62 degz~ees 47' E.. 170,;0 feet to an iron; thence with the easterly line of the Lean. C.. Smoker Property S.. 35 degrees 47' E. 100.0 feet: to an imn; thence S:. 62 degrees 4'7' W. i 70:0 feet.: to an iron on the easterly side of Williamson Road; thence with the easterly side of Williamson Road N. 35 degrees 47' W.. 1OO..U feet to the BEGILVNJNG and containing 16,810 square feet, 0,386 acre. 4813-3015-6033 1 SpiritlCornett Hospitality 4627 williaimon Road Roanoke, VA 5992/02 5004 E~:HIBIT B Case 12-36693-DOT REALTY ~AVET~.- OCtObBt' 12, 2412 Doc 16-9 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) G-J Page 18 of 24 ~.~Y~DA3~]!jUTT+~E TQ~'AY OR Corslett Hasgitality, LLC X124 Staples Nliil Read, 5~xite 300 Richmond, Virginia 23230 Attu: James E. Cornett, TQ anti J, Phillip Cornett Spotts Fain PC 411 E. Franklin Street, Suite b00 Richmond, ~tA 23219 Attn: Meade A. Spc-tta, Esq: I'4u are hereby notified that is accordance- with -that ce~rtsin Master Lease Agta~ by and betwcen Spirit'Master Funding -III, TIC and Coxttett ~IOspitality, LLC, dated November 2$, .2006, as a~me~rded and. supplemented tc~ data (as amended and suppler, the "1Vlaata; Lease'; tirerc is now dtu and unpaid base rent, late feces, defaulf interest. and property taaces in tJie arne~unt c-f 1# ' - far the proppties more fully descxt~ed in the Master I.eas~e for wlsioh you bald poasession. Capitatixed farms not otherwise defined in this native shall have the meanings set forth in the Master I,eaae. You are fiu'tt~e~ notif [xi That, within fiwe ~5) days after ser~±iee of this rice on you, yon. must pay the amount ststerl above, or surrender possession of the frees to the undasigrted. Payment -must. be made to "Spirit Master Winding III, LI,C" as follows: Y1u ~Vi~e Trsu~er• Bak Name. PNC Bank, N:A. .ABA: 043004096 Credit: Midlaud'~Vire Account Acct ~: I006967~47 Reference: 03025918b Tf you fail to -pay the monetary obligations or to sturender possession of the. Premises within f ve (Sj days, the undersigned will commence Iegal pt~oceedings vau_ a~g ~u~ to recover possession of doe Premises, to'declare the Agreements forfeited, aTtd ~ recover a judg~e'rtt f'or tIu amount of the mbnctary obligations aaddamsages for your unlawful deienti.©n of the Premises.. Only FULL PAYM(RNT of the monetary obli~etions demanded. in this IVotc~e will waive Lessor's right to poa~ession of the Prer>sisc~ under this Notice, unless Lessor agrees, itr vKriting, to con#inue to-allow possession in exchange :far receiving partial payment. LESSiOR: SPIitX'I' MASZ'EI~t FCTI'-iDliP+tfi~ Vii, LLC By: SPIRIT REALTY CAPITAL, as Property Manager By: ~ .~-fol.- ~ d' ~ Sean. Hufford __.. Vice President sp~rttraalty.aam _ _ _ 14631 N. SCOTTSDAL.E RD.. S7F:2~0 8C0'fTSt}A1~~,/4285264 pNONF <$Q:60&.D82f1 FAX 48D:b06:0826 EXHIBIT C Case 12-36693-DOT Doc 16-9 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) G-J Page 22 of 24 Novembers 2, ZOl2 Coraatt Hoapitnlity, LLC 2120 Maples Mill Road, Suite 300 Richmond, Virginia 23230 Attn: James E. Cornett, III and 1. Phillip Cornett Spotts Fain PC 411 E. Franklin Street, Suite GOU Richmond, VA 23219 Attn:.Meade A, Spotts, Esq. NOTIGE QF TELtiVIINA.TIUN ~F LEASE .AND NUTICE ~F ACCELEItATIU1'+1' OF II~1'DEBTEI)NESS Xou are hereby notified that- pursuant to Section 12.02(a) c~£ that certain Master Lease A-t by and betweenn-Spun Master Funding TII, LLC (s`I.,essor") and Cornett Hospital{ty, LLC ("Lessee"), dated Na~nber 28, 20Qb, as a~xiegded end. sIumeut~d to date (as wed and supplemented, the "Master Lease"}, Lessof is h+~eby gating. the Leese with to those Properties listed on Schedule Z to this lett+~ (the `~'et~ina~d Propert+~"}, eve immediately, Capitalized teens riot otherwise defined in thi,$ notice shall have the mea~-gs set. forth in the Master Lease. Lessor delivered notice to Lessee an or about t3otober i2, 201.2,, that Lessee, failed to pray base rent, late fees, default interest and non-su~acient funds fees iu the asnouztt of "~ 4~ f+ox the properties more -fully descxib+ed in the Master Lease far which you hold possession. Zessc~e failed to pay such amount, sad as a rasnlt, Lessor is e~eceising its rexr-edies unclear the MaEster Lease with respect to the Terminated. Properties. Lessee rt~ust vacate the Terminated Properties immediately. In the event .Lessee doffs not imme~diatt~y vacate the Tcnininated Properties, Le~ir may e~erci~ any additional remedies available to it under the Iwiasteor Lease, at l;sar, or in equity. L,ossor does not, by operation of-this notice ar cstherwi$e, waive auy right to amounts ciao from Lessee, or damages ra3ated to Lessee's obligations under, the Master Lease, or any remedy to mover sueh amounts or dentages> As a result of an Event of L3efault oct~rring under the 1VTaster Lease, Lessee is slats in default curler (i} Section. 1 p(e} of that. certain Mortgage Loan A,gr~eecnent dat®d Naveruber 28, 20~ between Lessor (as suer iri .interest to Spirit 1~inance Acquisitions, LLC) and. Lessee {the "3M Laan Agreement"}, (ii} that certain P'rcm~issary I+Totc in the ,principal. amount of ~3,t10U,044.U0 elated November 2, 200b, e~tecut~i by Lessee in favor of Spirit FXna~nce Aoquiaifi%ons, LLC (and su6sequerxdy assigned to Lessor as its successor: in intexest) (the "3M Note"j, (iii} Section 2 0(e) flf that certain: Mortgage- Lose t~grcement dateii August i6, 2007 __ 315zssl.r~~2zs7a-coca Case 12-36693-DOT Doc 16-9 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc Exhibit(s) G-J Page 23 of 24 between Lessor (as successor in interest w Spirit Finance Acquisitions, LLC) and Lessee (the "1.4M Loan Agreement"), (i~') that certain that certain Pmrnissary ~i`t~te in the principal amount of $1,4U4,OQ0.00 dated August 16, 20Q7, executed b}' Lessee in favor of Spirit Finance Acquisitions, LLC (and subsequently assigner tv Lessor as its sttcxr ~n interest) (the. "1.411 Note"}r (v} Section 1Q(e} of that certain Term Loan Agreetnrnt dated November ?8, 2UOG between Lessor (as successor in interest to .Spirit Finance Acquisitions, LLG) and Lessee (the "1M Loan Agreeettnent"}, amd (vii that. certain promissor~~ Note in the principal amount of $1.OU0,000.00 dated 3~oti~cmber 28; 2006, executed by Lessee in favor of Spirit ~is~tt Acquisitions, LLC (and subsequently assigned to Lessor as its successor in intermit} Note"). L r t i . ? f . ` ~ r . y . _ r_ ___~_..t:.s ....a~^,,:~+,, .,,.i.~,r *~t ©# an e 1 l., l d kgX.~• Lessor does not, by c~aeration of this notice of otherwise, weave an}{ rigtst to eny remedy available to Lessor trader the. Master Lease, the 3M Lean Asreement, the 3~I dote, the l .4M Loan p,greernent, the 1.411~I Note, the 11VT Loan Agreetnertt., the 1M'~+1ote or at Taw or in .equity: LES~Sf~R: SPA A~ASTEIt F[lIND1filG III,. LLC Bt': SPIRIT RFA1.T`x":Cr'~PIT'AL, L1i+G, as P'r+tzpert~ Aia~nager By; Sean Tiufford; Vice President Case 12-36693-DOT Doc 16-9 Filed 11/26/12 Entered 11/26/12 20:20:26 Desc ' Exhibit(s) G-J Page 24 of 24 • ~ ~~ ~ermfnsted Prsrn+~rtiies • 'Ta~e~as 17'76 Parham Riehzaond 'VA 23294 iRcL Haaters 7912 West Ricf~mond 'VA 23294 I3ra~d Street Hao#.ers 211 Ht~gueaat Mldlothhen 'VA 231;13 Rte. ;Ranters GU3:4 Carliele'P'ittt,+ ' A'Iediaeri~3-b~ PA _ l;4"4tS0 - .Roatere 4b27 ~Y~lismsv~n Rer~cl `ltoa~v~c YA 2dQi2 • E~:HIBIT D ' Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main Document Page 1 of 7 Christian K. Vogel (VSB No. 75537) LeClairRyan, A Professional Corporation Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia 23219 (804)916-7198 and Craig S. Ganz, Esq. (Admitted Pro Hac Vice) Tyler J. Carrell, Esq. (Admitted Pro Hac Vice) Gallagher & Kennedy, PA 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016 (602) 530-8080 Counsel for Spirit Master Funding III, LLC IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION IN RE: Cornett Hospitality, LLC, Chapter 11 Case No. 12-36693-DOT Debtor. Spirit Master Funding III, LLC, Movant, v. Cornett Hospitality, LLC Respondent. 1. This matter came before the Court through Spirit Master Funding III, LLC's ("Spirit"), Motion for Relief of Automatic Stay (the "Motion"), filed on November 26, 2012 at Docket No. 3193997v1/22874-0001 Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main Document Page 2 of 7 16.' 2. The Motion sought relief under 11 U.S.C. § 362(d)(1) and (2) to remove Cornett Hospitality, LLC (the "Debtor") of its improper possessory interest based on the position that the Lease Agreement between the parties was terminated pre-petition by Spirit. 3. The Motion states that Spirit terminated the leases relating to the following properties: (1) 1776 Parham Road, Richmond, VA 23294; (2) 7912 West Broad Street, Richmond, VA 23294; (3) 1211 Huguenot Road, Midlothian, VA 23113; (4) 6035 Carlisle Pike, Mechanicsburg, PA 17050; and (5) 4627 Williamson Road, Roanoke, VA 24012 (collectively, the "Terminated Properties"). 4. The Motion states that Spirit is prepared to re-let most, if not all, of these Terminated Properties and that such an act will mitigate the damages to Spirit and lower its impending claim in this proceeding. 5. Spirit sought, and was granted an expedited evidentiary hearing on its Motion, by and through this Court's Order Setting Expedited Hearing on Motion (the "Expedited Order"), entered on November 28, 2012 at Docket No. 24. 6. The Expedited Order set an evidentiary hearing for December 5, 2012 at 2:00 p.m. before this Court (the "Stay Relief Hearing"). 7. Frior to the Stay Relief hearing Spirit filed the Declaration of Sean Hufford in Support of Motion for Relief from Automatic Stay (the "Hufford Declaration"), on December 3, 2012 at Docket No. 40. 8. The Hufford Declaration authenticated the relevant documents set forth in the Motion. 'Undefined capitalized terms shalt take their meaning as ascribed in the Motion. _ __ _ _ _ .. ........... .. 3193997v1/22874-0001 _ 2 _ ' Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main Document Page 3 of 7 9. On December 4, 2012, Hooters of America ("HOA") filed its Motion for Joinder of Hooters of America, LLC, in Support of Motion for Relief from Automatic Stay by Spirit Master Funding (the "Joinder") at Docket No. 42. 10. The Joinder indicated that the Debtor was improperly operating certain locations, including the Terminated Properties, as a Hooters franchise based on a now expired, but not renewed, agreement. HOA indicated in the Joinder that they have asked the Debtor to cease and desist from continuing these improper operations. l 1.On December 4, 2012, the Debtor filed the Debtor's Opposition to Motion for Relief from Stay (the "Opposition") at Docket No. 44. 12. The Opposition admitted the following pertinent facts occurred prepetition (collectively, the "Debtor Admissions"): a. The Debtor was in monetary default of the Lease Agreement. Opposition at ¶33. b. Spirit was entitled to terminate the Lease Agreement. Opposition at ¶34. c. Debtor received the Pay or Quit Notices. Opposition at ¶35. d. Debtor failed to cure the monetary defaults. Opposition at ¶37. e. Debtor received the Notice of Termination by mail and via electronic email. Opposition at ¶38. 13. At the Stay Relief Hearing this Court heard oral argument and noted the Debtor Admissions. 14. Counsel for the Debtor's only basis to deny the Motion relied solely on the position that Spirit had failed to provide proper notice of termination under the Lease Agreement. Specifically, 3193997v1l228~4-0001 _ 3 _ ` Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main • Document Page 4 of 7 Debtor's counsel argued that Spirit failed to send the Notice of Termination certified mail with a request for return receipt. 15. In response Spirit stated that this was the first time the Debtor had raised this issue and the Debtor had previously conceded receipt of the Notice of Termination by mail and electronically in its Opposition at ¶38. Counsel for Spirit represented to the Court that the Notice of Termination was in fact provided by certified mail with return receipt, consistent with the terms of the Lease Agreement. 16. This Court then asked Spirit to lodge with the Court evidence that it complied with the Lease Agreement and provided the Notice of Termination through certified mail and return receipt. 17. The Court further requested that Spirit provide this evidence along with a proposed order and if, in the Court's sole discretion, an additional evidentiary hearing was necessary; such evidence would be heard on January 7, 2013, at 11:00 a.m. in this Court (the "Final Evidentiary Hearing") 18.One day after the Stay Relief Hearing, the Court received the Declaration of Janet L. Vigorito in Support of the Motion for Relief from the Automatic Stay (the "Vigorito Declaration"), filed on December 6, 2012, at Docket No. 54. 19. The Vigorito Declaration contained the following pertinent information relating to the Notice of Termination: a. On November 5, 2012, Ms. Vigorito sent a cover letter along with the Notice of Termination via certified mail to the Debtor at the address set forth in the Lease Agreement, with return receipt requested. A true and correct copy of the cover letter and Notice of Termination sent to the Debtor was attached to the Vigorito Declaration as Exhibit A. The cover letter accompanying the Notice of Termination references that the documents were sent certified mail and __ _ _ 3193997v1/22874-0001 _ 4 _ a • Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main Document Page 5 of 7 references the certified mail identification code with the last four digits of 3845. b. On November 5, 2012, Ms. Vigorito sent a cover letter along with the Notice of Termination via certified mail to Spotts Fain PC, at the address set forth in the Lease Agreement, with return receipt requested. A true and correct copy of the cover letter and Notice of Termination sent to Spotts Fain PC was attached to the Vigorito Declaration as Exhibit B. The cover letter accompanying the Notice of Termination references that the documents were sent certified mail and references the certified mail identification code with the last four digits of 3838. c. On November 9, 2012, Ms. Vigorito received an electronic return receipt confirmation from the United States Postal Service that the package sent certified mail with a certified mail identification code with the last four digits of 3845 was received and signed for at the address listed for the Debtor in the Lease Agreement. A true and correct copy of the electronic return receipt for the Debtor was attached to the Vigorito Declaration as Exhibit C. d. On November 9, 2012, Ms. Vigorito received an electronic return receipt confirmation from the United States Postal Service that the package sent certified mail with a certified mail identification code with the last four digits of 3838 was received and signed for at the address listed for Spotty Fain PC in the Lease Agreement. A true and correct copy of the electronic return receipt for the law firm of Spotts Fain PC was attached to the Vigorito Declaration as Exhibit D. 20. The Vigorito Declaration presented to the Court has satisfied its concern as to whether the Lease Agreement was properly terminated pre-petition with notice through certified mail and return receipt. 3193997v1/228~4-0001 _ _ - 5 - Case 12-3fi693-DOT Doc fi3 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main • Document Page 6 of 7 Based on the Motion, the Joinder, the Declaration of Hufford, the Declaration of Vigorito, the arguments presented at the Stay Relief Hearing, and good cause appearing, it is hereby ORDERED as follows: A. Good cause exists under 11 U.S.C. § 362(d)(1) for granting Spirit relief from the automatic stay as requested in the Motion; B. The Motion is GRANTED; C. The 14 day stay period under Bankruptcy Rule 4001(a)(1) i s waived based on the expedited nature of the relief sought by Spirit; D. Upon entry of this Order Spirit may commence any and all lawful actions to dispossess the Debtor of its possessory interest in the Terminated Properties; and E. In light of the additional evidence provided by Spirit the Final Evidentiary hearing is hereby vacated. ENTERED: Dec 13 2012 /s/ Douglas O. Tice Jr. UNITED STATES BANKRUPTCY JUDGE WE ASK FOR THIS: Entered on Docket: Dec 14 2012 /s/ Christian K. Vogel Christian K. Vogel (VSB No. 75537) LeClairRyan, A Professional Corporation Riverfront Plaza, East Tower 951 East Byrd Street, Eighth Floor Richmond, Virginia 23219 (804) 916-7198 and Craig S. Ganz, Esq. (Admitted Pro Hac Vice) Tyler J. Carrell, Esq. (Admitted Pro Hac Vice) Gallagher & Kennedy, PA 2575 E. Camelback Road, Suite 1100 3193997v1/22874-0001 _ ___ _ - 6 - _ __ Case 12-36693-DOT Doc 63 Filed 12/14/12 Entered 12/14/12 12:09:39 Desc Main - - Document Page 7 of 7 Phoenix, Arizona 85016 (602) 530-8080 Counsel for Spirit Master Funding III, LLC Pursuant to LBR 9022-1, I hereby certify that true copies of the foregoing has been endorsed by and/or served upon all necessary parties. Counsel Robert B. Van Arsdale Office of the United States Trustee 701 East Broad St. Suite 4304 Richmond, Virginia 23219 Assistant United States Trustee Christian K. Vogel LeClairRyan, A Professional Corporation Riverfront Plaza, East Tower 951 East Byrd Street, Eighth Floor Richmond, VA232 ] 9 Counsel for Spirit Master Funding III, LLC Craig S. Ganz Tyler J. Carrell Gallagher & Kennedy, PA 2575 E. Camelback Road, Suite 1100 Phoenix, Arizona 85016 Counsel for Spirit Master Funding III, LLC Bruce E. Arkema 1JurretteCrump PLC 1111 East Main Street, 16th Floor Richmond, VA 23219 Counsel for Cornett Hospitality, LLC __. __ 3193997v1/228740001 - 7 -