Document:

ex10-7.htm

Exhibit 10.7

 

MASTER

LAND AND BUILDING LEASE

 

(Pool A)

 

between

 

 

DBMFI LLC,

a Delaware limited liability company,

 

as LANDLORD

 

and

 

 

MORGAN’S FOODS, INC.,

an Ohio corporation

 

as TENANT

 

 

December 9, 2011

 

 

MASTER LAND AND BUILDING LEASE

  

  

INDEX TO MASTER LAND AND BUILDING LEASE

 

 

	ARTICLE 1   	 	DEMISE OF PREMISES	 2
	 	 	 	 
	ARTICLE 2	 	TERM	 2
	 	 	 	 
	ARTICLE 3	 	RENT	 4
	 	 	 	 
	ARTICLE 4	 	USE	 8
	 	 	 	 
	ARTICLE 5	 	PERFORMANCE OF OBLIGATIONS; ACCEPTANCE OF DEMISED PROPERTIES	 8
	 	 	 	 
	ARTICLE 6	 	ALTERATIONS	 9
	 	 	 	 
	ARTICLE 7	 	REPAIRS AND MAINTENANCE	 10
	 	 	 	 
	ARTICLE 8	 	COMPLIANCE WITH LAW	 11
	 	 	 	 
	ARTICLE 9 	 	
DISCLAIMER AND INDEMNITIES

	 11
	 	 	 	 
	ARTICLE 10 	 	
INSURANCE

	 13
	 	 	 	 
	ARTICLE 11 	 	
DAMAGE OR DESTRUCTION

	 16
	 	 	 	 
	ARTICLE 12 	 	
EMINENT DOMAIN

	 16
	 	 	 	 
	ARTICLE 13	 	
FINANCIAL COVENANTS OF TENANT

	 17
	 	 	 	 
	ARTICLE 14 	 	[Intentionally Omitted]	 19
	 	 	 	 
	ARTICLE 15	 	EVENTS OF DEFAULT	 19
	 	 	 	 
	ARTICLE 16	 	FORCE MAJEURE	 23
	 	 	 	 
	ARTICLE 17 	 	
NOTICES

	 24
	 	 	 	 
	ARTICLE 18 	 	ACCESS	 25
	 	 	 	 
	ARTICLE 19	 	SIGNS	 25
	 	 	 	 
	ARTICLE 20	 	IMPROVEMENTS, BUILDING EQUIPMENT AND RESTAURANT EQUIPMENT	 26
	 	 	 	 
	ARTICLE 21 	 	END OF TERM; HOLDING OVER	 27
	 	 	 	 
	ARTICLE 22 	 	
TENANT ASSIGNMENT AND SUBLETTING

	 27
	 	 	 	 
	ARTICLE 23	 	FINANCINGS	 30
	 	 	 	 
	ARTICLE 24	 	ESTOPPEL CERTIFICATE	
32

	 	 	 	 
	ARTICLE 25 	 	RECORDING	
32

	 	 	 	 
	ARTICLE 26 	 	APPLICABLE LAW; WAIVER OF JURY TRIAL	
32

	 	 	 	 
	ARTICLE 27	 	LIABILITY OF PARTIES	
33

	 	 	 	 
	ARTICLE 28	 	ATTORNEYS’ FEES; EXPENSES	
33

	 	 	 	 
	ARTICLE 29	 	ENVIRONMENTAL 34	 34
	 	 	 	 
	ARTICLE 30 	 	LANDLORD ASSIGNMENT 36	 36
	 	 	 	 
	ARTICLE 31	 	REPLACEMENTS 37	 37
	 	 	 	 
	ARTICLE 32	 	[Intentionally Omitted] 41	 41
	 	 	 	 
	ARTICLE 33	 	LANDLORD’S RIGHTS UNDER LEASE	 41
	 	 	 	 
	ARTICLE 34	 	[Intentionally Omitted]	 42
	 	 	 	 
	ARTICLE 35	 	[Intentionally Omitted]	 42
	 	 	 	 
	ARTICLE 36 	 	INTERPRETATION; MISCELLANEOUS	 42

 

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

	ARTICLE 37	 	QUIET ENJOYMENT SUBJECT TO DILIGENCE MATTERS	 42
	 	 	 	 
	ARTICLE 38	 	
NO MERGER OF TITLE

	 43
	 	 	 	 
	ARTICLE 39 	 	ADDITIONAL CERTIFICATIONS, REPRESENTATIONS AND WARRANTIES	 43
	 	 	 	 
	ARTICLE 40	 	BROKERS	 44
	 	 	 	 
	ARTICLE 41	 	STATE SPECIFIC PROVISIONS	 44

 

 

	Schedule 1 	 	Defined Terms
	 	 	 
	Schedule 2	 	List of Franchise Agreements
	 	 	 
	Exhibit A	 	Location/Address/Legal Description of Demised Properties
	 	 	 
	Exhibit B	 	Form of SNDA
	 	 	 
	Exhibit C 	 	Form of Tenant’s Estoppel Certificate
	 	 	 
	Exhibit D-1 	 	Form of Memorandum of Lease (Missouri)
	 	 	 
	Exhibit D-2 	 	Form of Memorandum of Lease (New York)
	 	 	 
	Exhibit D-3	 	Form of Memorandum of Lease (Ohio)
	 	 	 
	Exhibit D-4	 	Form of Memorandum of Lease (Pennsylvania)
	 	 	 
	Exhibit D-5	 	Form of Memorandum of Lease (West Virginia)
	 	 	 
	Exhibit E	 	Form of Landlord Assignment Lease Agreement
	 	 	 
	Exhibit F	 	Intentionally Omitted
	 	 	 
	Exhibit G	 	St. Louis Properties

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

MASTER

LAND AND BUILDING LEASE

(Pool A)

 

THIS MASTER LAND AND BUILDING LEASE (this “Lease”) is made and entered into as of December 9, 2011 (the “Commencement Date”), by and between DBMFI LLC, a Delaware limited liability company (“Landlord”) and MORGAN’S FOODS, INC., an Ohio corporation (“Tenant ”).

 

R E C I T A L S

 

A.           Landlord owns (i) good and indefeasible title in fee simple to the land described on Exhibit A attached hereto (collectively, the “Land”); and (ii) all Improvements and other structures located on any of the Land; any rights of way, easements, parking covenants, entitlements, privileges and other rights appurtenant to the Land, including regarding any street adjoining any portion of the Land and any air and development rights related to the Land and any and all fixtures at or on the Land, including all of the machinery, equipment and systems at or on any of the Land (collectively, “Building Equipment”), including the following (but specifically excluding any of the following that are not “fixtures” pursuant to applicable Law): built-in equipment; compressors; appliances; engines; electrical, plumbing, heating, ventilating, and air conditioning machinery; fire sprinklers and fire suppression equipment; lighting (including emergency lighting); security cameras and systems; paging and sound systems; walk-in coolers and grill hoods; built-in sinks; built-in shelving; awnings, and supports for signs (all of the foregoing in this clause (ii), collectively, “Improvements”). The Land and all Improvements thereon are collectively referred to herein as “Demised Properties” and each individually as a “Demised Property .”

 

B.           The personal property, trade fixtures and equipment owned or leased by Tenant located at any Demised Properties and used in connection with the operation of the business at the Demised Properties (other than the Building Equipment) are referred to herein collectively as the “Restaurant Equipment .”

 

C.           Tenant desires to lease from Landlord, and Landlord desires to lease to Tenant, the Demised Properties so that Tenant may, in accordance with and subject to the terms, conditions and restrictions of this Lease, operate (or cause the operation of) a Kentucky Fried Chicken (or KFC) restaurant at each Demised Property.

 

D.           Notwithstanding any other provision of this Lease, this Lease constitutes a single and indivisible lease of all the Demised Properties collectively, and is not an aggregation of leases for the separate Demised Properties. Neither Landlord nor Tenant would have entered into this Lease except as a single and indivisible lease, and the rental herein has been established on the basis of the specific structure of the subject transaction and the economic benefits and risk profile of the transaction as a whole, and not based on the valuation or price of any individual Demised Property. Tenant’s rights to any one Demised Property are dependent on Tenant’s full performance of its obligations as to every other Demised Property, and consideration supporting any agreements under this Lease regarding any Demised Property also supports the agreements under this Lease regarding all other Demised Properties.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

NOW, THEREFORE, in consideration of the lease of the Demised Properties and the rents, covenants and conditions herein set forth, and with reference to the definitions of various terms used herein as set forth on Schedule 1 hereto, Landlord and Tenant do hereby covenant, promise and agree as follows:

 

ARTICLE 1     DEMISE OF PREMISES

 

Subject to the terms and conditions contained herein, Landlord does hereby lease unto Tenant, and Tenant does hereby hire from Landlord, for the term hereinafter provided in Article 2 , the Demised Properties for the use thereof by Tenant, Tenant’s employees, customers and invitees.

 

ARTICLE 2     TERM

 

Section 2.01

(a)           This Lease shall commence on the Commencement Date and terminate on December 8, 2031 (the “Original Lease Term”) unless sooner terminated as hereinafter set forth. The “Lease Term,” as such term is used herein, means the Original Lease Term as extended (or as may be extended) pursuant to Section 2.02 below, unless sooner terminated as hereinafter set forth.

 

(b)           This Lease shall be deemed to be in full force and effect upon the Commencement Date. Tenant shall be deemed in possession of the Demised Properties upon the Commencement Date.

 

Section 2.02

 

(a)           Tenant shall have the option to extend the term of this Lease for up to four (4) separate option periods upon and subject to the terms set forth below in this Section 2.02. The first option period (the “First Option Period”) shall commence at the expiration of the Original Lease Term. The second option period (the “Second Option Period”) shall commence at the expiration of the First Option Period. The third option period (the “Third Option Period”) shall commence at the expiration of the Second Option Period. The fourth option period (the “Fourth Option Period”) shall commence at the expiration of the Third Option Period. The First Option Period, the Second Option Period, the Third Option Period and the Fourth Option Period are sometimes referred to herein collectively as the “Option  Periods” and individually as an “Option Period.” Each Option Period shall continue for a period of five (5) years from and after the commencement date of such Option Period. Except as otherwise expressly provided herein, all of the terms and conditions of this Lease applicable to the Original Lease Term shall continue to apply during each Option Period. In no event shall Tenant have any options to extend the term of this Lease except as expressly provided herein. A notice delivered by Tenant to Landlord in order to extend the term of this Lease for any Option Period pursuant to the terms hereof is referred to herein as an “Extension Notice”.

 

(b)           To validly extend the Lease Term for the First Option Period for all the Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the First Option Period (i) Tenant must and shall deliver to Landlord such Extension Notice not earlier than fifteen (15) months prior to the expiration of the Original Lease Term and not later than twelve (12) months prior to the expiration of the Original Lease Term, and (ii) as of the date such Extension Notice is delivered to Landlord, and as of the date the First Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

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(c)           To validly extend the Lease Term for the First Option Period for some, but not all, Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the First Option Period (a “PE First Option Period” and such option, a “PE First Option”) (i) Tenant must and shall deliver to Landlord such Extension Notice not earlier than fifteen (15) months prior to the expiration of the Original Lease Term and not later than twelve (12) months prior to the expiration of the Original Lease Term; (ii) Tenant’s Extension Notice shall list the Demised Properties that Tenant desires be subject to such extension (the “First Option Extension Properties ”) provided, however, that the First Option Extension Properties must comprise at least seventy-five percent (75%) of all the Demised Properties covered by this Lease (other than the St. Louis Properties) as of the date of Tenant’s delivery to Landlord of such Extension Notice; and (iii) as of the date such Extension Notice is delivered to Landlord, and as of the date the First Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(d)           To validly extend the Lease Term for the Second Option Period for all the Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Second Option Period (i) Tenant must have validly extended this Lease for the First Option Period (whether such First Option Period is for all Demised Properties under this Lease or a PE First Option Period) (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than fifteen (15) months prior to the expiration of the First Option Period and not later than twelve (12) months prior to the expiration of the First Option Period, and (iii) as of the date such Extension Notice is delivered to Landlord, and as of the date the Second Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(e)           To validly extend the Lease Term for the Second Option Period for some, but not all, Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Second Option Period (a “PE Second Option Period” and such option, a “PE Second  Option”) (i) Tenant must have validly extended this Lease for the First Option Period (whether such First Option Period is for all Demised Properties under this Lease or a PE First Option Period), (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than fifteen (15) months prior to the expiration of the First Option Period and not later than twelve (12) months prior to the expiration of the First Option Period; (iii) Tenant’s Extension Notice for the Second Option Period shall list the Demised Properties that Tenant desires be subject to such extension (the “Second Option Extension Properties”); provided, however, that the Second Option Extension Properties must comprise at least seventy-five percent (75%) of all the Demised Properties covered by this Lease (other than the St. Louis Properties) as of the date of Tenant’s delivery to Landlord of such Extension Notice; and (iv) as of the date such Extension Notice is delivered to Landlord, and as of the date the Second Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(f)           To validly extend the Lease Term for the Third Option Period for all the Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Third Option Period (i) Tenant must have validly extended this Lease for the Second Option Period (whether such Second Option Period is for all Demised Properties under this Lease or a PE Second Option Period) (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than fifteen (15) months prior to the expiration of the Second Option Period and not later than twelve (12) months prior to the expiration of the Second Option Period, and (iii) as of the date such Extension Notice is delivered to Landlord, and as of the date the Third Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(g)           To validly extend the Lease Term for the Third Option Period for some, but not all, Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Third Option Period (a “PE Third Option Period” and such option, a “PE Third Option”) (i) Tenant must have validly extended this Lease for the Second Option Period (whether such Second Option Period is for all Demised Properties under this Lease or a PE Second Option Period), (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than (15) months prior to the expiration of the Second Option Period and not later than twelve (12) months prior to the expiration of the Second Option Period; (iii) Tenant’s Extension Notice for the Third Option Period shall list the Demised Properties that Tenant desires be subject to such extension (the “Third Option Extension Properties”); provided, however, that the Third Option Extension Properties must comprise at least seventy-five percent (75%) of all the Demised Properties covered by this Lease (other than the St. Louis Properties) as of the date of Tenant’s delivery to Landlord of such Extension Notice; and (iv) as of the date such Extension Notice is delivered to Landlord, and as of the date the Third Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

(h)           To validly extend the Lease Term for the Fourth Option Period for all the Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Fourth Option Period (i) Tenant must have validly extended this Lease for the Third Option Period (whether such Third Option Period is for all Demised Properties under this Lease or a PE Third Option Period) (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than (15) months prior to the expiration of the Third Option Period and not later than twelve (12) months prior to the expiration of the Third Option Period, and (iii) as of the date such Extension Notice is delivered to Landlord, and as of the date the Fourth Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(i)           To validly extend the Lease Term for the Fourth Option Period for some, but not all, Demised Properties subject to this Lease at the date of Tenant’s delivery to Landlord of an Extension Notice for the Fourth Option Period (a “PE Fourth Option Period” and such option, a “PE Fourth  Option”) (i) Tenant must have validly extended this Lease for the Third Option Period (whether such Third Option Period is for all Demised Properties under this Lease or a PE Third Option Period), (ii) Tenant must and shall deliver to Landlord such Extension Notice not earlier than (15) months prior to the expiration of the Third Option Period and not later than twelve (12) months prior to the expiration of the Third Option Period; (iii) Tenant’s Extension Notice for the Fourth Option Period shall list the Demised Properties that Tenant desires be subject to such extension (the “Fourth Option Extension Properties”); provided, however, that the Fourth Option Extension Properties must comprise at least seventy-five percent (75%) of all the Demised Properties covered by this Lease (other than the St. Louis Properties) as of the date of Tenant’s delivery to Landlord of such Extension Notice; and (iv) as of the date such written Extension Notice is delivered to Landlord, and as of the date the Fourth Option Period is scheduled to commence, there shall be no existing Default or Event of Default under this Lease.

 

(j)           Without limiting anything contained in Section 36.02 hereof, time is of the strictest essence in the performance of each provision of this Section 2.02 . Either party, upon request of the other, shall execute and acknowledge, in form suitable for recording, an instrument confirming any Option Period, with Tenant paying all applicable recording costs.

 

ARTICLE 3     RENT

 

Section 3.01     Rent. Tenant shall pay all Base Rent and Additional Rent, from and after the Commencement Date and thereafter throughout the Lease Term, without offset, deduction, or abatement, except as may be otherwise expressly provided herein. Notwithstanding the foregoing, any amounts due by Tenant to Landlord hereunder for which no due date is expressly specified herein shall be due within fifteen (15) days following the delivery to Tenant by Landlord of written notice of such amounts due. Except as otherwise expressly provided herein, in the event of nonpayment by Tenant of any Rent, Landlord shall have the same rights and remedies in respect thereof regardless of whether such Rent is Base Rent or Additional Rent. All payments of Rent due to Landlord shall be paid to Landlord (at its election from time to time) in one of the following manners: (a) by electronic deposit into an account designated by Landlord (a “Landlord’s Account”), (b) by mail at Landlord’s address set forth in Article 17 , or (c) by mail to any other place in the United States designated by Landlord upon at least thirty (30) days’ prior written notice to Tenant.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

Section 3.02     Base Rent .

 

(a)           The following terms shall have the following meanings:

 

(i)            “Base Date” means (A) if the Commencement Date is the first day of a calendar month, the Commencement Date, and (B) if the Commencement Date is other than the first day of a calendar month, the first day of the first calendar month occurring after the Commencement Date.

 

(ii)           “Initial Adjustment Dates” means, collectively, each anniversary of the Base Date, through and including the fourth (4th) anniversary of the Base Date.

 

(iii)          “Initial Base Rent Escalation” means one and one-half percent (1.5%).

 

(iv)         “PE Option” means any of the First PE Option, the Second PE Option, the Third PE Option or the Fourth PE Option.

 

(v)           “PE Option Base Rent” means, for any PE Option (A) the product of (i) the total dollar amount of all sales at all PE Option Extension Properties for the latest consecutive twelve (12) calendar month period for which sales information has been delivered to Landlord under Section 13.02 as of the calculation date, divided by (ii) the total dollar amount of all sales at all Demised Properties for the latest consecutive twelve (12) calendar month period for which sales information has been delivered to Landlord under Section 13.02 as of the calculation date, multiplied by (B) the Base Rent applicable immediately prior to the PE Option Period caused by the exercise of such PE Option, multiplied by (C) 110%.

 

(vi)         “PE Option Extension Properties” means any of the First PE Option Extension Properties, the Second PE Option Extension Properties, the Third PE Option Extension Properties or the Fourth PE Option Extension Properties.

 

(vii)        “ PE Option Period” means any of the First PE Option Period, the Second PE Option Period, the Third PE Option Period or the Fourth PE Option Period.

 

(viii)       “Subsequent Adjustment Dates” means, collectively, (A) the fifth (5th) anniversary of the Base Date, (B) the tenth (10th) anniversary of the Base Date, (C) the fifteenth (15th) anniversary of the Base Date, (D) in the event the option for a First Option Period (other than a PE First Option Period) is timely exercised as provided in Article 2, the twentieth (20th) anniversary of the Base Date, (E) in the event the option for a Second Option Period (other than a PE Second Option Period) is timely exercised as provided in Article 2, the twenty-fifth (25th) anniversary of the Base Date, (F) in the event the option for a Third Option Period (other than a PE Third Option Period) is timely exercised as provided in Article 2, the thirtieth (30th) anniversary of the Base Date, and (G) in the event the option for a Fourth Option Period (other than a PE Fourth Option Period) is timely exercised as provided in Article 2, the thirty-fifth (35th) anniversary of the Base Date.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

(ix)           “ Subsequent Base Rent Escalation” means ten percent (10%).

 

(b)           The base rent amount for the Demised Properties for each month of the Lease Term shall be US$95,122, as increased as hereinafter provided (“Base Rent”). Tenant shall pay to Landlord Base Rent, in advance, without demand therefor, on or before the first day of each and every calendar month during the Lease Term and if the Commencement Date is not the first day of a calendar month, Tenant shall pay to Landlord pro-rated Base Rent on the Commencement Date for the partial calendar month in which the Commencement Date occurs.

 

(c)           Subject to the terms of this Section, (i) on each of the Initial Adjustment Dates, the Base Rent shall increase by the Initial Base Rent Escalation, and such increased Base Rent shall apply for the ensuing one-year period; and (ii) on each of the Subsequent Adjustment Dates, the Base Rent shall increase by the Subsequent Base Rent Escalation, and such increased Base Rent shall apply for the ensuing five-year period. For the avoidance of doubt, the parties acknowledge that Base Rent for any PE Option Period shall be determined as provided in clause (d) of this Section 3.02 (and not this clause (c) of this Section 3.02).

 

(d)           Base Rent for any PE Option Period shall be the PE Option Base Rent. After delivery to Landlord by Tenant of a timely and valid exercise of a PE Option, and not later than thirty (30) days prior to the commencement of the applicable PE Option Period, Landlord shall calculate the PE Option Base Rent and notify Tenant of such calculation, which shall be binding on the parties absent manifest error.

 

Section 3.03     Additional Rent .

 

(a)           If by applicable Law, any general or special assessment or like charge may be paid in installments without any penalty whatsoever, then such assessment may be paid in such installments and Tenant shall only be liable for the portion thereof that is allocable or attributable to the Lease Term or any portion thereof. If such assessment or charge may be payable in installments with interest, Tenant may pay such assessment or charge in installments, together with all interest thereon, provided that if such installments extend beyond the Lease Term, Landlord shall have the option to pay all remaining installments coming due following the Lease Term without interest.

 

(b)           Tenant shall pay all Real Estate Taxes directly to the collecting authority no less than thirty (30) days prior to the delinquency date thereof and shall provide Landlord not less than ten (10) Business Days prior to such delinquency date a copy of the paid receipt for each installment of Real Estate Taxes so paid. Nothing in this Lease shall obligate Tenant to pay any estate, inheritance, franchise, net income or similar taxes of Landlord (other than any rental taxes imposed upon the Landlord that are measured by or based in whole or in part directly upon the Rent payable under this Lease, whether existing at the date hereof or hereinafter imposed by any Governmental Authority) nor shall any of same be deemed Real Estate Taxes, unless the same shall be specifically imposed in substitution for, or in lieu of, Real Estate Taxes. Notwithstanding the first sentence of this clause (b), upon the occurrence of both of the following events, Tenant shall pay Real Estate Taxes to Landlord no less than thirty (30) days prior to the delinquency date thereof (the “RE Taxes Additional Rent”) in lieu of payment directly to the applicable collecting authority: (i) delivery to Tenant of a written request therefor from Landlord, and (ii) the occurrence and continuance of any Default under this Section 3.03(b) by Tenant, or the occurrence and the continuance of any Event of Default under any provision in this Lease (either event described in the foregoing clause (ii) is referred to herein as a “RE Taxes Additional Rent Trigger”). Funds paid by Tenant as RE Taxes Additional Rent shall be used only for the payment of the Real Estate Taxes. If Tenant fails to pay the appropriate party (Landlord or the collecting authority, as provided herein) all Real Estate Taxes when due hereunder, then Tenant shall, without limiting any other remedies available to Landlord, reimburse Landlord for any and all penalties or interest, or portion thereof, paid or incurred by Landlord as a result of such nonpayment or late payment by Tenant.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

(c)           Tenant shall have the right to undertake an action or proceeding against the applicable collecting authority seeking an abatement of Real Estate Taxes or a reduction in the valuation of the Demised Properties and/or contest the applicability of any Real Estate Taxes; provided, however, that Tenant delivers to Landlord prior written notice of any such action or proceeding by Tenant, and that Tenant has paid timely (and continues to pay timely) all Real Estate Taxes as provided in this Lease to the extent required by applicable Law. In any instance where any such permitted action or proceeding is being undertaken by Tenant, (i) Landlord shall cooperate reasonably with Tenant, at no cost or expense to Landlord, and execute any and all documents approved by Landlord and reasonably required in connection therewith and (ii) Tenant shall provide Landlord with all information reasonably requested by Landlord with respect to such action or proceeding within five (5) days after receipt of Landlord’s written request. Tenant shall be entitled to any refund (after the deduction therefrom of all expenses incurred by Landlord in connection therewith) of any Real Estate Taxes (including penalties or interest thereon) received by Tenant or Landlord, whether or not such refund was a result of actions or proceedings instituted by Tenant.

 

(d)           Tenant shall be solely responsible for, and shall pay directly to the applicable service providers, the cost of all utility services provided to the Demised Properties throughout the Lease Term. Notwithstanding the foregoing, upon the occurrence of both of the following events, Tenant shall pay to Landlord the cost of any and all utility services provided to the Demised Properties in lieu of payment directly to the applicable service providers: (i) delivery to Tenant of a written request therefor from Landlord, and (ii) any Default under this Section 3.03(d) by Tenant, or any Event of Default. Funds paid by Tenant to Landlord pursuant to the immediately preceding sentence shall be used only for the payment of the cost of utility services to the Demised Properties. If Tenant fails to pay the appropriate party (Landlord or the service providers, as provided herein) all such costs when due hereunder, then Tenant shall, without limiting any other remedies available to Landlord, reimburse Landlord for any and all penalties or interest, or portion thereof, paid or incurred by Landlord as a result of such nonpayment or late payment by Tenant.

 

(e)           Without limiting any of Tenant’s other obligations set forth in this Article, Tenant shall pay to Landlord, with each payment due to Landlord hereunder (and as a part of Rent due hereunder), all sales and excise tax on rental income and all other similar taxes imposed upon Landlord with respect to rental or other payments (including, but not limited to RE Taxes Additional Rent and Real Estate Taxes paid directly to the taxing authority to the extent deemed includible in Landlord’s gross income or gross receipts) in the nature of a gross receipts tax, gross income tax, margins tax, sales tax, occupancy tax, business improvement district tax, occupation tax, business and occupation tax, business privilege tax or the like, whether imposed by a federal, state or local taxing authority, which, when added to such payment, shall yield to Landlord after deduction of all such tax payable by Landlord (including any such taxes that may be payable on the additional amounts payable pursuant to this paragraph, on a “grossed-up” basis) with respect to all such payments a net amount which Landlord would have realized from such payment had no such tax been imposed.

 

(f)           Any indemnity payments due to Landlord from Tenant hereunder that are attributable to liabilities, fixed or contingent, known or unknown (i) that existed as of the date hereof, or relate to periods prior to and including the date hereof, or (ii) to which the Demised Properties were subject as of the date hereof, or that existed on the date hereof and ran with the Demised Properties and became a liability of the Landlord as the transferee or assignee of the previous owner of the Demised Properties, shall not be treated as additional rent or other gross income of the Landlord for federal income

tax purposes, but as an adjustment to the Landlord’s adjusted basis in the Demised Properties, which adjusted basis shall prior to the receipt by Landlord of such indemnity payments be deemed to include the amount of such liabilities. Tenant agrees that it will take no position inconsistent herewith for federal income tax purposes.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

ARTICLE 4     USE

 

Section 4.01     Tenant may use the Demised Properties to operate “Kentucky Fried Chicken”, “KFC”, “Pizza Hut”, “Taco Bell” or any other Yum! National Brand restaurants (each a “Permitted Restaurant Brand” and collectively, the “Permitted Restaurant Brands”), and for no other purpose without the prior written consent of Landlord, which approval may be granted or withheld in the reasonable discretion of Landlord. Subject to (a) applicable Law, and (b) Tenant’s right to make Required Alterations that (i) are completed in fewer than sixty (60) days, and (ii) do not involve more than three (3) Demised Properties at any given time, Tenant shall open and operate a Permitted Restaurant Brand at each of the Demised Properties during all hours that are customary for similarly situated sites of the applicable Permitted Restaurant Brand. This covenant of continuous operation is an additional consideration and a material inducement for Landlord to enter into this Lease.

 

Section 4.02     Notwithstanding any other provision of this Article, Tenant shall not use, or suffer or permit any Person to use, the Demised Properties or any portion thereof for any purpose in violation of any applicable Law, or in violation of any covenants or restrictions of record. From the Commencement Date and thereafter throughout the Lease Term, Tenant shall conduct its business in a commercially reasonable and reputable manner with respect to each of the Demised Properties and in compliance with the terms and provisions of this Lease. The character of the occupancy of the Demised Properties is an additional consideration and a material inducement for the granting of this Lease by Landlord to Tenant.

 

Section 4.03     Without limiting any other provision of this Lease, all obligations of Tenant under this Article 4  shall apply also to any subtenant of any of the Demised Properties.

 

ARTICLE 5     PERFORMANCE OF OBLIGATIONS; ACCEPTANCE OF DEMISED PROPERTIES

 

Tenant hereby represents, warrants and covenants to Landlord that Tenant has the right and lawful authority to enter into this Lease and perform Tenant’s obligations hereunder. Tenant acknowledges that it has had access to the Demised Properties prior to execution of this Lease and has had the opportunity to perform all tests, studies, inspections and investigations (including any investigations regarding zoning and use issues regarding all Demised Properties) and has in fact evaluated the Demised Properties to the extent required for its operations, that it desires, and that Tenant is accepting each Demised Property in its AS IS condition existing on the date Tenant executes this Lease. Tenant hereby accepts each Demised Property in its condition as of the date of possession hereunder, subject to all applicable Law, as well as private easements and restrictions, governing and regulating the use, operation or maintenance of the Demised Properties, whether or not of record (collectively, the “Diligence Matters”), and accepts this Lease subject thereto and to all matters disclosed hereby, and by any exhibits attached hereto. Tenant waives to the fullest extent allowed by Law any rights to notice by Landlord regarding the condition of the Demised Properties, whether at law or in equity, and hereby waives any rights and remedies thereunder based in any alleged or actual future of Landlord to provide any such notices. Tenant acknowledges that (a) neither Landlord nor any of its Affiliates has made any representation or warranty as to the suitability of any Demised Property for the conduct of the Tenant’s business and (b) Tenant is entering into this Lease solely on the basis of its own investigations and familiarity with the Demised Properties and not on the basis of any representation, warranty, covenant, agreement, undertaking, promise, statement, arrangement or understanding by, on behalf of, or with, Landlord or any of its Affiliates, except as expressly set forth in this Lease.

 

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ARTICLE 6     ALTERATIONS

 

Subject to the provisions of this Article 6, Tenant shall have no right to make changes, alterations or additions (collectively, “Alterations”) to the Improvements at any single Demised Property that involve structural changes or that cost in the aggregate in excess of US$50,000.00 per Demised Property, which amount shall be adjusted annually in proportion to increases in the CPI, in each case without prior written consent of Landlord, which Landlord agrees it will not withhold unreasonably; provided, however, in no event shall any Alterations be made that, after completion, would: (i) reduce the value of the Improvements as they existed prior to the time that said Alterations are made; or (ii) adversely affect the structural integrity of the Improvements; provided further, that Landlord shall not withhold its consent (1) to any Alterations (“Required Alterations”) that (x) have been approved by all applicable Governmental Authorities, (y) are required by the franchisor of the applicable Permitted Restaurant Brand, and (z) otherwise comply with subsections (i) and (ii) above, and (2) provided that no Default has occurred and is continuing. Tenant shall not install any underground storage tanks and any above ground storage tanks shall include secondary containment sufficient to prevent spills, overfills or tank ruptures from causing a release to the environment. Any and all Alterations made by Tenant shall be at Tenant’s sole cost and expense. Prior to the commencement of construction, including Alterations that cost less than US$50,000.00 per Demised Property, which amount shall be adjusted annually in proportion to increases in the CPI (but excluding Minor Projects), Tenant shall deliver promptly to Landlord detailed cost estimates for any such proposed Alterations, as well as all drawings, plans and other information regarding such Alterations (such estimates, drawings, plans and other information are collectively referred to herein as the “Alteration Information”). Notwithstanding the foregoing, in no event shall Tenant have an obligation to provide any Alteration Information to Landlord for its review and approval as to Required Alterations. Landlord’s review and/or approval (if required) of any Alteration Information shall in no event constitute any representation or warranty of Landlord regarding (x) the compliance of any Alteration Information with any applicable Law, (y) the presence or absence of any defects in any Alteration Information, or (z) the safety or quality of any of the Alterations constructed in accordance with any plans or other Alteration Information. Landlord’s review and/or approval of any of the Alteration Information shall not preclude recovery by Landlord against Tenant based upon the Alterations, the Alteration Information, or any defects therein. In making any and all Alterations, Tenant also shall comply with all of the following conditions:

 

(a)           No Alterations shall be undertaken until Tenant shall have (i) procured and paid for, so far as the same may be required, all necessary permits and authorizations of all Governmental Authorities having jurisdiction over such Alterations, and (ii) delivered to Landlord at least fifteen (15) days prior to commencing any such Alterations written evidence acceptable to Landlord, in its reasonable discretion, of all such permits and authorizations. Landlord shall, to the extent necessary (but at no cost, expense, or risk of loss to Landlord), join in the application for such permits or authorizations whenever necessary, promptly upon written request of Tenant.

 

(b)           Any and all structural Alterations of the Improvements shall be performed pursuant to a consulting agreement with an architect and/or structural engineer reasonably acceptable to Landlord.

 

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(c)           Except for Minor Projects, Tenant shall notify Landlord at least fifteen (15) days prior to commencing any Alterations, and Tenant shall permit Landlord access to the relevant Demised Properties in order to post and keep posted thereon such notices as may be provided or required by applicable Law to disclaim responsibility for any construction on the relevant Demised Properties.

 

(d)           Any and all Alterations shall be conducted and completed in a commercially reasonable time period, in a good and workmanlike manner, and in compliance with all applicable Law, municipal ordinances, building codes and permits, and requirements of all Governmental Authorities having jurisdiction over the relevant Demised Properties, and of the local Board of Fire Underwriters, if any; and, upon completion of any and all Alterations, Tenant shall obtain and deliver to Landlord a copy of the amended certificate of occupancy for the relevant Demised Properties, if required under applicable Law or by any Governmental Authority. If any Alterations involve the generation, handling, treatment, storage, disposal, permitting, abatement or reporting of Hazardous Materials, Tenant shall prepare and retain any and all records, permits, reports and other documentation necessary or advisable to document and evidence all such Hazardous Materials were handled in compliance with applicable Law. To the extent reasonably practicable, any and all Alterations shall be made and conducted so as not to disrupt Tenant’s business.

 

(e)           The cost of any and all Alterations shall be promptly paid by Tenant so that the Demised Properties at all times shall be free of any and all liens for labor and/or materials supplied for any Alterations subject to the next succeeding sentence. In the event any such lien shall be filed, Tenant shall, within five (5) days after receipt of notice of such lien, deliver written notice to Landlord thereof, and Tenant shall, within thirty (30) days after receipt of notice of such lien, discharge the same by bond or payment of the amount due the lien claimant. Tenant may in good faith contest any such lien provided that within such thirty (30) day period Tenant provides Landlord with a surety bond or other form of security reasonably acceptable to Landlord, protecting against said lien. Tenant shall provide Landlord promptly with evidence satisfactory to Landlord that all contractors, subcontractors or materialmen have been paid in full with respect to such Alterations and that their lien rights have been waived or released. In the event Tenant fails to either discharge such lien or protect against such lien in accordance with the foregoing, then Landlord shall have the option (but not the obligation) to pay such lien or post a bond to protect against such lien and pass through such costs to Tenant as Additional Rent.

 

ARTICLE 7     REPAIRS AND MAINTENANCE

 

Except as otherwise provided in this Article, Tenant, at its sole cost and expense, shall maintain each of the Demised Properties and each part thereof, structural and non-structural, in good order and condition, including all areas outside of any buildings (including all sidewalks, driveways, landscaping, trash enclosures, and trash compacting and loading areas on the Demised Properties), in a neat and clean condition, and ensuring that debris from the operation of each restaurant on the Demised Properties is cleaned and removed on a regular basis) and, subject to the terms and conditions of Article 6, shall make any necessary Repairs thereto, interior and exterior, whether extraordinary, foreseen or unforeseen, but subject to Article 11 and Article 12. Without limitation, (a) no Repairs shall result in any structural damage to any Demised Properties or any injury to any persons, (b) Tenant shall ensure that the quality of materials and workmanship of any Repairs meets or exceeds the quality of materials and workmanship of the Improvements prior to the need for such Repairs; (c) all Repairs shall fully comply with applicable Law, the requirements of any covenants, conditions, restrictions or other permitted encumbrances that are of record regarding the applicable Demised Property, and any applicable repair standards and requirements promulgated by Tenant for its (or its subsidiaries’ or Affiliates’ or franchisees’) properties. Landlord shall have no duty whatsoever to maintain, replace, upgrade, or repair any portion of the Demised Properties, including any structural items, roof or roofing materials, or any aboveground or underground storage tanks, and Tenant hereby expressly waives the right to make Repairs at the expense of Landlord, which right may be provided for in any applicable Law now or hereinafter in effect. In addition to Landlord’s rights under Section 15.05  , if Tenant fails or neglects to commence and diligently proceed with all Repairs or fulfill its other obligations as set forth above within fifteen (15) days after receipt of written notice of the need therefor describing the applicable Repair or other obligation, then Landlord or its agents may enter the Demised Properties for the purpose of making such Repairs or fulfilling those obligations. All costs and expenses incurred by Landlord as a consequence of such Landlord’s actions, plus an administrative charge of fifteen percent (15%) of such costs and expenses, shall be due to Landlord from Tenant within ten (10) days after written demand from Landlord.

 

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ARTICLE 8      COMPLIANCE WITH LAW

 

Tenant shall, throughout the Lease Term, at its sole cost and expense, comply with applicable Law.

 

ARTICLE 9      DISCLAIMER AND INDEMNITIES

 

Section 9.01     To the extent not prohibited by applicable Law, none of the Landlord Parties shall be liable for, under any circumstances, and Tenant hereby releases all Landlord Parties from, any loss, injury, death or damage to person or property (including any business or any loss of income or profit therefrom) of Tenant, Tenant’s members, officers, directors, shareholders, agents, employees, contractors, customers, invitees, or any other Person in or about the Demised Properties, whether the same are caused by (a) fire, explosion, falling plaster, steam, dampness, electricity, gas, water, rain; (b) breakage, leakage or other defects of Restaurant Equipment, Building Equipment, sprinklers, wires, appliances, plumbing fixtures, water or gas pipes, roof, air conditioning, lighting fixtures, street improvements, or subsurface improvements; (c) theft, acts of God, acts of the public enemy, riot, strike, insurrection, civil unrest, war, court order, requisition or order of governmental body or authority; (d) any act or omission of any other occupant of the Demised Properties; (e) operations in construction of any private, public or quasi-public work; (f) Landlord’s reentering and taking possession of the Demised Properties in accordance with the provisions of this Lease or removing and storing the property of Tenant as herein provided; or (g) any other cause, including damage or injury that arises from the condition of the Demised Properties, from occupants of adjacent property, from the public, or from any other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same are inaccessible to Tenant, or that may arise through repair, alteration or maintenance of any part of the Demised Properties or failure to make any such repair, from any condition or defect in, on or about the Demised Properties including any Environmental Conditions or the presence of any mold or any other Hazardous Materials, or from any other condition or cause whatsoever; provided, however, that the foregoing release set forth in this Section 9.01 shall not be applicable to any claim against a Landlord Party to the extent, and only to the extent, that such claim is directly attributable to the gross negligence or willful misconduct of such Landlord Party, as determined by a final nonappealable judgment (or by a judgment that such Landlord Party elects not to appeal) by a court of competent jurisdiction (provided, however, that the term “gross negligence” shall not include gross negligence imputed as a matter of law to Landlord solely by reason of its interest in the Demised Properties or the failure to act by Landlord or anyone acting under its direction or control or on its behalf, in respect of matters that are or were the obligation of Tenant under this Lease). Without limiting the foregoing, Tenant hereby waives any right to any consequential, indirect or punitive damages against any Landlord Parties arising out of any claim in connection with or related to this Lease or the Demised Properties.

 

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Section 9.02     In addition to any and all other obligations of Tenant under this Lease (including under any indemnity or similar provision set forth herein), to the extent permitted by applicable Law, Tenant hereby agrees to fully and forever indemnify, protect, defend (with counsel selected by Landlord) and hold all Landlord Parties free and harmless of, from and against any and Losses (including, subject to the terms of this Section, diminution in the value of the Demised Properties, normal wear and tear excepted): (a) arising out of or in any way related to or resulting directly or indirectly from: (i) the use, occupancy, or activities of Tenant, its subtenants, agents, employees, contractors or invitees in or about any of the Demised Properties; (ii) any failure on the part of Tenant to comply with any applicable Law, including any Environmental Laws; (iii) any Default or Event of Default under this Lease or any breach or default by Tenant or any other party (other than Landlord) under any other Transaction Document (including as a result of any termination by Landlord, following an Event of Default, of any sublease, license, concession, or other consensual arrangement for possession entered into by Tenant and affecting any of the Demised Properties pursuant to Section 15.08), and including any additional fees and costs, or any increased interest rate or other charges imposed by any Landlord’s Lender by reason of such Default or Event of Default (whether or not such Default or Event of Default is a default under any agreements with any Landlord’s Lender); (iv) any other loss, injury or damage described in Section 9.01  above; (v) in connection with mold at any Demised Property; (vi) work or labor performed, materials or supplies furnished to or at the request of Tenant or in connection with obligations incurred by or performance of any work done for the account of Tenant in, on or about the Demised Properties; and (b) whether heretofore now existing or hereafter arising out of or in any way related to or resulting directly or indirectly from the presence or Release at, on, under, to or from the Demised Properties of Hazardous Materials. Without limiting the foregoing, (x) the indemnity set forth in this Section 9.02 includes direct or indirect compensatory, consequential, and punitive damages, (y) Tenant shall pay on demand all fees and costs of Landlord (including attorneys’ fees and costs) in connection with any enforcement by Landlord of the terms of this Lease and any amendment to this Lease requested by Tenant, and (z) all of the personal or any other property of Tenant kept or stored at, on or about the Demised Properties shall be kept or stored at the sole risk of Tenant. Notwithstanding the foregoing, the indemnity set forth in this Section 9.02 shall not be applicable to any claim against any Landlord Party to the extent, and only to the extent, such claim is directly attributable to the gross negligence or willful misconduct of such Landlord Party, as determined by a final nonappealable judgment (or by a judgment that such Landlord Party elects not to appeal) by a court of competent jurisdiction (provided, however, that the term “gross negligence” shall not include gross negligence imputed as a matter of law to Landlord solely by reason of its interest in the Demised Properties or the failure to act by Landlord or anyone acting under its direction or control or on its behalf, in respect of matters that are or were the obligation of Tenant under this Lease).

 

Section 9.03     The provisions of this Article 9 shall survive the expiration or sooner termination of this Lease. Tenant hereby waives the provisions of any applicable Law restricting the release of claims, or extent of release of claims, that Tenant does not know or suspect to exist at the time of release, that, if known, would have materially affected Tenant’s decision to agree to the release contained in this Article 9. In this regard, Tenant hereby agrees, represents, and warrants to Landlord that Tenant realizes and acknowledges that factual matters now unknown to Tenant may hereafter give rise to Losses that are presently unknown, unanticipated and unsuspected, and Tenant further agrees, represents and warrants that the release provided hereunder has been negotiated and agreed upon in light of that realization and that Tenant nevertheless hereby intends to release, discharge and acquit the parties set forth herein above from any such unknown Losses that are in any manner set forth in or related to this Lease, the Demised Properties and all dealings in connection therewith.

 

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ARTICLE 10     INSURANCE

 

Section 10.01     As of the Commencement Date and throughout the Lease Term, Tenant shall, at its sole expense, obtain, pay for and maintain (or cause to be obtained, paid for and maintained), with financially sound and reputable insurers (as further described in Section 10.03), (a) special risk coverage covering loss or damage to each Demised Property (including Improvements now existing or hereafter erected thereon) caused by fire, lightning, hail, windstorm, explosion, vandalism, malicious mischief, leakage of sprinkler systems, and such other losses, hazards, casualties, liabilities and contingencies as are normally and usually covered by special risk policies in effect where such Demised Property is located, endorsed to include extended coverage perils and other broad form perils, including the standard special risk clauses, including building ordinance or law coverage sufficient to provide coverage for costs to comply with building and zoning codes and ordinances including demolition costs and increased cost of construction and (b) business income/interruption insurance to include loss of business at limits sufficient to cover 100% of the annual revenues at the Demised Properties minus any non-fixed expenses payable by Tenant to Landlord with a period of indemnity not less than twelve (12) months from time of loss (such amount being adjusted annually) and an extended period of indemnity of one hundred eighty (180) days. The policy(ies) referred to in clause (a) above shall be in an amount equal to one hundred percent (100%) of the full replacement cost of the Improvements and the Building Equipment at each Demised Property (without any deduction for depreciation), and shall contain a replacement cost endorsement and an agreed amount or waiver of co-insurance provisions endorsement. The deductible under the policies referred to in clause (a) above shall not exceed US$100,000 or such greater amount as is approved by Landlord from time to time. If any Demised Property is located in area prone to geological phenomena, including sinkholes, mine subsidence, earthquakes, or floods, the insurance policies referred to in clause (a) above shall cover such risks and in such amounts, form and substance, as Landlord shall reasonably determine.

 

Section 10.02     As of the Commencement Date and throughout the Lease Term, Tenant shall maintain, with financially sound and reputable insurers (as further described in Section 10.03), general liability insurance with respect to its business and each Demised Property (including all Improvements now existing or hereafter erected thereon) against losses, hazards, casualties, liabilities and contingencies as customarily carried or maintained by persons of established reputation engaged in similar businesses. Without limiting of the foregoing, Tenant shall maintain or cause to be maintained policies of insurance with respect to each Demised Property in the following amounts and covering the following risks:

 

(a)           Broad form boiler and machinery or breakdown insurance in an amount equal to the full replacement cost of the Improvements at the Demised Property (without any deduction for depreciation) in which the boiler or similar vessel is located, and including coverage against loss or damage from damage, breakdown or explosion of steam boilers, electrical machinery and equipment, air conditioning, refrigeration, pressure vessels or similar apparatus and mechanical objects now or hereafter installed at the applicable Demised Property.

 

(b)           During any period of construction, reconstruction, renovation or alteration at any Demised Property, a completed value, “All Risks” Builders Risk form or “Course of Construction” insurance policy in non-reporting form and in an amount of the completed value of the construction.

 

(c)           Commercial General Liability insurance covering claims for personal injury, bodily injury, death or property damage occurring upon, in or about each Demised Property on an occurrence form and in an amount not less than US$1,000,000 per occurrence and US$2,000,000 in the aggregate and shall provide coverage for premises and operations, products and completed operations and

contractual liability with a deductible in an amount not to exceed US$0, and an umbrella liability policy in the amount of US$25,000,000.

 

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(d)           Worker’s compensation with statutory limits and employer’s liability insurance in an amount of US$1,000,000 per accident, per employee and in the aggregate.

 

(e)           Except as otherwise provided in Section 10.01  , such other insurance (including increased amounts of insurance) and endorsements, if any, with respect to the Demised Properties and the operation thereof as Landlord may reasonably require from time to time.

 

Section 10.03     Each carrier providing any insurance, or portion thereof, required by this Article shall have the legal right to conduct its business in the jurisdiction in which the applicable Demised Property is located, and shall have a claims paying ability rating by S&P of not less than “A-” and an A.M. Best Company, Inc. rating of not less than A- and financial size category of not less than VII. Tenant shall cause all insurance that it is required to maintain hereunder to contain a mortgagee clause and loss payee clause in favor of Landlord’s Lender in accordance with this Section to be payable to Landlord’s Lender as a mortgagee and not as a co-insured, as its interest may appear. In the absence of a Landlord’s Lender or if below the casualty threshold set by such Landlord’s Lender, the loss payee clause will be in favor of Landlord. Notwithstanding anything to the contrary contained in this Section 10.03, in any event, casualty insurance proceeds shall be applied in accordance with Section 11.02 .

 

Section 10.04     All insurance policies required to be maintained by Tenant hereunder and renewals thereof (a) shall be in a form reasonably acceptable to Landlord, (b) shall provide for a term of not less than one year unless approved by Landlord, (c) if the same are insurance policies covering any property (i) shall include a standard mortgagee endorsement or its equivalent in favor of Landlord’s Lender, if any, (ii) shall contain an agreed value clause updated annually (if the amount of coverage under such policy is based upon the replacement cost of the applicable Demised Property), (iii) shall designate Landlord’s Lender, if any, as “mortgagee and loss payee,” and (iv) shall provide terrorism coverage. In addition, all property insurance policies (except for flood and earthquake limits) must automatically reinstate after each loss, and the commercial general liability and umbrella policies shall contain an additional insured endorsement in favor of Landlord and Landlord’s Lender, if any, as their interests may appear.

 

Section 10.05     Any insurance provided for in this Article may be effected by a blanket policy or policies of insurance, or under so-called “special-risk” or “multi-peril” insurance policies, provided that the amount of the total insurance available with respect to the Demised Properties shall provide coverage and indemnity at least equivalent to separate policies in the amounts herein required, and provided further that in other respects, any such policy or policies shall comply with the provisions of this Article. Any increased coverage provided by individual or blanket policies shall be satisfactory, provided the aggregate liability limits covering the Demised Properties under such policies shall otherwise comply with the provisions of this Article.

 

Section 10.06     Every insurance policy carried by either party with respect to the Demised Properties shall (if it can be so written) include provisions waiving the insurer’s subrogation rights against the other party to the extent such rights can be waived by the insured prior to the occurrence of damage or loss. Subject to the above, each party hereby waives any rights of recovery against the other party for any direct damage or consequential loss covered by said policies (or by policies required to be carried hereunder by such party) whether or not such damage or loss shall have been caused by any acts or omissions of the other party, but such waiver shall operate only to the extent such waiving party is so protected by such insurance coverage (or would have been protected by maintaining all policies required to be carried hereunder by such party).

 

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Section 10.07     The general liability and umbrella policies of insurance required to be maintained by Tenant under this Article 10 shall name Tenant as the insured and Landlord, Landlord’s Lenders, and Drawbridge Special Opportunities Fund LP as additional insureds as their interests may appear, with primary coverage in favor of all additional insureds (and with provisions that any other insurance carried by any additional insured or Landlord shall be non-contributing and that naming Landlord and the additional parties listed above in this Section as additional insureds shall not negate any right Landlord or such parties would have had as claimants under the policy if not so designated). Notwithstanding the foregoing, there is no requirement hereunder that the business interruption insurance required pursuant to Section 10.01 name Landlord or Drawbridge Special Opportunities Fund LP as additional insureds. All insurance policies required under this Article 10 also shall provide that the beneficial interest of Landlord in such policies shall be fully transferable. In the event Tenant fails to procure or maintain any policy of insurance required under Article 10, or if the insurance company or coverages provided fail meet the requirements contained in this Article 10 , Landlord may, at its option, purchase such insurance and charge Tenant all costs and expenses incurred in procuring and maintaining such insurance.

 

Section 10.08     Tenant shall provide to Landlord, beginning on the Commencement Date and continuing annually thereafter with certificates (or other evidence reasonably requested by Landlord) from all applicable insurance carriers evidencing the payment of premiums or accompanied by other evidence of such payment (e.g., receipts, canceled checks) reasonably satisfactory to Landlord. Each insurance policy required to be carried by Tenant hereunder shall include a provision requiring the insurer to provide Landlord with not less than thirty (30) days’ prior written notice of cancellation. Upon the occurrence of both of the following events, Tenant shall pay the Insurance Premium Additional Rent (defined below), on the first day of each month, to Landlord in lieu of payment directly to the applicable insurance carriers: (i) delivery to Tenant of a written request therefor from Landlord, and (ii) the occurrence and continuance of any Default under this Section 10.08 by Tenant, or any occurrence of any Event of Default under any provision in this Lease (the foregoing clause (ii) may be hereinafter referred to as an “Insurance Premium Additional Rent Trigger”). Funds paid by Tenant as Insurance Premium Additional Rent shall be promptly applied towards payment of the insurance premium next coming due when such premiums are due and payable. “Insurance Premium Additional Rent” shall mean a monthly payment equal to the amount of the premium that will next become due and payable under each policy of insurance that Tenant is required to maintain pursuant to their Lease (exclusive of those premiums that will become due within the subsequent month) divided by the number of months remaining until thirty (30) days before the premium for each insurance policy is due. In the event an Insurance Premium Additional Rent Trigger occurs within thirty (30) days prior to the date an insurance policy premium is due, the Insurance Premium Additional Rent shall be calculated for the subsequent policy period and the premium due within the subsequent month shall be due and payable immediately. The Insurance Premium Additional Rent shall be adjusted by Tenant from time to time to reflect any increases in premiums Tenant either obtains knowledge or notice thereof. In the event that Tenant has obtained financing from a third party (the “Premium Lender”) of Tenant’s insurance premium obligations, the term “Insurance Premium Additional Rent” shall be deemed to include the installment payments due to such Premium Lender.

 

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ARTICLE 11     DAMAGE OR DESTRUCTION

 

Section 11.01     If at any time during the Lease Term, any of the Demised Properties or any part thereof shall be damaged or destroyed by fire or other casualty of any kind or nature, Tenant shall promptly apply for all necessary permits, but in any event not later than thirty (30) days after the first date of such damage or destruction, and upon issuance of such permits thereafter diligently proceed to repair, replace or rebuild such Demised Property as nearly as possible to its condition and character immediately prior to such damage with such variations and Alterations requested by Landlord as may be permitted under (and subject to the provisions of) Article 6 (the “Restoration Work”).

 

Section 11.02     All property and casualty insurance proceeds payable to Landlord or Tenant (except (a) insurance proceeds payable to Tenant on account of the Restaurant Equipment or Tenant’s inventory; and (b) insurance proceeds payable from comprehensive general public liability insurance, or any other liability insurance) at any time as a result of casualty to the Demised Properties shall be paid jointly to Landlord and Tenant for purposes of payment for the cost of the Restoration Work, except as may be otherwise expressly set forth herein. Landlord and Tenant shall cooperate in order to obtain the largest possible insurance award lawfully obtainable and shall execute any and all consents and other instruments and take all other actions necessary or desirable in order to effectuate same and to cause such proceeds to be paid as hereinbefore provided. The proceeds of any such insurance in the case of loss shall, to the extent necessary, be used first for the Restoration Work with the balance, if any, payable to Tenant. If insurance proceeds as a result of a casualty to the relevant Demised Property are insufficient to complete the Restoration Work necessary by reason of such casualty, then Tenant shall be responsible for the payment of such amounts necessary to complete such work.

 

Section 11.03     Subject to the terms hereof, this Lease shall not be affected in any manner by reason of the total or partial destruction to any Demised Property or any part thereof and Tenant, notwithstanding any applicable Law, present or future, waives all rights to quit or surrender any Demised Property or any portion thereof because of the total or partial destruction of any Demised Property (prior to the expiration of this Lease). Without limiting the foregoing, no Rent shall abate as a result of any casualty.

 

ARTICLE 12     EMINENT DOMAIN

 

Section 12.01     Landlord and Tenant hereby agree that in no event shall any taking of any Demised Property for any public or quasi-public use under any statute or by right of eminent domain, or by purchase in lieu thereof, in any way relieve Tenant of any obligations under this Lease (as to the applicable Demised Property or otherwise) except as explicitly provided in this Article.

 

Section 12.02     If any portion of any Demised Property, or existing access to or from any Demised Property, is taken for any public or quasi-public use under any statute or by right of eminent domain, or by purchase in lieu thereof, and such taking, in Landlord’s reasonable determination (a) reduces the value of the Demised Property by fifty percent (50%) or more, or (b) prevents, and would prevent after reasonable repair and reconstruction efforts by Tenant, use of the Demised Property for its current permitted use under applicable zoning or other use regulations (including with respect to required parking and access), then this Lease shall terminate as to such Demised Property (but not any other Demised Property) as of the date that title to the applicable Demised Property, or portion thereof, actually transfers to the applicable authority.

 

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Section 12.03     Tenant agrees that Landlord has the right in its sole discretion, and at Tenant’s sole cost and expense, to oppose any proposed taking regarding any Demised Property. The parties hereto agree to cooperate in applying for and in prosecuting any claim for any taking regarding any Demised Property and further agree that the aggregate net award shall be distributed as follows:

 

(a)           Landlord shall be entitled to the entire award for the condemned Demised Property.

 

(b)           Tenant shall be entitled to any award that may be made for the taking of Tenant’s inventory and personal property, or costs related to the removal and relocation of Tenant’s inventory and personal property, so long as none of the foregoing reduces Landlord’s award.

 

Section 12.04     Except in the case of a termination of this Lease with respect to a Demised Property as described in Section 12.02, in case of a taking of any portion of any Demised Property, Tenant at its own expense shall proceed with diligence (subject to reasonable time periods for purposes of adjustment of any award and unavoidable delays) to repair or reconstruct (or cause to be repaired and reconstructed) the affected Improvements to a complete architectural unit, and all such repair or reconstruction work shall be performed in accordance with the standards and requirements for Alterations set forth in Article 6.

 

Section 12.05     In case of a taking of all or any portion of any Demised Property, the Base Rent payable monthly hereunder shall be reduced by the lesser of the following: (a) the product of the Landlord Award Amount regarding such taking, multiplied by 0.5833%, or (b) the product of (i) the Base Rent immediately preceding such taking, divided by the total number of Demised Properties immediately preceding such taking, multiplied by (ii) the percentage reduction in value of the applicable Demised Property caused by such taking, if any, (as reasonably determined by Landlord based upon, inter alia, the impact on Tenant’s long-term use of such Demised Property). The percentage reduction in value in clause (b)(ii) of the immediately preceding sentence shall be deemed to be 100% if this Lease terminates as to the applicable Demised Property pursuant to Section 12.02 , above.

 

Section 12.06     Notwithstanding any other provision of this Article, any compensation for a temporary taking shall be payable to Tenant without participation by Landlord, except to the proportionate extent such temporary taking extends beyond the end of the Lease Term, and there shall be no abatement of Rent as a result of any temporary taking affecting any of the Demised Properties.

 

ARTICLE 13 FINANCIAL COVENANTS OF TENANT

 

Section 13.01     Definitions . The following terms shall have the following meanings:

 

(a)           Tenant’s Fiscal Year is divided into thirteen four-week periods (each, a “Period”) except in the occurrence of a 53-week year, in which case the thirteenth Period consists of five weeks. “Fiscal Quarter” means, as applicable, the period of time comprised of Periods one through three, the period of time comprised of Periods four through six, the period of time comprised of Periods seven through nine, and the period of time comprised of Periods ten through thirteen.

 

(b)           “Fiscal Year” means any period commencing on the day after the Sunday nearest the last day of February and ending on (and including) the Sunday nearest the last day of February of the following calendar year.

 

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Section 13.02     Books and Records . Tenant shall keep accurate books and records of account of all of the Demised Properties sufficient to permit the preparation of financial statements in accordance with GAAP. Landlord and its duly authorized representatives shall have the right to examine, copy and audit Tenant’s records and books of account at all reasonable times during regular business hours. Tenant shall provide, or cause to be provided, to Landlord, in addition to any other financial statements required under this Lease, the following financial statements and information, all of which must be prepared in a form acceptable to Landlord:

 

(a)           promptly and in any event within ninety (90) days after the end of each Fiscal Year, audited statements of financial position of Tenant as of the end of each such Fiscal Year, including a balance sheet and statement of profits and losses, expenses and retained earnings, changes in financial position and cash flows for such Fiscal Year, which statements shall be duly certified by an officer of Tenant to fairly represent the financial condition of Tenant, as of the date thereof, prepared by Tenant in accordance with GAAP, and accompanied by a statement of a nationally recognized accounting firm acceptable to Landlord in its sole discretion that such financial statements present fairly, in all material respects, the financial condition of Tenant as of the end of the Fiscal Year being reported on and that the results of the operations and cash flows for such year were prepared, and are being reported on, in conformity with GAAP;

 

(b)           promptly and in any event within forty-five (45) days after the end of each Fiscal Year, (i) profit and loss statements in respect of each Demised Property for each such Fiscal Year, certified by an officer of Tenant to be true, correct, and complete in all material respects; and (ii) total sales figures in respect of each Demised Property for each month within each such Fiscal Year, certified by an officer of Tenant to be true, correct and complete in all material respects;

 

(c)           promptly and in any event within forty-five (45) days after the end of each Fiscal Quarter, (i) quarterly statements of the financial position of Tenant, including a balance sheet and statement of profits and losses, together with a statement showing the net operating cash flow for the previous twelve (12) month period (and containing supporting documentation necessary to confirm the amount of net operating cash flow), such quarterly statements of financial position to be certified by an officer of Tenant to fairly represent the financial condition of Tenant as of the date thereof and to have been prepared and reported in conformity with GAAP; (ii) a compliance certificate from Tenant, in form and substance reasonably acceptable to Landlord, certifying to such financial information of Tenant as reasonably requested by Landlord, and supporting the statements contained in any such compliance certificate; (iii) a compliance certificate from Tenant, in form and substance reasonably acceptable to Landlord, certifying to such financial information of the Demised Properties as reasonably requested by Landlord, and supporting the statements contained in any such compliance certificate, (iv) quarterly profit and loss statements in respect of each Demised Property and trailing twelve (12) month results, certified by an officer of Tenant to be true, correct, and complete in all material respects; and (v) total sales figures in respect of each Demised Property for each month within the applicable Fiscal Quarter, certified by an officer of Tenant to be true, correct and complete in all material respects;

 

(d)           promptly and in any event within fifteen (15) days after the end of each calendar month total sales figures in respect of each Demised Property for the applicable calendar month and trailing twelve (12) month results, certified by an officer of Tenant to be true, correct and complete in all material respects;

 

(e)           any financial statements distributed to any creditors of Tenant within five (5) Business Days after such distribution; and 

 

(f)    such other information with respect to the Demised Properties or Tenant that may be reasonably requested from time to time by Landlord, within a reasonable time after the applicable request.

 

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ARTICLE 14     [Intentionally Omitted] 

 

ARTICLE 15     EVENTS OF DEFAULT

 

Section 15.01     Events Of Default. Subject to the terms of this Article, the occurrence of any of the following shall constitute an event of default by Tenant under this Lease (“Event of Default ”):

 

(a)           Nonpayment of Base Rent . Failure to pay any installment of Base Rent hereunder within five (5) days of when payment is due.

 

(b)           Nonpayment of Additional Rent . Failure to pay any amount of Additional Rent within five (5) days of when such payment is due.

 

(c)           Bankruptcy and Insolvency . If at any time during the Lease Term, (i) Tenant files a Petition, (ii) any creditor or other Person that is an Affiliate of Tenant files against Tenant any Petition, or any creditor or other Person (whether or not an Affiliate of Tenant) files against Tenant any Petition where Tenant, or an Affiliate of Tenant, cooperates or colludes with such creditor or other Person in connection with such Petition or the filing thereof, (iii) any creditor or other Person that is not an Affiliate of Tenant files a Petition against Tenant, where none of Tenant, or an Affiliate of Tenant, cooperates or colludes with such creditor or other Person in connection with such Petition or the filing thereof, and such Petition is not vacated or withdrawn within sixty (60) days after the filing thereof, (iv) a trustee or receiver is appointed to take possession of any of the Demised Properties, or of all or substantially all of the business or assets of Tenant, and such appointment is not vacated or withdrawn and possession restored to Tenant within sixty (60) days thereafter, (v) a general assignment or arrangement is made by Tenant for the benefit of creditors, (vi) any sheriff, marshal, constable or other duly-constituted public official takes possession of any Demised Property, or of all or substantially all of the business or assets of Tenant by authority of any attachment, execution, or other judicial seizure proceedings, and if such attachment or other seizure remains undismissed or undischarged for a period of sixty (60) days after the levy thereof, (vii) Tenant admits in writing its inability to pay its debts as they become due; or (viii) Tenant files an answer admitting or failing timely to contest a material allegation of any Petition filed against Tenant.

 

(d)           Misrepresentation . The discovery by Landlord, and written notice to Tenant, that any representation, warranty or financial statement given to Landlord by Tenant, or any Affiliate of Tenant, was materially false or misleading when given, including as set forth in any Transaction Document.

 

(e)           Insurance; Environmental; Patriot Act;. Any default by Tenant under Article 10, Article 29, or Article 39(c) .

 

(f)           Delivery of Notices and Other Documents. The failure by Tenant to deliver any of the notices or other documents required to be delivered to Landlord under this Lease, or the notice to any lender with a security interest in any of the Restaurant Equipment required in Article 21, or the notice to any equipment lessor that owns any of the Restaurant Equipment required in Article 21, in each case within the time periods required herein (other than any such notices or other documents addressed in another clause of this Section 15.01, for which Tenant will have the grace periods (if any) and notice rights (if any) set forth in such other clause), provided, however, that if no time period is stated in this Lease for the delivery by Tenant of any notice or other document to Landlord, then Tenant shall have a grace period of fifteen (15) days after the date of the event or occurrence first giving rise to the obligation to deliver such notice or other document to Landlord.

 

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(g)           Liens . Any claim of lien is recorded against any Demised Property and such claim of lien continues for thirty (30) days without discharge (by bonding or other means available pursuant to applicable Law), satisfaction or provision for payment being made by or on behalf of Tenant.

 

(h)           Franchise Agreement . Any default by Tenant or any of its Affiliates under any Franchise Agreement, after the expiration of any applicable notice and/or cure period.

 

(i)           Operation of Replaced Property. Tenant or any Affiliate of Tenant operates a Permitted Restaurant Brand restaurant at any Replaced Property at any time within two years following the substitution of a Replacement Property for such Replaced Property as described in Article 31  .

 

(j)           Other Obligations. The failure by Tenant to timely perform any obligation, agreement or covenant under this Lease, other than those matters specified in Sections 15.01(a)-(i) above, and such failure continuing for a period of thirty (30) days after written notice of such failure is delivered to Tenant, or such longer period, up to but not exceeding an additional sixty (60) days, as is reasonably necessary to remedy such default.

 

As used in this Lease, “ Default ” means any breach or default under this Lease, whether or not the same is an Event of Default, and also any breach or default under this Lease, that after notice or lapse of time or both, would constitute an Event of Default if that breach or default were not cured within any applicable grace or cure period.

 

Section 15.02    Remedies Upon Event of Default . If an Event of Default by Tenant occurs, then, in addition to any other remedies available to Landlord at law or in equity or elsewhere hereunder, Landlord shall have the following remedies:

 

(a)   Termination. Landlord shall have the right, with or without notice or demand, immediately upon expiration of any applicable grace period specified herein, to terminate this Lease (or Tenant’s possession of any of the Demised Properties), and at any time thereafter recover possession of all or any portion of the Demised Properties or any part thereof and expel and remove therefrom Tenant and any other Person occupying the same by any lawful means, and repossess and enjoy all or any portion of the Demised Properties without prejudice to any of the remedies that Landlord may have under this Lease. If Landlord elects to terminate this Lease (or to terminate Tenant’s right of possession), Landlord shall also have the right to reenter the Demised Properties and take possession of and remove all personal property of Tenant, if any, in such Demised Properties. If Landlord elects to terminate this Lease and/or Tenant’s right to possession, or if Tenant’s right to possession is otherwise terminated by operation of law, Landlord may recover as damages from Tenant the following: (i) all Rent then due under this Lease through the date of termination; (ii) the Rent due for the remainder of the Lease Term in excess of the fair market rental value of the Demised Properties for the remainder of the Lease Term, including any and all Additional Rent (each discounted by the discount rate of the Federal Reserve Bank of San Francisco plus one percent (1%)); (iii) the cost of reletting the Demised Properties, including the anticipated period of vacancy until such Demised Properties can be re-let at their fair market rental values; and (iv) any other costs and expenses that Landlord may reasonably incur in connection with the Event of Default. Efforts by Landlord to mitigate the damages caused by the Event of Default (or Tenant’s Default under this Lease) shall not waive Landlord’s right to recover damages under the foregoing provisions.

 

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(b)           Continuation after Event of Default. If Landlord does not elect to terminate this Lease, then this Lease shall continue in effect, and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover Rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a landlord at law or in equity, subject to Article 26 hereof. Landlord shall not be deemed to have terminated this Lease except by an express statement in writing. Acts of maintenance or preservation, efforts to relet the Demised Properties, or the appointment of a receiver upon application of Landlord to protect Landlord’s interest under this Lease shall not constitute an election to terminate Tenant’s right to possession unless such election is expressly stated in writing by Landlord. Notwithstanding any such reletting without such termination, Landlord may at any time thereafter elect to terminate Tenant’s right to possession and this Lease. If Landlord elects to relet the Demised Properties for the account of Tenant, the rent received by Landlord from such reletting shall be applied as follows: first, to the payment of any and all costs of such reletting (including attorneys’ fees, brokers’ fees, alterations and repairs to any of the Demised Properties, and tenant improvement costs); second, to the payment of any and all indebtedness other than Rent due hereunder from Tenant to Landlord; third, to the payment of any and all Rent due and unpaid hereunder; and the balance, if any, shall be held by Landlord and applied in payment of future Rent as it becomes due. If the rent received from the reletting is less than the sum of the costs of reletting, other indebtedness due by Tenant, and the Rent due by Tenant, then Tenant shall pay the deficiency to Landlord promptly upon demand by Landlord. Such deficiency shall be calculated and paid monthly.

 

(c)           State–Specific Remedy . Landlord may pursue any other remedy now or hereafter available to Landlord under the Laws of the states in which the Demised Properties are located in addition to and not as an alternative remedy to those provided hereunder.

 

Section 15.03     No Cure Rights Following Events of Default . Upon the occurrence of an Event of Default, Landlord shall have all rights and remedies hereunder and under applicable Law. Except only as may be required by applicable Law that cannot be waived lawfully (a) Landlord shall have no obligation to give any notice after an Event of Default as a condition to Landlord’s pursuit of any right or remedy; and (b) Landlord shall have no obligation to accept the attempted or purported cure of, or to waive, any Event of Default, regardless of tender of delinquent payments or other performance by Tenant, or any other event or condition whatsoever; and Tenant shall not have any right to cure any Event of Default, and no right to cure shall be implied. Without limiting the foregoing, after the occurrence of any Event of Default (irrespective of whether or not the same consists of an ongoing condition, a one-time occurrence, or otherwise), the same shall be deemed to continue at all times thereafter; unless Landlord executes and delivers a written agreement in which Landlord expressly states that such Event of Default has ceased to continue (and Landlord shall not be obligated under any circumstances whatsoever to execute and deliver any such agreement). Without limitation, this Section shall govern in any case where reference is made in this Lease or otherwise to (x) any “cure” (whether by use of such word or otherwise) of any Event of Default, (y) “during an Event of Default” or “the continuance of an Event of Default” (in each case, whether by use of such words or otherwise), or (z) any condition or event that continues beyond the time when the same becomes an Event of Default.

 

Section 15.04     Indemnification. Nothing in this Article shall be deemed to affect or limit Tenant’s obligation to indemnify, defend, protect and hold harmless Landlord and the other Landlord Parties under this Lease (including under Article 9 and Article 29), and such obligation shall survive the termination or expiration of this Lease.

 

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Section 15.05     Waiver of Notice/Performance by Landlord. Notwithstanding any other provision herein, (a) Tenant shall not be entitled to notice of Default from Landlord, or right to cure, for any failure by Tenant to comply with any obligation under this Lease (and such failure shall result in an Event of Default) upon the expiration of any period within which Tenant is required to comply with any applicable Law; and (b) in addition to any other rights of Landlord under this Lease, if Tenant has failed to satisfy any obligation of Tenant set forth herein, whether or not the same constitutes an Event of Default, and in Landlord’s reasonable determination such failure by Tenant constitutes a threat of injury or harm to persons, or damage or loss of value to property, then Landlord may, with or without notice, and without regard to whether or not any applicable cure period expressly provided herein has expired, elect to perform such obligation for the account and at the expense of Tenant. If Landlord pays any sums of money or incurs any expense in connection with performing any such obligation (including attorneys’ fees, consultant fees, testing and investigation fees, expert fees and court costs), such sums so paid or expenses so incurred by Landlord, plus an administrative charge of fifteen percent (15%) of such sums or expenses, shall be due to Landlord from Tenant within ten (10) days after written demand therefor from Landlord, in addition to any other amounts to be paid by Tenant to Landlord under this Lease.

 

Section 15.06    Late Fee. In addition to any interest charged to Tenant under Section 15.07, if any payment of Base Rent or Additional Rent is not received by Landlord from Tenant when such payment is due to Landlord hereunder, such payment shall be deemed delinquent and cause Tenant to incur a late fee of five percent (5%) of each such delinquent payment (the “Late Fee”), due and payable immediately with the delinquent Base Rent or delinquent Additional Rent, as the case may be.

 

Section 15.07     Interest . Tenant hereby acknowledges that late payment by Tenant of Base Rent or Additional Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges. Accordingly, in addition to any Late Fee due from Tenant hereunder, any sum due by Tenant under this Lease that is not paid when due shall bear interest at the lesser of seven-and-one-half percent (7.5%) per annum of such sums, or the maximum rate allowed under applicable Law, from the date such sum becomes due and payable by Tenant hereunder until paid, unless otherwise expressly provided in this Lease.

 

Section 15.08     Tenant’s Subleases . If Landlord elects to terminate this Lease on account of any Event of Default, then Landlord may terminate any sublease and any license, concession, or other consensual arrangement for possession entered into by Tenant and affecting any of the Demised Properties (subject to the terms of any applicable nondisturbance agreement executed by Landlord), or choose to succeed to Tenant’s interest in any such arrangement. Absent a nondisturbance agreement between Landlord and any such subtenant, no payment by a subtenant with respect to a sublease shall entitle such subtenant to possession of any Demised Property after termination of this Lease and Landlord’s election to terminate the sublease. If Landlord elects to succeed to Tenant’s interest in such arrangement, then Tenant shall, as of the date of notice given by Landlord to Tenant of such election, have no further right to, or interest in, any rent or other consideration due under that arrangement.

 

Section 15.09    Form of Payment After Default. Without limiting any other obligation of Tenant under this Lease, if Tenant fails, on two or more occasions within any Lease Year, to pay any amount due to Landlord under this Lease within the applicable notice and cure periods set forth in this Lease, or if Tenant attempts to pay any such amount by drawing a check on an account with insufficient funds, then Landlord shall have the right to require that any and all subsequent amounts paid by Tenant to Landlord under this Lease (to cure a default or otherwise) be paid in the form of cashier’s or certified check drawn on an institution acceptable to Landlord, or any other form approved by Landlord in its sole and absolute discretion, notwithstanding that Landlord may have previously accepted payments from Tenant in a different form.

 

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Section 15.10    Acceptance of Rent Without Waiving Rights . No endorsement or statement by Tenant on any check or any letter accompanying any payment by Tenant to Landlord will be deemed an accord and satisfaction of any amount in dispute between Tenant and Landlord or otherwise. Landlord may accept any and all of Tenant’s payments without waiving any right or remedy under this Lease, including but not limited to the right to commence and pursue an action to enforce rights and remedies under a previously served notice of default, without giving Tenant any further notice or demand.

 

Section 15.11     Post-Event of Default Sales . If Landlord elects (in its sole discretion) to sell

any of the Demised Properties following any Events of Default in order to mitigate damages resulting from such Events of Default, the Base Rent payable hereunder from and after the date of such sale shall be reduced by the lesser of the following: (a) the product of (i) 0.5833%, multiplied by (ii) the proceeds received by Landlord in connection with such sale, less any and all costs incurred by Landlord in connection with such sale (including attorneys’ fees and brokers’ fees), or (b) the product of (i) the Base Rent immediately preceding such sale, divided by the total number of Demised Properties immediately preceding such sale, multiplied by (ii) the number of Demised Properties sold in such sale. In no event shall the reduction described in the immediately preceding sentence reduce any obligation of Tenant that came due prior to the date of such sale.

 

Section 15.12    Licenses and Permits . In connection with any repossession of any Demised Property by Landlord or its designee, Tenant and its Affiliates shall reasonably cooperate with Landlord in transferring to Landlord or its designee any (a) franchise agreement with any franchisor for a Permitted Restaurant Brand (provided that Tenant will not guaranty that any such transfer will be approved by the franchisor); and (b) licenses or permits then held or maintained by Tenant or its Affiliates and required by applicable Law in order to operate such Demised Property as a Permitted Restaurant Brand, including any such licenses or permits required in order to serve alcoholic beverages at such Demised Property.

 

Section 15.13     Remedies Cumulative . All rights, privileges, elections, and remedies of Landlord are cumulative and not alternative with all other rights and remedies hereunder, at law or in equity to the fullest extent permitted by applicable Law. The exercise of one or more rights or remedies by Landlord shall not impair Landlord’s rights to exercise any other right or remedy to the fullest extent permitted by applicable Law.

 

Section 15.14    Affirmance of Lease . In the event that, following of the filing of any Petition regarding Tenant, under applicable Law, the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, within such time period as may be permitted by the bankruptcy court having jurisdiction, so affirm this Lease, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease, and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligations under this Lease.

 

Section 15.15     Survival . The remedies available to Landlord pursuant to this Article shall survive expiration or termination of this Lease.

 

ARTICLE 16     FORCE MAJEURE

 

If either party is prevented or delayed from timely performance of any obligation or satisfying any condition under this Lease by any event or circumstance beyond the control of such party, exclusive of financial inability of a party, but including any of the following if beyond the control of (and not caused by) such party: strike, lockout, labor dispute, civil unrest, inability to obtain labor, materials or reasonable substitutes thereof, acts of God, present or future governmental restrictions, regulations or control, insurrection, and sabotage, then the time to perform such obligation or satisfy such condition shall be extended by the delay caused by such event or circumstance, but only for a reasonable period of time not to exceed, in any event, ninety (90) days. The provisions of this Article shall in no event operate to delay the Commencement Date or to excuse Tenant from the payment of all Rent as and when due under this Lease.

 

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ARTICLE 17 NOTICES

 

(a)         Any notice, demand or other communication to be given under the provisions of this Lease by either party hereto to the other party hereto shall be effective only if in writing and (i) personally served, (ii) mailed by United States registered or certified mail, return receipt requested, postage prepaid, (iii) sent by a nationally recognized courier service (such as Federal Express) for next-day delivery, to be confirmed in writing by such courier, or (iv) sent by facsimile (with answer back acknowledged), addressed as follows:

 

To Tenant:                            Morgan’s Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, OH 44122

Attention: Barton J. Craig, Esq.

Facsimile: (216) 359-2103

 

with a copy to:                      Morgan’s Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, OH 44122

Attention: James Liguori

Facsimile: (216) 359-2105

 

To Landlord:                         DBMFI LLC

c/o Drawbridge Special Opportunities Fund LP

1345 Avenue of the Americas, 46th Floor

New York, New York 10105

Attention: Constantine M. Dakolias, President

Facsimile: (212) 798-6131

 

with a copy to:                      Fortress Investment Group LLC

10250 Constellation Boulevard, Suite 2350

Los Angeles, CA 90067

Attention: Joshua Pack

Facsimile: (310) 228-3031

 

and a copy to:                       Fortress Investment Group

5221 N. O’Connor Boulevard, Suite 700

Irving, Texas 75039

Attention: Andy Osborne

Facsimile: (214) 260-0938

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and a copy to:                       Sidley Austin LLP

555 West Fifth Street, Suite 4000

Los Angeles, California 90013-1010

Attention: Marc I. Hayutin, Esq.

Facsimile: (213) 896-6600

 

and a copy to:                       Sidley Austin LLP

555 West Fifth Street, Suite 4000

Los Angeles, California 90013-1010

Attention: William D. Ellis, Esq.

Facsimile: (213) 896-6600

 

(b)           Subject to the terms of this subsection (b), all notices, demands and other communications sent in the foregoing manner shall be deemed delivered when actually received or refused by the party to whom sent, unless (i) mailed, in which event the same shall be deemed delivered on the day of actual delivery as shown by the addressee’s registered or certified mail receipt or at the expiration of the third (3rd) Business Day after the date of mailing, whichever first occurs, or (ii) sent by facsimile, in which event the same shall be deemed delivered only if a duplicate notice sent pursuant to a method described in subsection (a)(i), (a)(ii) or (a)(iii) of this Article 17 is deemed to have been delivered within one Business Day after such facsimile is received by the recipient. Notwithstanding the foregoing, if any notice, demand or other communication is not received during business hours on a Business Day, such notice, demand or other communication shall be deemed to have been delivered at the opening of business on the next Business Day.

 

(c)           Either Landlord or Tenant may from time to time change its address for receiving notices under this Lease by providing written notice to the other party in accordance with this Article 17 .

 

ARTICLE 18     ACCESS

 

Landlord and its designees shall have the right upon not less than twenty-four (24) hours’ prior written notice to Tenant (except in the event of an emergency, where no prior notice shall be required) to enter upon any of the Demised Properties at reasonable hours to inspect such Demised Properties or, during the period commencing one year prior to the end of the Lease Term, for the purpose of exhibiting same to prospective tenants and posting “for lease” or similar signage at the Demised Properties, all in Landlord’s discretion. Any such entry and/or inspection by Landlord shall not unreasonably interfere with Tenant’s ability to conduct its business operations at the Demised Properties.

 

ARTICLE 19     SIGNS

 

Tenant may, at Tenant’s sole cost and expense, install or erect, at or on any Demised Property, signs of any height or dimensions and bearing such inscriptions as Tenant shall reasonably determine; provided, however, that no sign shall be installed or erected by Tenant at or on any Demised Property until all governmental approvals and permits required therefor have been obtained, all fees pertaining thereto have been paid by Tenant, and Tenant has delivered written evidence of such approvals, permits and payment to Landlord. Upon the termination of this Lease following an Event of Default or upon a rejection of this Lease in any bankruptcy or similar proceeding, Landlord shall have the right, at its sole option, to retain and use the signage structures in the future operation of the Demised Properties without payment of any compensation to Tenant, or to require Tenant to remove such signage structures at Tenant’s sole cost and expense (and, if such removal is not accomplished by Tenant promptly after notice from Landlord, Landlord may undertake such removal at Tenant’s sole cost and expense). This Article shall survive termination of this Lease.

 

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ARTICLE 20

	
 IMPROVEMENTS, BUILDING EQUIPMENT AND RESTAURANT EQUIPMENT

 

Section 20.01 Any Building Equipment and other Improvements at the Demised Properties on the Commencement Date shall be the property of Landlord. In the event that Tenant installs or erects any fixtures or other Improvements to the Demised Properties after the Commencement Date, such fixtures or other Improvements shall be the property of Landlord and remain upon and be surrendered with the Demised Properties; provided, however, that Tenant shall be required to remove any underground storage tanks or otherwise close such tanks in accordance with applicable Law, unless Landlord expressly consents in writing to the continued presence of any such underground storage tanks. Notwithstanding the foregoing provisions, Tenant shall be liable for all property taxes, assessments, and similar charges assessed against or allocable to any property at the Demised Properties (irrespective of whether such property is Building Equipment owned by Landlord or Restaurant Equipment or other personal property owned by Tenant) and that are attributable to any period of time during the Lease Term.

 

Section 20.02 During the Lease Term, Tenant shall be entitled to use the Building Equipment in Tenant’s operations at the Demised Properties. Tenant shall keep the Building Equipment in good working order and repair, shall not remove the Building Equipment from the Demised Properties (subject to the terms of this Section) and shall not permit any lien or other encumbrance to attach to Building Equipment except as may be caused by Landlord, and except any such liens that are being contested by Tenant in good faith by appropriate proceedings and that have been bonded over by Tenant to the reasonable satisfaction of Landlord or for which Tenant provides alternative security to the reasonable satisfaction of Landlord. Tenant shall keep (or cause to be kept) the Building Equipment insured and shall be responsible for any casualty or other loss to Building Equipment or occasioned by Building Equipment. Tenant shall at all times have a system in place to identify the Building Equipment from the Restaurant Equipment or any of Tenant’s personal property, and any items of equipment not so identified shall conclusively be presumed to be Building Equipment and shall be the property of Landlord. Tenant may, from time to time, retire or replace Building Equipment with new items of equipment of equal or greater value purchased by Tenant, in which event such replaced equipment shall constitute Building Equipment; provided, however that Tenant shall provide Landlord prompt written notice after any such replacement together with reasonable evidence as to the value and quality of the new Building Equipment. All Building Equipment shall be the property of Landlord, and Tenant shall execute such instruments and documents as Landlord may require to evidence such ownership by Landlord.

 

Section 20.03 Tenant shall also keep the Restaurant Equipment located in each Demised Property in good working order and repair, and shall not remove the Restaurant Equipment from the Demised Properties, except to the extent it is replaced by equipment of equal or greater quality and utility or is no longer required for restaurant operations; provided, however, that Tenant shall at all times maintain sufficient Restaurant Equipment at each Demised Property to be able to fully operate a Permitted Restaurant Brand at each Demised Property (whether or not Tenant has ceased operations at such Demised Property as described in Section 4.01). In the event of any replacement of any Restaurant Equipment with new items of equipment, such new items of equipment shall thereafter constitute Restaurant Equipment. Tenant shall not permit any lien or other encumbrance to attach to Restaurant Equipment, except Permitted Liens. Subject to Permitted Liens, all Restaurant Equipment shall be owned by Tenant (and not leased), except with the prior written consent of Landlord. Tenant shall keep the Restaurant Equipment fully insured and shall be responsible for any casualty or other loss to any Restaurant Equipment or occasioned by any Restaurant Equipment.

 

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Section 20.04 Tenant shall deliver to Landlord from time to time, within ten (10) days after Landlord’s request (or, if an Event of Default has occurred, immediately after Landlord’s request), a true, correct, and complete listing of every separate item of Restaurant Equipment (aggregated by category, in the manner in which such equipment is described in Tenant’s accounting records) and the Demised Property where it is located (the “Restaurant Equipment Schedule”). In no event shall Tenant’s listing of any Building Equipment on the Restaurant Equipment Schedule cause such Building Equipment to be deemed Restaurant Equipment hereunder.

 

ARTICLE 21 END OF TERM; HOLDING OVER

 

Section 21.01 Upon the expiration or earlier termination of the Lease Term, Tenant shall peaceably and quietly quit and surrender the Demised Properties, and all Alterations that are then part of the Demised Properties, broom clean and in good order and condition. Tenant shall within thirty (30) days prior to the end of the Lease Term transfer to Landlord all plans, drawings , other Alteration Information, and technical descriptions of the Demised Properties, and shall assign to Landlord all assignable permits, licenses, authorizations and warranties necessary for the operation of the Demised Properties (in each case to the extent not previously transferred or assigned to Landlord). Upon the expiration or earlier termination of this Lease, Tenant shall have the obligation to remove all Restaurant Equipment, except that Tenant may elect to abandon any trade fixtures or equipment that are attached or connected to the Demised Properties, with the prior written consent of Landlord. Tenant agrees to promptly repair and to indemnify, protect, defend and hold harmless Landlord from and against any damage caused by Tenant’s removal of any Restaurant Equipment. Any such items or other items of Restaurant Equipment or personal property that are not removed upon the expiration or earlier termination of this Lease shall be deemed abandoned and may be removed, disposed of or used by Landlord without payment of any compensation to Tenant.

 

Section 21.02 If Tenant holds over in possession after the expiration of the Lease Term, then such holding over shall not be deemed to extend the Lease Term or renew this Lease, but rather the tenancy thereafter shall continue as a tenancy at sufferance pursuant to the terms and conditions contained in this Lease, at one hundred fifty percent (150%) of the Base Rent otherwise then applicable (in addition to all Additional Rent); and Tenant shall be responsible for the consequences of any unauthorized holdover and shall indemnify, defend, protect (with counsel selected by Landlord) and hold Landlord Parties wholly free and harmless from any and all Losses arising therefrom.

 

Section 21.03 This Article 21  shall survive the expiration or termination of this Lease.

 

ARTICLE 22     TENANT ASSIGNMENT AND SUBLETTING

 

Section 22.01

 

(a)           Except as otherwise explicitly provided in this Article 22 and Article 23, neither Tenant, nor Tenant’s successors or assigns, shall assign or transfer, in whole or in part, by operation of law or otherwise, this Lease, or sublet the Demised Properties, in whole or in part, or permit the Demised Properties or any portion of any of them to be used or occupied by others, or enter into a management contract or other arrangement whereby the Demised Properties shall be managed or operated by anyone other than the owner of the Tenant’s leasehold estate, without the prior written consent of Landlord in each instance, which Landlord may withhold in its sole and absolute discretion. Without limitation, any of the following shall be deemed an assignment of this Lease: (i) any assignment or transfer of any direct or indirect ownership interest in Tenant, in whole or in part, by operation of law or otherwise, regardless of the number of tiers of ownership, in one or more transactions, in such a manner that the ultimate beneficial owners of Tenant transfer control of Tenant, and (ii) any encumbrance, pledge or hypothecation, in whole or in part, by operation of law or otherwise, of this Lease or any interest in the leasehold estate created by this Lease, or of any direct or indirect ownership interest in Tenant, regardless of the number of tiers of ownership. As used in the immediately preceding sentence, “control” means ownership of voting securities sufficient to elect a majority of the board of directors of a corporation, or analogous ownership interests of non-corporate entities, or otherwise having the power to direct the policies or operations of such corporation or non-corporate entities.

 

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(b)           After any assignment or sublease permitted by Landlord hereunder, and except as expressly provided herein, (i) Tenant shall remain liable for all its obligations under this Lease and Tenant shall execute and deliver to Landlord a guaranty in form and substance reasonably acceptable to both Landlord and Tenant, whereby Tenant explicitly guarantees all of the assignee’s or subtenant’s obligations under this Lease, and (ii) Landlord may condition its consent to any sublease regarding the Demised Properties upon the sublease containing the following provisions, in form and substance acceptable to Landlord and Landlord’s Lender (collectively, the “Subordination and Attornment Provisions ”): (A) that the sublease is subordinate in all respects to this Lease; (B) that in the event of the cancellation or termination of this Lease for any reason whatsoever or of the surrender of this Lease by operation of law prior to the expiration date of the sublease, subtenant shall make full and complete attornment to Landlord under either the terms of this Lease (with a base rent for the applicable Demised Properties equal to the greater of (y) the sublease base rent, and (z) the fair market rent for such Demised Properties as reasonably determined by Landlord) or the terms of the sublease, at Landlord’s election in its sole and absolute discretion, for the balance of the term of the sublease; (C) that subtenant waives the provisions of any Law then or thereafter in effect that may give subtenant any right of election to terminate the sublease or to surrender possession of the Demised Properties in the event any proceeding is brought by Landlord to terminate this Lease; and (D) that all of the foregoing provisions in (A) through (C) are for the benefit of both Tenant and Landlord and Landlord is a third party beneficiary thereof. Notwithstanding the foregoing, upon the request of Landlord or Landlord’s Lender, Landlord, Tenant and the subtenant shall execute and deliver to each other a separate subordination, attornment and nondisturbance agreement regarding the sublease, in form and substance reasonably acceptable to Landlord and Landlord’s Lender. Tenant shall submit current financial statements of any proposed assignee or sublessee together with Tenant’s request for Landlord’s approval of any proposed assignment or sublease. Tenant shall reimburse Landlord for all costs and expenses actually paid by Landlord in connection with any requested assignment or sublease; including, but not limited to, legal fees and costs in reviewing sublease or assignment documents and in preparing or reviewing consents.

 

(c)           If this Lease is assigned or transferred, or if all or any part of the Demised Properties is sublet or occupied by any party other than Tenant, Landlord may collect rent from the assignee, transferee, subtenant or occupant, and apply the net amount collected to the Rent reserved in this Lease, but no such assignment, subletting, occupancy or collection shall be deemed a waiver of any covenant or condition of this Lease, or the acceptance of the assignee, transferee, subtenant or occupant as tenant, or a release of Tenant from the performance or further performance by Tenant of its obligations under this Lease. Without limiting the generality of the forgoing, Tenant expressly acknowledges and agrees that, in the event of any assignment of this Lease, Tenant shall remain jointly and severally liable with the assignee for all of the obligations under this Lease, and in all other cases of any transfer of Tenant’s interest under this Lease, Tenant shall remain primarily liable for such obligations. Subject to the foregoing, the consent by Landlord to an assignment, transfer, management contract or subletting shall not in any way be construed to relieve Tenant from obtaining the express written consent of Landlord in each instance to any subsequent similar action that Tenant may desire to take.

 

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Section 22.02 Notwithstanding anything contained in Section 22.01, Tenant may sublease any Demised Property hereunder without Landlord’s consent, including without limitation to any of Tenant’s wholly-owned subsidiaries, provided all of the following conditions are satisfied (a) the subtenant is commercially and financially sound; (b) the permitted use under the sublease is limited to the operation of a restaurant (with any change in use subject to the prior written consent of each of Landlord and Tenant, which approval each may withhold in its reasonable discretion) and the covenants set forth in Section 4.02 are included in the sublease as obligations of the subtenant (although the covenants set forth in Section 4.01 may be expressly excluded from the sublease), (c) the sublease contains a covenant whereby the subtenant agrees, subject to Applicable Law, to continuously operate at the Demised Property during all hours that are customary for similarly situated sites of the same operating brand; provided, however, that if there are not similarly situated sites of the same operating brand, then the sublease shall contain a covenant whereby the subtenant agrees, subject to Applicable Law, to continuously operate at the Demised Property during all hours that are customary for similar restaurants in the same geographic location as the Demised Property; (d) the applicable sublease contains the Subordination and Attornment Provisions and prohibits the subtenant from effecting or permitting any Alterations (other than a Minor Project) without the prior written consent of Tenant and Landlord; (e) the term of the sublease, including any extension options, does not (and cannot) extend beyond the scheduled Lease Term; and (f) the subtenant has delivered to Landlord and any Landlord’s Lender, upon request, a subordination, non-disturbance and attornment agreement in form and substance reasonably acceptable to Landlord and any Landlord’s Lender; provided, however, that Tenant may only sublease without Landlord’s consent a maximum aggregate number (other than those to Tenant’s wholly-owned subsidiaries) of four (4) Demised Properties during the Lease Term (and any such subleased Demised Property shall continue to count against such maximum number, whether such subleased Demised Property is later assigned by Landlord pursuant to Article 30, or replaced by a Replacement Property under Article 31, or otherwise is removed from this Lease, or if the applicable sublease is terminated), and if Tenant has subleased four (4) Demised Properties (other than those to Tenant’s wholly-owned subsidiaries) during the Lease Term without Landlord’s consent, any additional sublease shall be subject to Landlord’s consent in its sole discretion, unless the sublease satisfies the conditions in Section 22.03  , in which event such sublease shall be subject to Landlord’s consent in its reasonable discretion.

 

Section 22.03 Notwithstanding anything contained in Section 22.01, Tenant may sublease any Demised Property hereunder subject to Landlord’s consent in its reasonable discretion, provided all of the following conditions are satisfied: (a) the subtenant is commercially and financially sound; (b) the permitted use under the sublease is limited to the operation of a retail establishment (which may include, but which shall not be limited to, the operation of a restaurant) (and with any change in use subject to the prior written consent of each of Landlord and Tenant, which approval each may withhold in its reasonable discretion) and the covenants set forth in Section 4.02 are included in the sublease as obligations of the subtenant (although the covenants set forth in Section 4.01 may be expressly excluded from the sublease), (c) the sublease contains a covenant whereby the subtenant agrees, subject to Applicable Law, to continuously operate at the Demised Property during all hours that are customary for similarly situated sites of the same operating brand; provided, however, that if there are not similarly situated sites of the same operating brand, then the sublease shall contain a covenant whereby the subtenant agrees, subject to Applicable Law, to continuously operate at the Demised Property during all hours that are customary for similar retail establishments in the same geographic location as the Demised Property; (d) the applicable sublease contains the Subordination and Attornment Provisions and prohibits the subtenant from effecting or permitting any Alterations (other than a Minor Project) without the prior written consent of Tenant and Landlord; (e) the term of the sublease, including any extension options, does not (and cannot) extend beyond the scheduled Lease Term, and (f) the subtenant has delivered to Landlord and any Landlord’s Lender, upon request, a subordination, non-disturbance and attornment agreement in form and substance reasonably acceptable to Landlord and any Landlord’s Lender.

 

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Section 22.04 Notwithstanding anything to the contrary contained in Section 22.01, Tenant may assign all, but not less than all, of its interest in this Lease without Landlord’s prior written consent, Tenant shall be released from any liability accruing under this Lease after the date of such assignment, provided that (a) (i) the assignee has an S&P Credit Rating of BBB- or higher, and a Moody’s Credit Rating of Baa3 or higher; or (ii) the assignee has an aggregate tangible net worth, as determined in accordance with GAAP, of at least US$20,000,000; (b) the assignee assumes all of Tenant’s obligations under this Lease; and (c) Tenant delivers to Landlord not less than thirty (30) days’ prior written notice of any such assignment, together with documents reasonably acceptable to Landlord evidencing the satisfaction of the conditions set forth in (a) and (b) of this sentence. As referenced herein, “S&P Credit  Rating” means the credit rating assigned by Standard & Poor’s Rating Group to the highest rated publicly issued debt securities of the assignee, and “Moody’s Credit Rating” means the credit rating assigned by Moody’s Investors Service to the highest rated publicly issued debt securities of the assignee.

 

Section 22.05 Upon any sublease or assignment permitted as provided in this Article 22 , Tenant shall deliver to Landlord copies of such sublease or assignment agreement in form and substance reasonably satisfactory to Landlord (including assumption language reasonably satisfactory to Landlord in any assignment agreement) promptly after the execution thereof by Tenant. An assignment made with Landlord’s consent or as otherwise permitted hereunder shall not be effective until Tenant delivers to Landlord an executed counterpart of such assignment containing an agreement, in recordable form, executed by the assignor and the proposed assignee, in which the assignee assumes the performance of the obligations of the assignor under this Lease throughout the Lease Term. In no event shall Tenant be entitled to amend, extend or otherwise modify any sublease or assignment agreement without the prior written consent of Landlord, which consent Landlord may withhold in its sole and absolute discretion.

 

Section 22.06 Subject to the terms of this Lease, this Lease shall be binding upon, enforceable by, and inure to the benefit of the parties hereto and their respective heirs, successors, representatives and assigns.

 

ARTICLE 23 FINANCINGS

 

Section 23.01 This Lease shall be subject and subordinate to all present and future ground or underlying leases of any of the Demised Properties and to the lien of any mortgages or trust deeds, now or hereafter in force against any of the Demised Properties, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages or trust deeds, or the lessors under such ground or underlying leases, require in writing that this Lease be superior thereto; and Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any mortgage or deed of trust to which this Lease is subordinate, or in the event of any termination of any ground or underlying lease to which this Lease is subordinate, to attorn, without any deductions or set-offs whatsoever, to the purchaser upon any such foreclosure sale, if so requested to do so by such purchaser, and to the ground or underlying lease lessor, if so requested to do so by such ground or underlying lease lessor, and to recognize such purchaser, or ground or underlying lessor, as the case may be, as the lessor under this Lease; provided, however, that the foregoing subordination to future ground or underlying leases of the Demised Properties and to the lien of any future mortgages or trust deeds in force against the Demised Properties may be conditioned upon Landlord providing Tenant with a subordination, non-disturbance and attornment agreement in favor of Tenant in the form attached hereto as Exhibit B, or other commercially reasonable form requested by Landlord that provides, without limitation, that this Lease and the rights of Tenant hereunder shall survive any foreclosure proceeding brought under such mortgage or deed of trust, or termination of such ground or underlying lease (as applicable), provided Tenant is not in default or breach of its obligations under this Lease (either, an “SNDA”). Without limiting the foregoing, (a) as of the Commencement Date, each of Landlord, Landlord’s Lender, and Tenant shall execute and deliver to each other a subordination, non-disturbance and attornment agreement in the form attached hereto as Exhibit B , and (b) Tenant shall, and shall cause any subtenant, from time to time, within eight (8) days after any request by Landlord, to execute and deliver such other instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease (at Landlord’s election) to any such mortgages, trust deeds, ground or underlying leases (including, at Landlord’s election, one or more additional SNDAs requested by Lender).

 

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Section 23.02 Tenant shall cooperate with Landlord and execute any and all instruments reasonably requested by Landlord (including, if necessary, the execution of an amendment to this Lease), in the establishment and maintenance of cash management procedures reasonably requested by any Landlord's Lender with respect to payment of Base Rent and other amounts payable by Tenant directly to Landlord as and when the same are due and payable hereunder; provided, however, that Tenant shall not be obligated to agree to any requested action or execute any requested instrument if the same would have a material adverse effect upon Tenant, unless Tenant is reasonably compensated therefor by Landlord. In addition, Tenant agrees to cooperate in good faith with Landlord, any Landlord’s Lender and any Landlord’s Mortgagee, in connection with any sale or transfer of the any of the Demised Properties by Landlord or any transfer, participation, syndication and/or securitization of any loan secured by any of the Demised Properties, or any or all servicing rights with respect thereto, including (a) by providing such documents, financial and other data, and other information and materials (the " Disclosures") that would typically be required with respect to Tenant by a purchaser of the any of the Demised Properties and/or a purchaser, transferee, assignee, servicer, participant, co-lender, investor or rating agency involved with respect to any transfer, participation, syndication and/or securitization of any loan secured by any of the Demised Properties, as applicable (collectively, the "Transfer Parties" and each, a "Transfer Party "); and (b) by amending the terms of this Lease to the extent reasonably necessary so as to satisfy the requirements of the Transfer Parties involved in any such transfer, participation, syndication or securitization; provided, however, that Tenant shall not be obligated to agree to any requested action, or execute any requested amendment, if the same would have a material adverse effect upon Tenant, unless Tenant is reasonably compensated therefor by Landlord

 

Section 23.03 Notwithstanding Section 22.01 above, but subject to the terms of this Article, Landlord agrees that Tenant shall have the right to encumber, pledge or hypothecate Tenant’s interest in the leasehold estate created by this Lease. All proceeds from any Leasehold Mortgage shall remain the property of Tenant. Landlord shall not be obligated to subordinate any or all of Landlord’s right, title or interest in and to the Demised Properties and this Lease to the lien of any Leasehold Mortgage. A Leasehold Mortgage shall encumber only Tenant’s leasehold interest in the Demised Properties, and shall not encumber Landlord’s right, title or interest in the Demised Properties. Landlord shall have no liability whatsoever for the payment of any obligation secured by any Leasehold Mortgage or related obligations. A Leasehold Mortgage shall be, and hereafter shall continue at all times to be, subject to each and all of the covenants, conditions and restrictions set forth in this Lease, and junior, subject and subordinate, in each and every respect, to all rights and interests of any Landlord’s Mortgagee now or hereafter affecting any of the Demised Properties. Should there be any conflict between the provisions of this Lease and the provisions of any Leasehold Mortgage, the provisions of this Lease shall control. No Leasehold Mortgage shall be for a term longer than the Original Lease Term. Either prior to or concurrently with the recordation of any Leasehold Mortgage, Tenant shall cause a fully conformed copy thereof and of the financing agreement secured thereby to be delivered to Landlord and Landlord’s Mortgagee, together with a written notice containing the name and post office address of Tenant’s Lender. Upon written request from Tenant, Landlord agrees to deliver an estoppel certificate in favor of Tenant’s Lender regarding this Lease, in form and substance reasonably acceptable to Landlord and Tenant’s Lender. Tenant agrees that a condition precedent to its granting a Leasehold Mortgage to any Tenant’s Lender shall be the execution and delivery by such Tenant’s Lender to Landlord and Landlord’s Lender of a subordination, non-disturbance and attornment agreement, in form and substance reasonably acceptable to Landlord and Landlord’s Lender, that shall provide, without limitation, that upon a default under the Leasehold Mortgages, Tenant’s Lender may foreclose only on this Lease as an entirety, applicable to all, but not less than all (even if otherwise possible under applicable Law) of the Demised Properties. If Landlord delivers to Tenant a Default notice under this Lease, Landlord shall notify any Tenant’s Lender (without any liability for failure to provide such notification) that has delivered to Landlord a prior written request for such notice, and Landlord shall recognize and accept the performance of any obligation of Tenant hereunder by Tenant’s Lender (provided said performance occurs within the same cure periods as provided to Tenant under this Lease); provided, however that nothing contained herein shall obligate Tenant’s Lender to take any such actions. Any act by Tenant or Tenant’s Lender in violation of this Section 23.03  shall be null and void and of no force or effect. This Section shall survive termination of this Lease.

 

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ARTICLE 24 ESTOPPEL CERTIFICATE

 

Tenant shall, without charge, at any time and from time to time, within ten (10) days after any request by Landlord, deliver to Landlord or any other Person specified by Landlord, duly executed and acknowledged, a completed Estoppel Certificate in substantially the form as set forth on Exhibit C attached hereto, or other commercially reasonable estoppel certificate confirming such information regarding this Lease, Tenant as Landlord may request (either, an “Estoppel Certificate”). Tenant’s failure to deliver to Landlord any Estoppel Certificate requested by Landlord as and when provided in this Article shall be deemed conclusive against Tenant as to the truthfulness of the items stated in such Estoppel Certificate requested by Landlord.

 

ARTICLE 25 RECORDING

 

Neither Landlord nor Tenant shall record this Lease; however, upon the request of either party hereto, the other party shall join in the execution and recordation of a memorandum of lease (or similar instrument) in a form substantially similar to the form attached hereto as Exhibits D-1 through D­5. Tenant shall pay all costs charged by the applicable local recorder in connection with the recordation of any such memorandum of lease (or similar instrument).

 

ARTICLE 26 APPLICABLE LAW; WAIVER OF JURY TRIAL

 

This Lease shall be construed in accordance with, and this Lease and all matters arising out of or relating to this Lease (whether in contract, tort or otherwise) shall be governed by, the law of the State of New York without regard to conflicts of law principles; provided, however, that any forcible entry and detainer action or similar proceeding shall be governed by the laws of the state in which the applicable Demised Property is located. If any provision of this Lease or the application thereof shall, to any extent, be invalid or unenforceable, the remainder of this Lease shall not be affected thereby, and each provision of this Lease shall be valid and enforceable to the fullest extent permitted by applicable Law.

 

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TENANT AND LANDLORD, EACH HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK, AND EACH IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS LEASE SHALL BE LITIGATED IN SUCH COURTS (EXCEPT FOR FORCIBLE ENTRY AND DETAINER ACTIONS, OR SIMILAR PROCEEDINGS, WHICH SHALL BE LITIGATED IN COURTS LOCATED WITHIN THE COUNTY AND STATE IN WHICH THE APPLICABLE DEMISED PROPERTY IS LOCATED). TENANT AND LANDLORD EACH ACCEPTS, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS (EXCEPT AS PROVIDED ABOVE IN THIS PARAGRAPH) AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS LEASE.

 

EACH OF TENANT AND LANDLORD, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS LEASE.

 

TENANT AND LANDLORD EACH ACKNOWLEDGES THAT THE PROVISIONS OF THIS ARTICLE ARE A MATERIAL INDUCEMENT TO THE OTHER PARTY’S ENTERING INTO THIS LEASE.

 

ARTICLE 27 LIABILITY OF PARTIES

 

   Section 27.01  The obligations of Landlord under this Lease are not personal obligations of the individual members, partners, directors, officers, shareholders, agents or employees of Landlord. Tenant shall look solely to the Demised Properties for satisfaction of any liability of Landlord and shall not look to other assets of Landlord nor seek recourse against the assets of the individual members, partners, directors, officers, shareholders, agents or employees of Landlord. Whenever Landlord transfers its interest in any Demised Property, Landlord shall be automatically released from further performance under this Lease with respect to such Demised Property and from all further liabilities and expenses hereunder related to such Demised Property.

 

   Section 27.02  The obligations of Tenant under this Lease are not personal obligations of the individual members, partners, directors, officers, shareholders, agents or employees of Tenant. Landlord shall not seek recourse against the assets of the individual members, partners, directors, officers, shareholders, agents or employees of Tenant. If more than one Person is named as Tenant hereunder, the obligations under this Lease of all such Persons as Tenant shall be joint and several.

 

ARTICLE 28 ATTORNEYS’ FEES; EXPENSES

 

Without limiting any other obligation of Tenant to timely indemnify or reimburse Landlord hereunder (including under Article 9 and Article 29):

 

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(a)           If any party to this Lease shall bring any action or proceeding for any relief against the other, declaratory or otherwise, arising out of this Lease, the losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees and costs incurred in bringing or defending such action or proceeding and/or enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the commencement of such action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing for the recovery of attorneys’ fees and costs, separate from the judgment, incurred in enforcing such judgment. The prevailing party shall be determined by the trier of fact based upon an assessment of which party’s major arguments or positions taken in the proceedings could fairly be said to have prevailed over the other party’s major arguments or positions on major disputed issues; provided, however, that the parties agree that in no event shall Tenant be deemed a prevailing party if an Event of Default then exists under this Lease. For the purposes of this clause, attorneys’ fees shall include fees incurred in the following: (i) post-judgment motions; (ii) contempt proceedings; (iii) garnishment, levy, and debtor and third party examinations; (iv) discovery; and (v) bankruptcy litigation. This clause is intended to be expressly severable from the other provisions of this Agreement, is intended to survive any judgment and is not to be deemed merged into the judgment.

 

(b)           Tenant agrees to pay or, if Tenant fails to pay, to reimburse, Landlord upon receipt of written notice from Landlord for all reasonable costs and expenses (including reasonable attorneys’ fees and costs) incurred by Landlord in connection with (i) the preparation, negotiation, execution and delivery of this Lease and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby and all the costs of furnishing all opinions by counsel for Tenant (including any opinions requested by Landlord as to any legal matters arising under this Lease or the other Transaction Documents); (ii) Tenant’s ongoing performance of and compliance with its agreements and covenants contained in this Lease and the other Transaction Documents on its part to be performed or complied with, including confirming compliance with environmental and insurance requirements, and determining whether defaults or Events of Default may exist under any of the Transaction Documents; (iii) any request by Tenant to Landlord, including Landlord’s actions in response thereto; (iv) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Lease and the other Transaction Documents and any other documents or matters requested by Landlord in accordance with the terms of the Transaction Documents; (v) securing Tenant’s compliance with any requests made pursuant to the provisions of this Lease or other Transaction Documents; and (vi) enforcing any obligations of or collecting any payments due from Tenant under this Lease, the other Transaction Documents or with respect to any Demised Property.

 

ARTICLE 29 ENVIRONMENTAL

 

Section 29.01 Tenant acknowledges that Landlord makes no warranties or representations of any kind, or in any manner or in any form whatsoever, as to the status of Environmental Conditions or Hazardous Materials at the Demised Properties. Tenant shall conduct at its own expense any and all investigations regarding Environmental Conditions of the Demised Properties and will satisfy itself as to the absence or existence of Hazardous Materials contamination of the Demised Properties. Tenant’s entry into this Lease shall be made at its sole risk.

 

Section 29.02 Tenant shall comply with all Environmental Laws and cause and ensure the Demised Properties and all operations thereon comply with all applicable Environmental Laws. Tenant shall not suffer or permit any loss, on, at, under or affecting the Demised Properties of any source if the same pose a health or safety risk to invitees or employees. From and after the Commencement Date, Tenant shall not be entitled to the Use of any Hazardous Materials at the Demised Properties other than De Minimis Amounts, which shall be performed in full compliance with all Environmental Laws and any other applicable Laws. Tenant shall be prohibited from conducting or allowing the Release of Hazardous Materials onto, on, about, under or from the Demised Properties, the exception being sewer or other permitted discharges or Releases or other De Minimis Amounts, in full compliance with all Environmental Laws and any other applicable Laws. From and after the date of this Lease, Tenant covenants to, and shall, undertake all Remedial Activities necessary to comply with Environmental Laws and address any Use or Release of Hazardous Materials after the date of this Lease, by Tenant or its agents, employees, representatives, invitees, licensees, subtenants, customers or contractors (“Other Parties”), or otherwise adversely affecting any Demised Property at Tenant’s sole cost and expense, and shall give immediate written notice of same to Landlord, including the abatement of any mold or fungi that constitute Hazardous Materials, even if no applicable Law compels such abatement. If any Remedial Activities are required to be performed at any location other than the Demised Properties, Tenant shall use its best efforts to obtain any required access agreements from third parties.

 

  

  

  

 

Section 29.03 In addition to any other obligation herein, Tenant shall indemnify, defend, protect and hold Landlord Parties free and harmless from any and all Losses and other obligations of any kind whatsoever that may be made against or incurred by Landlord Parties in connection with (a) the violation of any Environmental Law, or (b) Hazardous Materials or Environmental Conditions at, on, under, about or from the Demised Properties during the Lease Term (and in the event of any holding over by Tenant, during any period that Tenant occupies the relevant Demised Property) whether or not the same constitute a violation of any Environmental Law, including any and all costs and fees of attorneys or experts incurred by Landlord in defending against same. This and any other right of Landlord under this Lease shall inure to the benefit of Landlord’s successors and assigns, as well as Landlord’s Lenders and Landlord’s Mortgagees and their respective successors and assigns as third party beneficiaries.

 

Section 29.04 Tenant shall promptly inform Landlord in writing of (a) any and all enforcement actions, initiation of Remedial Activities where no Remedial Activities are currently being conducted upon receipt of such notification, or other governmental or regulatory actions (excluding routine actions such as permit renewals) instituted, completed or threatened pursuant to any Environmental Laws affecting the Demised Properties; (b) all claims made or threatened by any third Person against Tenant or the Demised Properties relating in any way whatsoever to Hazardous Materials or Environmental Conditions (the matters set forth in clauses (a) and (b) are hereinafter referred to as “Environmental Claims”); (c) Tenant’s knowledge of any material Release of Hazardous Materials at, on, in, under to or from the Demised Properties or on, in or under any adjoining property. Tenant shall also supply to Landlord within three Business Days after Tenant first receives or sends the same, copies of all claims, reports, complaints, notices, warnings, asserted violations or other communications relating in any way to the matters described in this Section.

 

Section 29.05 In addition to any other obligations herein, Tenant shall be solely responsible for and shall indemnify, protect, defend, and hold harmless all Landlord Parties from and against any and all Losses directly or indirectly arising out of or associated in any manner whatsoever with Tenant’s Use or the presence of Hazardous Materials or Release of Hazardous Materials at, on, under, about or from the Demised Properties during the Lease Term (and in the event of any holding over by Tenant, during any period that Tenant occupies the relevant Demised Property). Tenant’s indemnity and release includes: (a) the costs associated with Remedial Activities, including all necessary plans and reports, incurred by the U.S. Environmental Protection Agency, or any other federal, state or local governmental agency or entity or by any other Person, incurred pursuant to the CERCLA, RCRA, or any other applicable Environmental Laws; (b) any oversight charges, fines, damages or penalties arising from the presence or Release of Hazardous Materials, and any related Remedial Activities, incurred pursuant to the provisions of CERCLA, RCRA, or any other applicable Environmental Laws; (c) any liability to third parties arising out of the presence or Release of Hazardous Materials for personal injury, bodily injury, property damage or natural resource damage arising under any statutory or common law theory, including damages assessed for the maintenance of a public or private nuisance, the costs of Remedial Activities, or for the carrying on of an abnormally dangerous activity; (d) all direct or indirect compensatory, consequential, or punitive damages arising out of any claim based on the presence or Release of Hazardous Materials or damage or threatened damage to Environmental Conditions; (e) any and all reasonable costs, fees and expenses of attorneys, consultants and experts incurred or sustained in making any investigation on account of any claim, in prosecuting or defending any action brought in connection therewith, in obtaining or seeking to obtain a release therefrom, or in enforcing any of the agreements herein contained; (f) Rent during any period of Remedial Activities equal to the Base Rent then in effect, or if this Lease has terminated, the Base Rent that was in effect on the Termination Date; and (g) any action or omission or use of the Demised Properties by any subtenant. The foregoing indemnity shall apply to Tenant’s Use of Hazardous Materials irrespective of whether any of Tenant’s activities were or will be undertaken in accordance with Environmental Laws or other applicable Laws. This indemnity is intended to be operable under 42 U.S.C. 9607(e)(1). Tenant specifically agrees that it shall not sue or seek contribution from any indemnity or any successors or assigns thereof in any matter relating to any Hazardous Material liability. All costs and expenses paid or incurred by Landlord for which Tenant is obligated to indemnify Landlord under this Section shall be paid promptly by Tenant to Landlord. This Section shall survive termination of this Lease.

 

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ARTICLE 30 LANDLORD ASSIGNMENT

 

Section 30.01 This Lease shall be fully assignable by Landlord or its successors and assigns, in whole or in part, subject to the terms of Article 27 and this Article. In the event that from time to time Landlord desires to partially assign its interest in this Lease with respect to one or more of the Demised Properties (including to one or more Affiliates of Landlord), then (a) Landlord shall determine in its sole discretion, the Base Rent allocated to any Demised Properties covered by the partial assignment (the “Allocated Base Rent Amount”), (b) Landlord, at its cost and expense, shall prepare a landlord assignment lease agreement (or landlord assignment lease agreements, in Landlord’s discretion) in the form attached hereto as Exhibit E with respect to any such Demised Properties (each, a “Landlord  Assignment Lease Agreement”); (c) upon the assignment by Landlord, this Lease shall be amended to exclude any such Demised Properties from this Lease, the Base Rent hereunder shall be reduced by the Allocated Base Rent Amount; and (d) the Base Rent payable under the Landlord Assignment Lease Agreement (or Landlord Assignment Lease Agreements) shall equal the Allocated Base Rent Amount. In such event, each party (including Landlord’s assignee), shall execute any such new Landlord Assignment Lease Agreement within five (5) Business Days after delivery of an execution version thereof. In addition, Tenant shall execute and deliver to Landlord any other instruments and documents requested by Landlord in connection with the assignment, including a new guaranty (substantially in the form of Exhibit F) of any such Landlord Assignment Lease Agreement and any commercially reasonable subordination, non-disturbance and attornment agreement that may be requested by Landlord’s assignee’s lenders. In addition, Tenant agrees to cooperate reasonably with Landlord in connection with any such assignment. From and after the effective date of any such Landlord Assignment Lease Agreement, Landlord shall be automatically released (without need for any further agreement or other document) from any liability thereafter arising with respect to the Demised Properties covered thereby. In no event shall Landlord have any liability under any Landlord Assignment Lease Agreement. Without limiting the foregoing, (x) Tenant agrees that Landlord may agree in its sole discretion with any purchaser or assignee of any Demised Property covered by a Landlord Assignment Lease Agreement to provide (or have an Affiliate of Landlord provide) asset management and/or act as servicer regarding such Demised Property; (y) Tenant acknowledges that any Landlord Assignment Lease Agreement may be, in Landlord’s sole discretion, a “master lease” agreement covering multiple Demised Properties (which Landlord Assignment Lease Agreement may include, in Landlord’s sole discretion, language materially identical to that contained in Recital D and Section 30.03 of this Lease, even if such language does not appear in the form of Landlord Assignment Lease Agreement attached hereto as Exhibit E); and (z) any Landlord assignee that is an Affiliate of Landlord may, in its sole discretion, elect to conform the terms of such Landlord Assignment Lease Agreement (other than Base Rent) to this Lease rather than to the form of Landlord Assignment Lease Agreement attached hereto as Exhibit E.

 

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Section 30.02 Landlord and Tenant agree that this Lease constitutes a true lease and not a financing or other form of transaction (including for federal income tax purposes). In furtherance of the foregoing, Landlord and Tenant each irrevocably waives any claim or defense based upon the characterization of this Lease as anything other than a true lease and irrevocably waives any claim or defense that asserts that this Lease is anything other than a true lease. Landlord and Tenant covenant and agree that they will not assert that this Lease is anything but a true lease. Landlord and Tenant each stipulate and agree not to challenge the validity, enforceability or characterization of this Lease of the Demised Properties as a true lease and further stipulate and agree that nothing contained in this Lease creates or is intended to create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like. Landlord and Tenant each shall support the intent of the parties that the lease of the Demised Properties pursuant to this Lease is a true lease and does not create a joint venture, partnership (either de jure or de facto), equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs. Tenant has discussed the characterization of this Lease with its independent auditors and Tenant believes that this Lease will be treated as an operating lease rather than a capital lease. Landlord shall claim all depreciation with respect to the Demised Properties.

 

Section 30.03 Landlord and Tenant agree that this Lease constitutes a single and indivisible lease as to all of the Demised Properties collectively, and shall not be subject to severance or division unless and to the extent, pursuant to Section 30.01, Landlord elects to effect a partial assignment of this Lease. In furtherance of the foregoing, and except as may result from the amendment of this Lease to eliminate certain properties and reduce Base Rent in conjunction with the execution of Landlord Assignment Lease Agreements pursuant to the terms of Section 30.01  , Landlord and Tenant each (a) waives any claim or defense based upon the characterization of this Lease as anything other than a master lease of all the Demised Properties and irrevocably waives any claim or defense that asserts that this Lease is anything other than a master lease, (b) covenants and agrees that it will not assert that this Lease is anything but a unitary, unseverable instrument pertaining to the lease of all, but not less than all, of the Demised Properties, (c) stipulates and agrees not to challenge the validity, enforceability or characterization of this Lease of the Demised Properties as a unitary, unseverable instrument pertaining to the lease of all, but not less than all, of the Demised Properties, and (iv) shall support the intent of the parties that this Lease is a unitary, unseverable instrument pertaining to the lease of all, but not less than all, of the Demised Properties, if, and to the extent that, any challenge occurs.

 

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ARTICLE 31 REPLACEMENTS

 

Section 31.01 Property Replacements. During the Lease Term, Tenant, at its election, may substitute up to an aggregate amount not to exceed fifteen percent (15%) of the Demised Properties (other than the St. Louis Properties) (each a “Replaced Property”) with tracts of real property on which Tenant operates another Permitted Restaurant Brand restaurant (each a “Replacement Property”). Tenant shall submit for Landlord’s review evidence of the fair market value of the proposed Replacement Property satisfactory to Landlord and any Landlord’s Lender and compliant with Landlord’s Lender’s regulatory requirements, as well as current survey, current environmental report, records of any administrative proceedings or environmental claims involving the proposed Replacement Property, current title report and profit/loss statements for the previous two years of the Replacement Property and similar data with respect thereto, as well as evidence of the fair market value of the proposed Replaced Property satisfactory to Landlord and any Landlord’s Lender and compliant with Landlord’s Lender’s regulatory requirements, and other information with respect to the Replaced Property as Landlord and Landlord’s Lender may request. Provided that (a) the Replacement Property has equivalent or greater fair market value and equivalent or stronger financial operating history than the Replaced Property, each as determined by Landlord in its sole good faith discretion, (b) the Replacement Property is located within the same geographic area as the Replaced Property, is in a portion of such geographic area with equivalent or better customer demographics and equivalent or less business competition, has equivalent or better traffic flows, is not subject to a higher property tax rate, and is not subject to fees and other costs to comply with applicable Laws that are materially higher than those that the Replaced Property is subject to, each as determined in Landlord’s sole good faith discretion, (c) the Replacement Property has no material title or environmental defects, and has no other material liability substantially greater than the Replaced Property on the date of the applicable substitution, all in Landlord’s sole good faith discretion, (d) Tenant has satisfied such other conditions as Landlord or Landlord’s Lenders may impose in their sole good faith discretion, (e) Landlord and Landlord’s Lenders, in their sole good faith discretion, otherwise approve the substitution (such approval rights encompassing, without limitation, Landlord’s determination as to whether the substitution will qualify as a like-kind exchange in which no gain is recognized pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended), and (f) such substitution is in compliance with all the provisions of the federal income tax law relating to “real estate mortgage investment conduits” (“REMICs”), which appear in Sections 860A through 860G of the Internal Revenue Code of 1986, as amended from time to time (“Code”), then Landlord, within thirty (30) days after the submission of all reports and other information required hereunder (such thirty (30) day period is referred to in this Article as the “Consideration Period”), shall approve the substitution of the Replacement Property for the Replaced Property. Without limiting the foregoing, upon the written request of Landlord or Landlord’s mortgagee, as the case may be, Tenant shall deliver to Landlord as a condition precedent to any approval of the substitution of a Replacement Property for a Replaced Property, a legal opinion, in form and substance acceptable to Landlord or Landlord’s mortgagee, as the case may be, in its sole discretion, to the effect that, with respect to any REMIC trust that holds any loan secured by a mortgage on the Demised Properties, the release of the Replaced Property and the substitution of the Replacement Property will not cause (x) such loan to fail to be a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, (y) any failure of such REMIC trust to qualify as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code for federal income tax purposes, or (z) the imposition of any tax upon the REMIC trust or any of such REMIC trust’s assets, including any tax on “prohibited transactions” imposed under Section 860F(a)(2) of the Code. Subject to the foregoing, in the event that Landlord fails to approve the proposed substitution, Landlord shall deliver to Tenant a written notice within ten (10) days following the expiration of the Consideration Period, disapproving the proposed substitution and describing which of Landlord’s and/or Landlord’s Lenders’ conditions have not been satisfied. In the event of any such disapproval, Tenant shall have an additional fifteen (15) day period from and after the date Landlord’s disapproval notice is delivered to Tenant to submit any additional information or documentation to Landlord regarding satisfaction of the foregoing conditions. In the event all the foregoing conditions are still not satisfied, then Landlord shall deliver to Tenant a second written notice within ten (10) days following the expiration of such fifteen (15) day period disapproving the proposed substitution and describing which of said conditions have not been satisfied. If all other conditions set forth above regarding the proposed substitution have been satisfied except that Landlord believes that the Replacement Property does not have equivalent or greater fair market value to the Replaced Property, then Tenant may, by written notice delivered to Landlord within ten (10) days after Landlord delivers to Tenant Landlord’s second written notice of Landlord’s disapproval of the proposed substitution, invoke the following arbitration procedure to determine whether the Replacement Property has an equivalent or greater fair market value to the Replaced Property (in which event the proposed substitution shall be deemed approved), or a fair market value less than the Replaced Property (in which event the proposed substitution shall remain disapproved). The date when such Tenant’s notice invoking the arbitration is delivered to Landlord is referred to in this Section as the “Notice Date”).

 

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(1)           Submission of Proposed Value. Within five (5) days after the Notice Date, (a) Landlord shall deliver to Tenant an MAI fair market value appraisal for each of the Replacement Property and the Replaced Property supporting its assertion that the fair market value of the Replacement Property is less than the fair market value of the Replaced Property, and (b) Tenant shall deliver to Landlord an MAI fair market value appraisal for each of the Replacement Property and the Replaced Property supporting its assertion that the fair market value of the Replacement Property is equal to or greater than the fair market value of the Replaced Property. If either party (as referred to this Section, a “Failing Party”) fails to deliver its appraisals to the other party on or before the last day of such five (5)-day period, but the other party delivers its appraisals to the Failing Party on or before the last day of such five (5)-day period, the assertion supported by such other party’s appraisals delivered pursuant to subsection (1), above (i.e. that the fair market value of the Replacement Property is less than, or equal to or greater than (as the case may be), the fair market value of the Replaced Property) shall be binding on both parties, and the arbitration shall be deemed concluded as of the first day following the expiration of such five (5)-day period.

 

(2)           Appointment and Qualifications of Arbitrator. If the arbitration is not deemed concluded pursuant to subsection (1), above, then within fifteen (15) days after the Notice Date, Landlord and Tenant shall each appoint one licensed real estate appraiser who has been active over the previous ten-year (10-year) period in the appraisal of single tenant quick serve/casual dining restaurants within the county in which the applicable Replacement Property is located (each such appraiser chosen pursuant to this subsection (2), an “Arbitrator”). Each of Landlord and Tenant shall notify the other party, in writing, of its Arbitrator (and the business address thereof) within two Business Days after the appointment thereof (collectively, the “Arbitrator Appointment Notices”). Each of Landlord and Tenant agrees that any Arbitrator may be (but is not required to be) an appraiser who prepared one or both of the fair market value appraisals delivered by Landlord and Tenant pursuant to subsection (1), above.

 

(3)           Appointment of Third Arbitrator. If each party appoints an Arbitrator and notifies the other party in accordance with subsection (2), above, then the two Arbitrators shall, within ten (10) days after delivery of the later of the two Arbitrator Appointment Notices, agree on and appoint a third Arbitrator (whom shall be a licensed real estate appraiser with all other qualifications for the initial two Arbitrators chosen by the parties as set forth in subsection (2), above) and provide prompt written notice to Landlord and Tenant of such third Arbitrator and the business address thereof. If the two Arbitrators fail to agree on and appoint a third Arbitrator within such ten (10) day period, then either Landlord or Tenant may elect to have the third Arbitrator selected by the AAA by delivering written notice thereof to the other party. In such event, the electing party shall petition the AAA (with a copy to the other party) to so determine the third Arbitrator and the parties shall cooperate reasonably with each other and the AAA (including by responding promptly to any requests for information made by the AAA) in connection with such determination. The decision of the AAA shall be final and conclusive as to the identity of the third Arbitrator. If any fees of the third Arbitrator or the AAA are required to be paid in advance (prior to the completion of the arbitration procedure described in this Section) in order for such Arbitrator, or the AAA, as the case may be, to commence or continue its work in connection with the arbitration described in this Section, each party shall promptly pay one-half of such fees as and when due, and if either Landlord or Tenant fails to pay its one-half share of any such fees as and when due (such party is referred to in this Section as the “Delinquent  Party”), and the other party does pay its one-half share of any such fees as and when due, then if the Delinquent Party fails to pay its one-half share of all such fees within ten (10) days after written notice from the other party, the assertion supported by such other party’s appraisals delivered pursuant to subsection (1) (i.e. that the fair market value of the Replacement Property is less than, or equal to or greater than (as the case may be), the fair market value of the Replaced Property) shall be binding on both parties, and the arbitration shall be deemed concluded as of the first day following the expiration of such ten (10)-day period.

 

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(4)           Arbitrators’ Decision . If the arbitration is not previously deemed concluded pursuant to subsection (3), above, then within thirty (30) days after the appointment of the third Arbitrator, the three Arbitrators shall decide whether the fair market value of the Replacement Property is equal to or greater than the fair market value of the Replaced Property and shall notify Landlord and Tenant in writing of each Arbitrator’s decision. The determination of each Arbitrator shall be limited to the sole issue of, and each Arbitrator shall have neither the right nor the power to determine any issue other than, whether the fair market value of the Replacement Property is equal to or greater than the fair market value of the Replaced Property, as determined by such Arbitrator. The decision of the majority of the three Arbitrators shall be binding on Landlord and Tenant (subject to subsection (5), below), and the arbitration shall be deemed concluded upon delivery to Landlord and Tenant of such notifications of the Arbitrators’ decisions.

 

(5)           If Only One Arbitrator Is Appointed . If the arbitration is not previously deemed concluded pursuant to subsection (1), and if either Landlord or Tenant fails to appoint an Arbitrator within fifteen (15) days after the Notice Date or fails to deliver an Arbitrator Appointment Notice in accordance with subsection (2), above, and the other party does appoint an Arbitrator within such fifteen (15) day period and delivers an Arbitrator Appointment Notice in accordance with subsection (2), above, then the Arbitrator timely appointed by such other party shall reach a decision regarding whether the fair market value of the Replacement Property is equal to or greater than the fair market value of the Replaced Property, as determined by such Arbitrator, and notify Landlord and Tenant of that decision within thirty (30) days after such Arbitrator’s appointment. Such decision of the Arbitrator shall be binding on Landlord and Tenant, and the arbitration shall be deemed concluded upon delivery of such notification of the Arbitrator’s decision.

 

(6)           Cost of Arbitration. If the Arbitrators (or Arbitrator, pursuant to subsection (5), above) determine that the fair market value of the Replacement Property is equal to or greater than the fair market value of the Replaced Property, then Tenant shall be deemed the “Winning Party” under this subsection (6) and Landlord shall be deemed the “Losing Party” under this subsection (6). If the Arbitrators (or Arbitrator, pursuant to subsection (5), above) determine that the fair market value of the Replacement Property is less than the fair market value of the Replaced Property, then Landlord shall be deemed the “Winning Party” under this subsection (6) and Tenant shall be deemed the “Losing Party” under this subsection (6). In addition, in the event the arbitration is deemed concluded due to a Failing Party not timely delivering its appraisals as described in subsection (1), or a Delinquent Party failing to pay its share of fees after written notice as described in subsection (3), such Failing Party or Delinquent Party (as the case may be) shall be deemed the “Losing Party” under this subsection (6), and the party that is not the Failing Party or Delinquent Party (as the case may be) shall be deemed the “Winning Party” under this subsection (6). Each party shall initially pay the fees and expenses of its legal counsel, appointed arbitrator, any written reports prepared by any appraiser in connection with its duties under this Section, one-half of the fees of the third arbitrator, and one-half the fees of the AAA (if applicable), provided, however, that the Losing Party shall be obligated to reimburse the Winning Party for all such fees and expenses of the arbitration paid by the Winning Party promptly upon the completion of the arbitration procedure described in this Section.

 

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In the event Landlord approves the substitution of the Replacement Property for the Replaced Property, Tenant shall execute and deliver to Landlord such instruments and documents as Landlord shall reasonably require in connection therewith, including a special warranty or similar deed and an amendment to this Lease, and Landlord shall convey the Replaced Property to Tenant (or Tenant’s designee) as is, with all faults, without any express or implied warranties. Any substitution of a Replacement Property for a Replaced Property shall not alter any of the other obligations of Tenant under this Lease, including the Base Rent due from Tenant hereunder. Without limitation, Tenant shall be responsible for all Additional Rent (including real property taxes) regarding the Replaced Property up to the date of transfer. Tenant shall pay all reasonable out-of-pocket expenses paid or incurred by Landlord pursuant to this Section, including, (i) Landlord’s, Affiliates of Landlord’s and Landlord’s Lenders’ legal fees and expenses, the costs of any title policies (owner’s and/or lender’s) on the Replacement Property, and, without limiting any of Tenant’s obligations set forth in Article 3  of this Lease, any sales, transfer, and other taxes and recording fees, and any taxes required to be withheld, which may be payable in connection with the conveyance of Replacement Property by Tenant or Replaced Property to Tenant (including any interest or penalties imposed with respect to the late payment of any such taxes), and (ii) such amount, which, when added to such payment, shall yield to Landlord (after deduction of all expenses payable by Landlord with respect to all such payments) a net amount which Landlord would have realized from such payment had no such expenses been incurred; provided, however, that so long as no Event of Default has occurred and is continuing, if an arbitration has been completed under subsections (1) through (6) of this Section, and if Tenant was the Winning Party (as defined above in subsection (6)), then Tenant shall not be obligated to reimburse Landlord for fees and expenses incurred by Landlord in connection with such arbitration, and Landlord shall be obligated to reimburse Tenant for fees and expenses incurred by Tenant in connection with such arbitration.

 

ARTICLE 32 [Intentionally Omitted]

 

ARTICLE 33 LANDLORD’S RIGHTS UNDER LEASE

 

Any and all rights of Landlord under this Lease shall inure to the benefit of Landlord’s successors and assigns, as well as Landlord’s Lenders and/or any Landlord’s Mortgagees and their respective successors and assigns as third party beneficiaries.

 

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ARTICLE 34 [Intentionally Omitted]

 

ARTICLE 35 [Intentionally Omitted]

 

ARTICLE 36 INTERPRETATION; MISCELLANEOUS

 

Section 36.01 For purposes of this Lease, (a) the words “include”, “includes” and “including” shall be deemed to be followed by the words “without limitation” (unless already expressly followed by such phrase), and (b) the words “herein”, “hereof”, “hereby”, “hereto” and “hereunder” refer to this Lease as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Exhibits, and Schedules mean the Articles and Sections of, and the Exhibits and Schedules attached to, this Lease; (y) to a lease, instrument or other document means such lease, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Lease; and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. The Schedules and Exhibits referred to herein shall be construed with and as an integral part of this Lease to the same extent as if they were set forth verbatim herein. Titles to Articles and headings of Sections are inserted for convenience of reference only and shall not be deemed a part of or to affect the meaning or interpretation of this Lease. Any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class. Where a provision of this Lease requires that that consent of a party shall not be unreasonably withheld, or that such consent is in such party’s reasonable discretion, such provision shall be deemed to require that such consent not be unreasonably withheld, conditioned, or delayed.

 

Section 36.02 This Lease may be executed in counterparts and shall be binding on all the parties hereto as if one document had been signed. The delivery of an executed copy of this Lease by facsimile transmission shall have the same force and effect as the delivery of the original, signed copy of this Lease. Time is of the essence of every provision of this Lease. Any provision of this Lease explicitly providing for the performance by Tenant of obligations upon or after the expiration or termination of this Lease shall survive any such expiration or termination. This Lease and the Exhibits attached hereto, all of which form a part hereof, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Demised Properties, and there are no covenants, promises, agreements, conditions or understandings heretofore made, either oral or written, between them other than as herein set forth. No modification, amendment, change or addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by each party. The captions, section numbers, and index appearing in this Lease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections or articles nor in any way affect this Lease. Nothing contained in this Lease shall be construed to create the relationship of principal and agent, partnership, joint venture or any other relationship between the parties hereto other than the relationship of landlord and tenant. Except as explicitly set forth in this Lease, there shall be no third party beneficiaries of this Lease or any of the agreements contained herein. The failure of Landlord or Tenant to insist upon strict performance of any of the terms and conditions hereof shall not be deemed a waiver of any rights or remedies that party or any other such party may have, and shall not be deemed a waiver of any subsequent breach or default in any of such terms, covenants or conditions.

 

ARTICLE 37 QUIET ENJOYMENT SUBJECT TO DILIGENCE MATTERS

 

From and after the Commencement Date until the expiration or termination of the Lease Term, and provided no Event of Default has occurred, Tenant shall have quiet enjoyment of the Demised

 

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Properties, subject however, to all Diligence Matters, which shall have priority over the interest of Tenant in this Lease and its leasehold interest in the Demised Properties.

 

ARTICLE 38 NO MERGER OF TITLE

 

There shall be no merger of this Lease with any of the leasehold estates created hereunder with any fee estate or other leasehold interest in any of the Demised Properties, whether by reason of the fact that the same Person may acquire, hold or own, directly or indirectly more than one or all of such legal interests in any Demised Property unless and until (a) under applicable Law such estates may be merged, and (b) all Persons having any leasehold interest or fee estate in any of the Demised Properties, or any part thereof sought to be merged, shall enter into a written agreement effecting such a merger under applicable Law and shall duly record same; provided, however, no such merger shall occur unless in each instance Landlord and any Landlord’s Lender shall be a party to such agreement.

 

  ARTICLE 39 ADDITIONAL CERTIFICATIONS, REPRESENTATIONS AND WARRANTIES

 

Tenant hereby represents, warrants and certifies to Landlord as follows:

 

(a)           Tenant operates, as of the date of this Lease, not less than 76 Permitted Restaurant Brand restaurants.

 

(b)           As of the date of this Lease, Tenant has (i) a positive Consolidated Net Worth and (ii) a positive Consolidated Tangible Net Worth.

 

(c)           Tenant, nor its officers and directors, or its direct or indirect owners regardless of the number of tiers of ownership (each such owner, a “Beneficial Owner”) (i) is a Person, or has a fiduciary acting on its behalf, whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such Person, or any fiduciary acting on such Person’s behalf, in any manner violative of Section 2, or (iii) is a Person, or has a fiduciary acting on its behalf, on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order. If Tenant shall at any time determine that an officer, director or Beneficial Owner of Tenant, or any fiduciary acting on its behalf, is or has become subject to Executive Order 13224 or is a Person, or has a fiduciary acting on its behalf, listed on the list referenced in foregoing clause (iii) or subject to the limitations or prohibitions referenced in such clause, Tenant will take such steps as a result of such determination as may be required by applicable Law. Tenant is in compliance with (y) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (z) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001), and each of the officers, directors and Beneficial Owners of Tenant, and any fiduciary acting on behalf of any of them, is in compliance with such statutes, enabling legislation or executive orders to the extent applicable to such Persons.

 

MASTER LAND AND BUILDING LEASE

  

  

  

    (d)           Tenant does not intend to apply the constant rental accrual method (within the meaning of section 1.467-3(b) of the Treasury Regulations promulgated under the Internal Revenue Code of 1986) to any Rent paid by Tenant under this Lease.

 

ARTICLE 40 BROKERS

 

Landlord and Tenant each (a) represents to the other party that such representing party has dealt with no broker or brokers in connection with the negotiation, execution and delivery of this Lease, other than Brookwood Associates, LLC and (b) agrees to indemnify, defend, protect (with counsel selected by the indemnified party, subject to the approval of the indemnifying party (unless the indemnifying party is the Tenant and an Event of Default has occurred)) and hold such other party free and harmless of, from and against any and all Losses arising from (including all brokerage commissions and/or finder’s fees due or alleged to be due as a result of) any agreement or purported agreement made by such indemnifying party.

 

ARTICLE 41 STATE SPECIFIC PROVISIONS

 

Section 41.01 Pennsylvania Provisions Without limiting the choice of law provision set forth in Article 32 , the following provisions shall apply to the extent that the laws of the Commonwealth of Pennsylvania govern the interpretation or enforcement of this Lease with respect to any Demised Properties located in the Commonwealth of Pennsylvania.

 

(a)           This Lease and Tenant’s rights hereunder are and will be subject and subordinate to any condominium declaration, by-laws and other instruments (collectively, the “Condominium Documents”) which may be recorded in order to subject any of the Demised Property located in the Commonwealth of Pennsylvania to a condominium form of ownership pursuant to the laws of the Commonwealth of Pennsylvania, provided that the Condominium Documents do not by their terms increase the Rent, materially increase Tenant’s non-Rent obligations or materially and adversely affect Tenant’s rights under this Lease. At Landlord’s request, and subject to the foregoing proviso, Tenant will execute and deliver to Landlord an amendment of this Lease confirming such subordination and modifying this Lease to conform to such condominium regime.

 

(b)           CONFESSION OF JUDGMENT FOR POSSESSION OF PREMISES . TENANT HEREBY EXPRESSLY AUTHORIZES THE PROTHONOTARY, CLERK OR ANY ATTORNEY OF ANY COURT OF RECORD TO ACCEPT SERVICE OF PROCESS FOR, TO APPEAR FOR, AND TO CONFESS JUDGMENT AGAINST TENANT AND ALL PERSONS CLAIMING UNDER TENANT IN ANY AND ALL ACTIONS BROUGHT HEREUNDER BY LANDLORD AGAINST TENANT TO RECOVER POSSESSION OF THE PREMISES (IN EJECTMENT OR OTHERWISE), WITHOUT ANY LIABILITY ON THE PART OF SAID ATTORNEY, FOR WHICH THIS LEASE SHALL BE SUFFICIENT WARRANT, AND TENANT AGREES THAT UPON THE ENTRY OF SUCH JUDGMENT, A WRIT OF POSSESSION OR OTHER APPROPRIATE PROCESS MAY ISSUE FORTHWITH (WITHOUT ANY PRIOR WRIT OR PROCEEDING WHATSOEVER).

 

IN ANY SUCH ACTION, LANDLORD SHALL FIRST CAUSE TO BE FILED IN SUCH ACTION AN AFFIDAVIT MADE BY LANDLORD OR SOMEONE ACTING FOR IT SETTING FORTH FACTS NECESSARY TO AUTHORIZE THE ENTRY OF JUDGMENT, OF WHICH FACTS SUCH AFFIDAVIT SHALL BE CONCLUSIVE EVIDENCE, AND IF A TRUE COPY OF THIS LEASE BE FILED IN SUCH ACTION (AND OF THE TRUTH OF THE COPY SUCH AFFIDAVIT SHALL BE SUFFICIENT EVIDENCE), IT SHALL NOT BE NECESSARY TO FILE THE ORIGINAL, AS A WARRANT OF ATTORNEY, ANY RULE OF COURT, CUSTOM OR PRACTICE TO THE CONTRARY NOTWITHSTANDING. TENANT AND ALL PERSONS CLAIMING UNDER TENANT HEREBY RELEASE LANDLORD FROM ANY CLAIMS ARISING FROM ANY ERRORS OR DEFECTS WHATSOEVER IN ENTERING SUCH ACTION OR JUDGMENT, IN CAUSING SUCH WRIT OF POSSESSION OR OTHER PROCESS TO BE ISSUED OR IN ANY PROCEEDING THEREON OR CONCERNING THE SAME, AND HEREBY AGREE THAT NO WRIT OF ERROR OR OBJECTION SHALL BE MADE OR TAKEN THERETO.

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

THIS WARRANT OF ATTORNEY SHALL NOT BE EXHAUSTED BY ONE EXERCISE, BUT JUDGMENT MAY BE CONFESSED FROM TIME TO TIME, AS OFTEN AS OCCASION THEREFOR SHALL EXIST. SUCH POWERS MAY BE EXERCISED DURING AS WELL AS AFTER THE EXPIRATION OR TERMINATION OF THE TERM AND DURING AND AT ANY TIME AFTER ANY EXTENSION OR RENEWAL OF THE TERM.

 

THIS SECTION 41.01(b) SETS FORTH A WARRANT OF ATTORNEY FOR AN ATTORNEY TO CONFESS JUDGMENT AGAINST TENANT. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT AGAINST TENANT, TENANT, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO CONSULT WITH) SEPARATE COUNSEL FOR TENANT AND WITH KNOWLEDGE OF THE LEGAL EFFECT HEREOF, HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES UNCONDITIONALLY ANY AND ALL RIGHTS TENANT HAS OR MAY HAVE TO PRE-JUDGMENT AND PRE-EXECUTION NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS OF THE UNITED STATES OF AMERICA, THE COMMONWEALTH OF PENNSYLVANIA, OR ELSEWHERE.

 

TENANT SPECIFICALLY ACKNOWLEDGES THAT LANDLORD HAS RELIED ON THE WARRANT OF ATTORNEY SET FORTH IN THIS SECTION 41.01(b) IN ENTERING INTO THIS LEASE WITH TENANT AND THAT THE LANDLORD-TENANT RELATIONSHIP CREATED HEREBY IS COMMERCIAL IN NATURE.

 

(c)       Tenant expressly agrees that any judgment, order or decree entered against Tenant by or in any Court or Magistrate by virtue of the powers of attorney contained in this Lease, or otherwise, shall be final, and releases to Landlord and to any and all attorneys who may appear for Landlord all errors in the said proceedings except those errors relating to the facts of the underlying claim by Landlord against Tenant, and all liability therefor. Tenant expressly waives the benefits of all laws, now or hereafter in force, exempting any goods on the Premises, or elsewhere from distraint, levy or sale in any legal proceedings taken by Landlord to enforce any rights under this Lease. Tenant hereby waives all errors and imperfections in any proceedings brought hereunder against Tenant. Tenant further waives the right of inquisition on any real estate that may be levied upon to collect any amount which may become due under the terms and conditions of this Lease, and does hereby voluntarily condemn the same and authorizes the Prothonotary or Clerk of Court to issue a Writ of Execution or other process upon Tenant’s voluntary condemnation, and further agrees that the said real estate may be sold on a Writ of Execution or other process. If proceedings shall be commenced by Landlord to recover possession under the Acts of Assembly, either at the end of the term or earlier termination of the Lease, or for nonpayment of rent or any other reason, Tenant specifically waives all rights to notice under the Landlord and Tenant Act of 1951, 68 P.S. §250.101 et seq., Act of April 6, 1951, P.L. 69, as same may be amended from time

to time (the “Landlord and Tenant Act”), including, without limitation, the right to the three months’ notice and/or the ten, fifteen or thirty days’ notice required by the Landlord and Tenant Act.

 

  

  

  

 

(d)       The right to enter judgment against Tenant and to enforce all of the other provisions of this Lease hereinabove provided for may, at the option of any assignee of this Lease, be exercised by any assignee of Landlord’s right, title and interest in this Lease in his, her, its or their own name, notwithstanding the fact that any or all assignment of the said right, title and interest may not be executed and/or witnessed in accordance with the Act of Assembly of May 28, 1715, 1 Sm. L. 90, and all supplements and amendments thereto that have been or may hereafter be passed and Tenant hereby expressly waives the requirements of said Act of Assembly and any and all laws regulating the manner and/or form in which such assignment shall be executed and witnessed.

 

Section 41.02 Missouri Provisions. Without limiting the choice of law provision set forth in Article 32, the following provisions shall apply to the extent that the laws of the State of Missouri govern the interpretation or enforcement of this Lease with respect to any Demised Properties located in the State of Missouri:

 

(a)       THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

Section 41.03 New York Provisions. Without limiting the choice of law provision set forth in Article 32 , the following provisions shall apply to the extent that the laws of the State of New York govern the interpretation or enforcement of this Lease with respect to any Demised Properties located in the State of New York:

 

(a)       Tenant hereby waives the provisions of Section 227 of the Real Property law of the State of New York and agrees that the provisions of Article 11  hereunder shall govern and control in lieu thereof.

 

(b)       The provisions set forth in Section 2.01(b) of this Lease are intended to constitute “an express provision to the contrary” within the meaning of Section 223-a of the New York Real Property Law.

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

 

MASTER LAND AND BUILDING LEASE

  

  

  

 

IN WITNESS WHEREOF, the parties have executed this Lease to be effective as of the date first above written.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

	 	 	 	
LANDLORD:

	 
	 	 	 	 	 
	 	 	 	DBMFI LLC,	 
	 	 	 	a Delaware limited liability company	 
	 	 	 	 	 
	
/s/ Courtney Ranger

	 	 	
By : /s/ Joshua Pack

	 
	
First Witness

	 	 	
Name : Joshua Pack

	 
	 	 	 	
Title : Vice President

	 

 

	Courtney Ranger	 	 	 	 
	
Printed Name of First Witness

	 	 	 	 

 

	/s/ V.C. Grigorians	 	 	 	 
	
Second Witness

	 	 	 	 

 

	
Vivian Grigorians

	 	 	 	 
	
Printed Name of Second Witness

	 	 	
 

	 

 

 

[SIGNATURES CONTINUE ON NEXT PAGE]

 

 

MASTER LAND AND BUILDING LEASE

(Pool A)

Signature Page

  

  

 

ACKNOWLEDGMENTS

 

STATE OF             Texas                             )

) ss.

COUNTY OF          Dallas                            )

 

On this        8th      of         Dec       , before me, the undersigned, personally appeared Joshua Pack , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument, the person, or the entity upon behalf of which the person, acted, executed the instrument.

 

	(NOTARIAL SEAL)	
Brenda A. Keel                          

Notary Public

 

	
My co mission expires:

           08-10-2012                                     

 

	
Notary Public

State of Texas

	
BRENDA A. KEEL

MY COMMISSION EXPIRES

AUGUST 10, 2012

 

[ACKNOWLEDGMENTS CONTINUE ON NEXT PAGE]

 

 

 

 

 

MASTER LAND AND BUILDING LEASE

(Pool A)

Acknowledgment

  

  

 

THE UNDERSIGNED TENANT ACKNOWLEDGES THAT IT FULLY UNDERSTANDS THE CONFESSIONS OF JUDGMENT AND WAIVERS CONTAINED IN SECTIONS 15.02(c) AND 41.01 HEREOF AND KNOWINGLY, INTENTIONALLY AND VOLUNTARILY ENTERS INTO THIS LEASE FULLY COMPREHENDING THE RELINQUISHMENT OF CERTAIN RIGHTS BY VIRTUE OF SUCH CONFESSIONS OF JUDGMENT AND WAIVERS.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

	 	 	 	

TENANT:

	 
	 	 	 	 	 
	 	 	 	
MORGAN'S FOODS, INC.,

an Ohio corporation

	 
	 	 	 	 	 
	
/s/ Courtney Ranger

	 	 	
By : /s/ James Liquori

	 
	
First Witness

	 	 	
Name : James Liquori

	 
	 	 	 	
Title : President & COD

	 

 

	Courtney Ranger	 	 	 	 
	
Printed Name of First Witness

	 	 	 	 

 

	/s/ V.C. Grigorians	 	 	 	 
	
Second Witness

	 	 	 	 

 

	
Vivian Grigorians

	 	 	 	 
	
Printed Name of Second Witness

	 	 	
 

	 

 

 

MASTER LAND AND BUILDING LEASE

(Pool A)

Signature Page

  

  

 

STATE OF             Texas                             )

) ss.

COUNTY OF          Dallas                            )

 

On this    8     day of     December    , before me, the undersigned, personally appeared   James Liquori   , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument, the person, or the entity upon behalf of which the person, acted, executed the instrument.

 

(NOTARIAL SEAL)

	
Notary Public

State of Texas

	
MEGAN FAITH MOYER

Notary Public

STATE OF TEXAS

My Commission Expires July 21, 2015

	
 

/s/ Megan Faith Moyer

Notary Public

My co mission expires:

           07-21-15                 

 

 

 

MASTER LAND AND BUILDING LEASE

(Pool A)

Acknowledgment

  

  

 

SCHEDULE 1

 

DEFINED TERMS

 

The following capitalized terms used in this Lease have the following meanings. “AAA ” means the American Arbitration Association or any successor thereto.

 

“Additional Rent” means any and all fees, expenses, taxes and charges of every kind and nature arising in connection with or relating to the Demised Properties (other than Base Rent), including (i) any and all taxes (including Real Estate Taxes), fees, utility service charges, insurance premiums, and other costs, and any amounts owed by Tenant under any indemnity to Landlord hereunder, including as set forth in Article 10 and Article 37; (ii) all fees and penalties that may accrue on any amounts due from Tenant hereunder if Tenant fails to pay such amounts in a timely manner; (iii) all other Losses that Landlord may suffer or incur in enforcing this Lease (whether or not any formal action is brought by Landlord against Tenant) or in otherwise taking actions permitted under this Lease following a Default (as hereinafter defined) by Tenant (including making Repairs (as hereinafter defined) and fulfilling other obligations of Tenant as provided in Article 7, and purchasing insurance required to be maintained by Tenant under this Lease, as provided in Article 11), or as a result of, arising out of, or in connection with any notice, request or other action by Tenant, whether or not expressly permitted by the terms of this Lease; (iv) any and all other sums that may become due, or costs and expenses that may be incurred by Landlord, by reason of any Default or Event of Default under this Lease, including any additional fees and costs, or any increased interest rate or other charges imposed by any Landlord’s Lender by reason of such Default or Event of Default (whether or not such Default or Event of Default is a default under any agreements with any Landlord’s Lender); and (v) any and all costs of maintaining, repairing and restoring the Demised Properties. In addition, “Additional Rent” includes any rent or other income received by Tenant from any subtenant of any Demised Property to the extent applicable to periods after the expiration or termination of this Lease as to such Demised Property.

 

“Affiliate” means in relation to any Person, any other Person: (i) directly or indirectly controlling, controlled by, or under common control with, the first Person; (ii) directly or indirectly owning or holding five percent or more of any equity interest in the first Person; or (iii) five percent or more of whose voting stock or other equity interest is directly or indirectly owned or held by the first Person. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Without limiting the foregoing, the Affiliates of any Person that is an entity shall include all natural persons who are officers, agents, directors, members, partners, or employees of the entity Person.

 

“Allocated Base Rent Amount” is defined in Section 30.01  .

 

“Alteration Information” is defined in Article 6 .

 

“Alterations” is defined in Article 6 .

 

“Arbitrator” is defined in Section 31.01  .

 

“Arbitrator Appointment Notices” is defined in Section 31.01.

 

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-1

  

 

“Base Date” is defined in Section 3.02(a) .

 

“Base Rent” is defined in Section 3.02(b) .

 

“Beneficial Owner” is defined in Article 39 .

 

“Building Equipment” is defined in the Recitals to this Lease.

 

“Business Day” means any day excluding (i) Saturday, (ii) Sunday, (iii) any day that is a legal holiday under the Laws of the State of New York or the State of California, and (iv) any day on which banking institutions located in the State of New York or the State of California are generally not open for the conduct of regular business.

 

“Code” is defined in Section 31.01  .

 

“Commencement Date” is defined in the first paragraph of this Lease. “Consideration Period” is defined in Section 31.01  .

 

“Consolidated Net Worth” means the difference, in United States dollars, of Tenant’s consolidated assets minus consolidated liabilities, determined in accordance with GAAP.

 

“Consolidated Tangible Net Worth” means the difference, in United States dollars, of (i) Tenant’s consolidated assets, less all intangible assets minus (ii) Tenant’s consolidated liabilities, all as determined in accordance with GAAP.

 

“CPI” means the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items (1982-84=100), published by the Bureau of Labor Statistics of the U.S. Department of Labor. If the CPI is not published for any month during the Lease Term, Landlord, in its reasonable discretion, shall substitute a comparable index published by the Bureau of Labor Statistics of the U.S. Department of Labor. If such an index is not published by the Bureau of Labor Statistics, Landlord, in its reasonable discretion, shall select a comparable index published by a nationally recognized responsible financial periodical.

 

“De Minimis Amounts” means, with respect to any given level of Hazardous Materials, that level or quantity of Hazardous Materials in any form or combination of forms, the use, storage or release of which does not constitute a violation of, or require regulation, remediation, reporting or monitoring under, any Environmental Laws and is customarily employed in the ordinary course of, or associated with, similar businesses located in the states in which the relevant Demised Property is located.

 

“Deeds” has the meaning set forth in the Purchase Agreement.

 

“Default” is defined in Section 15.01  .

 

“Delinquent Party” has the meaning set forth Section 31.01  .

 

“Demised Properties” is defined in the Recitals to this Lease.

 

“Diligence Matters” is defined in Article 5.

 

MASTER LAND AND BUILDING LEASE

 

SCHEDULE 1-2

  

 

“Disclosures” is defined in Section 23.02 . “Environmental Claims” is defined in Section 29.04 .

 

“Environmental Conditions” means the conditions of Environmental Media and the conditions of any part of the Demised Properties, including building materials, that affect or may affect Environmental Media.

 

“Environmental Laws” means any federal, state or local law, statute, ordinance, permit condition, regulation or written policy pertaining to public or worker health or safety, natural resources, climate changes, or the regulation protection of the indoor or outdoor environment, the regulation or reporting of Hazardous Materials, including the following: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq. as amended (“ CERCLA”), the Solid Waste Disposal Act, 42 U.S.C.. 6901 et seq. as amended (“RCRA”), the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, as amended, 33 U.S.C. 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 USC 7401 et seq.; the National Environmental Policy Act of 1970, as amended, 42 USC 4321 et seq.; the Rivers and Harbors Act of 1899, as amended, 33 USC 401 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq. the Endangered Species Act of 1973, as amended, 16 U.S.C. 1531, et seq.; the Occupational Safety and Health Act of 1970, as amended 29 U.S.C. 651, et seq.; the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. 300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801  et seq. as amended, and all regulations, published governmental policies, and administrative or judicial orders promulgated under or implementing or enforcing said laws; (ii) all state or local laws which implement the foregoing federal laws or which pertain to public health and safety, occupational health and safety, natural resources or environmental protection, all as amended from time to time, and all regulations, published governmental policies, and administrative or judicial orders promulgated under the foregoing laws; (iii) all federal and state common law, including but not limited to the common law of public or private nuisance, trespass, negligence or strict liability, where such common law pertains to public health and safety, occupational health and safety, natural resources, environmental protection, or the use and enjoyment of property, and all judicial orders promulgated under said laws; and (iv) all comparable local laws and comparable laws of other jurisdictions.

 

“Environmental Media” means soil, fill material, or other geologic materials at all depths, groundwater at all depths, surface water including storm water and sewerage, indoor and outdoor air, and all living organisms, including all animals and plants, whether such Environmental Media are located on or off the Demised Properties.

 

“Estoppel Certificate” is defined in Article 24 . “Event of Default” is defined in Section 15.01  . “Extension Notice” is defined in Section 2.02(a) .“Failing Party” has the meaning set forth in Section 31.01  .

 

“First Option Extension Properties” is defined in Section 2.02(c) . 

 

“First Option Period” is defined in Section 2.02(a).

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-3

  

 

 “Fourth Option Extension Properties” is defined in Section 2.02(i) . “Fourth Option Period” is defined in Section 2.02(a) .

 

“Franchise Agreement” means, with respect to any Demised Property, any franchise, trademark and/or license agreement entered into by Tenant (or any Affiliate of Tenant) and the applicable franchisor relating to such Demised Property, as more particularly described on Schedule 2 attached hereto, in each case as the same may be amended, restated, supplemented, replaced or otherwise modified from time to time.

 

“GAAP” means those generally accepted accounting principles set forth from time to time in statements and pronouncements of the Financial Accounting Standards Board and in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants or those having other substantial authoritative support in the United States of America and which are applicable in the circumstances (and are not inconsistent with such Statements and Opinions), as applied on a consistent basis.

 

“Governmental Authority” means (i) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or (iii) any court, administrative tribunal or public utility.

 

“Hazardous Materials” means any ignitable, reactive, explosive, corrosive, carcinogenic, mutagenic, toxic or radioactive material, whether virgin material, secondary material, by-product, waste or recycled material, defined, regulated or designated as a contaminant, pollutant, hazardous or toxic substance, material, waste, contaminant or pollutant under any Environmental Laws or any other federal, state or local law, statute, regulation, ordinance, or governmental policy presently in effect or as amended or promulgated in the future, and shall specifically include: (i) those materials included within the definitions of “hazardous substances,” “extremely hazardous substances,” “hazardous materials,” “toxic substances” “toxic pollutants,” “hazardous air pollutants” “toxic air contaminants,” “solid waste,” “hazardous waste,” “pollutants,” contaminants” or similar categories under any Environmental Laws; (ii) those materials that create liability under common law theories of public or private nuisance, negligence, trespass or strict liability; and (iii) specifically including any material, waste or substance that contains: (A) petroleum or petroleum derivatives byproducts, including crude oil and any fraction thereof and waste oil; (B) asbestos; (C) polychlorinated biphenyls; (D) formaldehyde; and (E) radon. If not already defined as a Hazardous Material under any of the foregoing terms, mold and fungi of any type or concentration shall be deemed a Hazardous Material hereunder if present in any Improvements under such conditions or circumstance as to represent blight or any unsanitary condition or that impairs the use of any Improvements or portion thereof for its intended uses.

 

“Improvements” is defined in the Recitals to this Lease.

 

“Initial Adjustment Dates” is defined in Section 3.02(a) .

 

“Initial Base Rent Escalation” is defined in Section 3.02(a) .

 

“Insurance Premium Additional Rent” is defined in Section 10.08 .

“Insurance Premium Additional Rent Trigger” is defined in Section 10.08.

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-4

  

 

“Land” is defined in the Recitals to this Lease.

 

“Landlord” is defined in the first paragraph of this Lease.

 

“Landlord Assignment Lease Agreement” is defined in Section 30.01  .

 

“Landlord Award Amount” means the amount of the net award actually received by Landlord for any taking of any portion of any Demised Property.

 

“Landlord Parties” means, collectively, (i) Landlord, Affiliates of Landlord, Landlord’s Lenders and any Landlord’s Mortgagee, and (ii) any members, partners, shareholders, officers, directors, employees, agents, attorneys, contractors, affiliates, heirs, successors or assigns of any of Landlord, Affiliates of Landlord, Landlord’s Lenders, or any Landlord’s Mortgagee.

 

“Landlord’s Account” is defined in Section 3.01  .

 

“Landlord’s Lenders” means any persons or entities providing financing to Landlord or Affiliates of Landlord.

 

“Landlord’s Mortgagee” means any Persons holding a mortgage, deed of trust, deed to secure debt or similar instrument encumbering Landlord’s interest in the Demised Properties or portion thereof (whether or not any such Person is also a Landlord’s Lender).

 

“Late Fee” is defined in Section 15.06 .

 

“Law” means all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes, directives, orders, or written policies issued pursuant thereto, and published administrative or judicial precedents.

 

“Lease” is defined in the first paragraph of this agreement. “Lease Term” is defined in Section 2.01(a) .

 

“Leasehold Mortgage” means any leasehold deed of trust, mortgage, deed to secure debt, assignment of leases and rents, assignment, security agreement, or other security document securing financing from a lender of Tenant and encumbering Tenant’s leasehold interest in any Demised Property.

 

“Liens” means liens, security interests, charges and encumbrances. “Losing Party” has the meaning set forth in Section 31.01  .

 

“Losses” means all losses, claims, demands, actions, causes of action, settlements, obligations, duties, indebtedness, debts, controversies, remedies, choses in action, liabilities, costs, penalties, fines, damages, injuries, judgments, forfeitures, or expenses (including reasonable attorneys’, consultant, testing and investigation and expert fees and court costs), whether known or unknown, and whether liquidated or unliquidated.

 

“Minor Project” means a non-structural minor maintenance or repair project and/or “cosmetic refresh” project involving only painting, carpeting, floor covering and installation of moveable replacement Restaurant Equipment, unless in either case governmental permits are required or the costs exceed, in the aggregate, for any affected Demised Property, US$25,000.

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-5

  

 

“Notice Date” has the meaning set forth in Section 31.01  . 

 

“Option Period” is defined in Section 2.02(a) .

 

“Original Lease Term” is defined in Section 2.01(a) . 

 

“Other Parties” is defined in Section 29.02 .

 

“PE First Option” is defined in Section 2.02(c) .

 

“PE First Option Period” is defined in Section 2.02(c) . 

 

“PE Fourth Option” is defined in Section 2.02(i) .

 

“PE Fourth Option Period” is defined in Section 2.02(i) . 

 

“PE Option” is defined in Section 3.02(a) .

 

“PE Option Base Rent” is defined in Section 3.02(a) .

 

“PE Option Extension Properties” is defined in Section 3.02(a) . 

 

“PE Option Period” is defined in Section 3.02(a) .

 

“PE Second Option” is defined in Section 2.02(e) .

 

“PE Second Option Period” is defined in Section 2.02(e) . 

 

“PE Third Option” is defined in Section 2.02(g) .

 

“PE Third Option Period” is defined in Section 2.02(g) .

 

“Permitted Liens” means (i) Liens to secure claims for labor, material or supplies in respect of obligations not overdue; (ii) Liens in respect of judgments or awards that have been in force for less than the applicable period for making an appeal so long as execution is not levied thereunder or in respect of which Tenant shall at the time in good faith be prosecuting an appeal or proceedings for review and in respect of which a stay of execution shall have been obtained pending such appeal or review; (iii) Liens of carriers, warehousemen, mechanics and materialmen and other like Liens that have been in existence less than 120 days after the date of creation thereof in respect of obligations not overdue; and (iv) purchase money Liens on Restaurant Equipment to secure purchase money indebtedness incurred in connection with the acquisition of such Restaurant Equipment, which Liens cover only the Restaurant Equipment so acquired.

 

“Permitted Restaurant Brand” is defined in Section 4.01.

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-6

  

 

“Person” means an individual, corporation, partnership, joint venture, association, joint-stock company, trust, estate, limited liability company, non-incorporated organization or association, or any other entity, any Government Authority or any agency or political subdivision thereof.

 

“Petition” means a petition in bankruptcy (including any such petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief) under the Bankruptcy Code of the United States of America, or under any other present or future federal or state statute, law or regulation of similar intent or application.

 

“Purchase Agreement” means that certain Purchase and Sale Agreement and Joint Escrow Instructions, by and between Landlord and Tenant.

 

“RE Taxes Additional Rent” is defined in Section 3.03(b) .

 

“RE Taxes Additional Rent Trigger” is defined in Section 3.03(b) .

 

“Real Estate Taxes” means (i) all taxes and general and special assessments and other impositions in lieu thereof, or as a supplement thereto and any other tax measured by the value of real property and assessed on a uniform basis against the owners of real property, including any substitution in whole or in part therefor due to a future change in the method of taxation, and including any increase in any of the foregoing resulting from any sale, exchange, mortgage, encumbrance, or other disposition by Landlord, in each case assessed against, or allocable or attributable to, any of the Demised Properties and accruing during or prior to the Lease Term, and (ii) all transfer taxes imposed in connection with this Lease.

 

“Release” means any active or passive spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into any Environmental Media. For the purposes of this Lease, “Release” also includes any threatened Release.

 

“Remedial Activities” means any investigation, work plan preparation removal, repair, cleanup, abatement, remediation, monitored natural attenuation, natural resource damage assessment and restoration, closure, post-closure, detoxification or remedial activity of any kind whatsoever necessary to address Environmental Conditions.

 

“REMICs” is defined in Section 31.01  . 

 

“Rent” means Base Rent plus Additional Rent.

 

“Repairs” means all replacements, renewals, alterations, additions and betterments necessary for Tenant to properly maintain each Demised Property in good order and condition, safe and fit for use as a Kentucky Fried Chicken or KFC.

 

“Replaced Property” is defined in Section 31.01  .

 

“Replacement Property” is defined in Section 31.01  .

 

“Required Alterations” is defined in Article 6 .

 

“Restaurant Equipment” is defined in the Recitals to this Lease.

 

“Restaurant Equipment Schedule” is defined in Section 20.04.

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-7

  

 

“ Restoration Work” is defined in Section 11.01  .

 

“ Second Option Extension Properties” is defined in Section 2.02(e) .

 

“ Second Option Period” is defined in Section 2.02(a) .

 

“ SNDA” is defined in Section 23.01  .

 

“ St. Louis Properties” means the three Demised Properties more fully described on Exhibit G . 

 

“ Subordination and Attornment Provisions” is defined in Section 22.01(b) .

 

“ Subsequent Adjustment Dates” is defined in Section 3.02(a) .

 

“ Subsequent Base Rent Escalation” is defined in Section 3.02(a) .

 

“ Tenant” is defined in the first paragraph of this Lease.

 

“ Tenant’s Lender” means any lender of Tenant that holds a Leasehold Mortgage. 

 

“ Third Option Extension Properties” is defined in Section 2.02(g) .

 

“ Third Option Period” is defined in Section 2.02(a) .

 

“ Transaction Documents” means, collectively, this Lease, the Purchase Agreement, and the Deeds, each of which are dated of even date herewith, and any other agreements entered into by and between Landlord and Tenant regarding any of the foregoing or the Demised Properties.

 

“ Transfer Parties” is defined in Section 23.02 .

 

“ Unreimbursed Costs” means any fees or other costs that are not reimbursed or subject to reimbursement pursuant to applicable Law or regulations, insurance, contractual indemnities or any other means.

 

“ Use” means the receipt, handling, generation, storage, treatment, recycling, disposal, transfer, transportation, introduction, or incorporation into, on, about, under or from the Demised Properties.

 

“ Winning Party” has the meaning set forth in Section 31.01  .

 

“ Yum! National Brand” means a restaurant franchise brand operated by Yum! Brands, Inc. that has a minimum of fifty (50) units operating nationally and aggregate sales in excess of $50,000,000.

 

MASTER LAND AND BUILDING LEASE

  

SCHEDULE 1-8

  

SCHEDULE 2

 

LIST OF FRANCHISE AGREEMENTS

 

	  UNIT #	  UNIT NAME	
 BEGINNING

DATE

	
 EXPIRATION

DATE

	  PARTIES
	
01

	
Boardman

	
2/14/1999

	
2/14/2019

	
KFC Corporation and Morgan's Restaurants of Ohio, Inc.

	
08

	
Austintown

	
6/1/1997

	
6/1/2017

	
KFC Corporation and Morgan's Restaurants of Ohio, Inc.

	
16

	
Alliance

	
6/1/1997

	
6/1/2017

	
KFC Corporation and Morgan's Restaurants of Ohio, Inc.

	
25

	
Weirton

	
6/1/1997

	
6/1/2017

	
KFC Corporation and Morgan's Restaurants of West Virginia, Inc.

	
30

	
Irwin

	
6/1/1997

	
6/1/2017

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
36

	
12th St.

	
6/1/1997

	
6/1/2017

	
KFC Corporation and GRNN, Inc. assigned to MRPA on 07/24/98

	
50

	
Coraopolis

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
51

	
Whitehall

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
55

	
Homestead

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
59

	
Bellevue

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
61

	
Harmarville

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
65

	
West View

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
66

	
Braddock Hills

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

	
91

	
Lakewood-TB

	
4/4/2000

	
4/4/2020

	
Taco Bell Corp. and Morgan's Tacos of Pennsylvania, Inc.

	
91

	
Lakewood

	
7/2/2000

	
7/2/2020

	
KFC Corporation and Morgan's Restaurants of New York, Inc.

	
324

	
Farmington

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Foods of Missouri, Inc.

	
352

	
Moundsville

	
7/13/1999

	
7/13/2019

	
KFC Corporation and Morgan's Restaurants of West Virginia, Inc.

	
379

	
Kittanning-TB

	
7/14/1999

	
7/14/2019

	
Taco Bell Corp. and Morgan's Tacos of Pennsylvania, Inc.

	
379

	
Kittanning

	
12/30/1999

	
12/30/2019

	
KFC Corporation and Morgan's Restaurants of Pennsylvania, Inc.

 

 

MASTER LAND AND BUILDING LEASE

SCHEDULE 2

  

  

 

EXHIBIT A

 

LOCATION/ADDRESS/LEGAL DESCRIPTION OF DEMISED PROPERTIES

 

	
Unit No.

	
Address

	
City

	
ST

	
1

	
6636 South Avenue

	
Youngstown

	
OH

	
8

	
4642 Mahoning Avenue

	
Youngstown

	
OH

	
16

	
825 East State Street

	
Alliance

	
OH

	
25

	
4015 Main St.

	
Weirton

	
WV

	
30

	
9390 Route 30

	
Irwin

	
PA

	
36

	
2656 W. 12th Street

	
Erie

	
PA

	
50

	
6901 University Blvd.

	
Moon Township

	
PA

	
51

	
5130 Clairton Blvd.

	
Pittsburgh

	
PA

	
55

	
222 West 8th Avenue

	
Homestead

	
PA

	
59

	
4306 Ohio River Blvd.

	
Pittsburgh

	
PA

	
61

	
1 Landings Drive

	
Pittsburgh

	
PA

	
65

	
804 W. View Park Drive

	
West View

	
PA

	
66

	
278 Yost Blvd.

	
Pittsburgh

	
PA

	
91

	
270 E. Fairmount Ave.

	
Lakewood

	
NY

	
324

	
Highway 32, Route 67

	
Farmington

	
MO

	
352

	
122 N. Lafayette Avenue

	
Moundsville

	
WV

	
379

	
14 Hilltop Plaza

	
Kittanning

	
PA

 

LEGAL DESCRIPTIONS FOLLOW

 

 

 

MASTER LAND AND BUILDING LEASE

Exhibit A

  

  

 

Boardman (1) - 6636 S. Ave., Youngstown, OH

 

Situated in the Township of Boardman, County of Mahoning, State of Ohio, described as follows:

 

Situate in the Township of Boardman, County of Mahoning, State of Ohio, and known as being Lot No. 1 in the P.B.F. Plat No. 1, as recorded in Volume 95, Page 249 of Mahoning County Plat Records, and being further described as follows:

 

Beginning at a point on the westerly right of way line of South Avenue, said point being the Northeasterly corner of said Lot No. 1;

 

thence along said right of way line, South 02 deg. 28’ 00" West a distance of 109.61 feet to a point at a curve to the right having a chord bearing of South 48 deg. 02’ 49” West, 42.85 feet and a radius of 30.00 feet;

 

thence southwesterly along said curve an arc distance of 47.73 feet to a point;

 

thence along the southerly line of said Lot 1, North 86 deg. 22’ 22" West a distance of 172.23 feet to an iron pin set;

 

thence along the westerly line of said lot 1, North 03 deg. 37’ 38" East a distance of 140.20 feet to an iron pin set;

 

thence along the northerly line of said Lot 1, South 86 deg. 22’ 22" East a distance of 200.00 feet to the point of beginning, and containing within said bounds 0.644 acres of land.

 

 

Boardman (1)

  

  

  

 

Austintown (8) - 4642 Mahoning Ave., Youngstown, OH  

 

Parcel No. 1

 

Situate in the Township of Austintown, County of Mahoning, State of Ohio, and being known as Lot No. 16 in Mahoning Heights Plat as recorded in Volume 19 of Plats, Page 34 of Mahoning County Records, said lot has a frontage of 60.76 feet on the Northerly curved side of Mahoning Avenue, and extends back on the Westerly line 341.33 feet, said Westerly line being also the Easterly line of Cambrel Avenue, and on the Easterly line 331.63 feet, having a rear line of 60 feet, as appears by said plat.

 

Parcel No. 2

 

Situate in the Township of Austintown, County of Mahoning, State of Ohio, and known as being Sublot Nos. 16 and 17 in Mahoning Heights Plat No. 2, Subdivision of a part of Austintown Township Great Lot No. 19, as shown by the recorded plat of said subdivision in Volume 19 of Maps, Page 34 of Mahoning County Records, and together forming a parcel of land having a frontage of 101.26 feet on the Northwesterly side of Mahoning Avenue Extension, formerly The Youngstown Austintown Road, and extending back 315.47 feet on the Easterly line 331.63 feet on the Westerly line, and having a rear line of 100 feet, as appears by said plat.

 

And known as being Lot No. 18 in a replat of Lots 16, 17 and 18, Mahoning Heights Plat, as shown by the Replat recorded in Volume 97, Page 93 of Mahoning County Plat Records.

 

 

Austintown (8)

  

  

  

 

Alliance (16) - 825 East State St., Alliance, OH

 

Known as part of Out Lot No. 446 and further know as part of Northeast Quarter of Section No. 1 in the original Washington Township, bounded and described as follows: Beginning at a monument at the Northwest corner of the Northeast Quarter of Section No. 1; thence S 89° 59' 36" E 284.50 feet along the quarter section line and the centerline of East State St. to the True Place of Beginning;

 

thence S 89° 59' 36" E 160.00 feet along the quarter section line and the centerline of East State St. to a point;

 

thence S 0° 32' 00" E passing over an iron pin at 55 feet, a distance of 319.00 feet to an iron pin; thence N 89° 59' 36" W 160.00 feet to an iron pin;

 

thence N 0° 32' 00" W passing over an iron pin at 264.00 feet, a distance of 319.00 feet to the place of beginning.

 

The above parcel of land contains 1.1717 acres of land, of which 0.2020 acre is within the road right of way.

 

This description based on survey by James R. Allen, Reg. Survey No. 4616 dated April, 1990.

 

Together with all rights of ways, easements and grants contained in Deed recorded in OR Volume 1038, Page 444, Stark County Records.

 

 

Alliance (16)

  

  

  

 

Weirton (25) - 4015 Main St., Weirton, WV

 

Parcel No. 1: Situate in Cross Creek District (now Weirton District), Brooke County, State of West Virginia, known and designated as Lot number seventeen (17) Heaslett Subdivision Plan of Lots, also known as 4006 Washington Street, Weirton, West Virginia.

 

Parcel No. 2: All those certain lots or parcels of land known and designated as Lots numbered two (2), three (3), four (4) and five (5), of the Heaslett Subdivision Plan of Lots, lying and being in the District of Cross Creek, County of Brooke, and the State of West Virginia, said plan of lots being of record in the Office of the Clerk of the County Court of Brooke County, West Virginia, in Deed Book #40, at page 213, to which Deed reference is hereby made.

 

The above real estate is the same as conveyed to Morgan's Weirton Foods, Inc., a corporation from Samuel N. Kusic, Esq., individually, and in trust under a Declaration of Trust executed by the Grantor and Leslie W. Kusic, his wife, by deed dated July 2, 1987, and recorded in the Office of the Clerk of the County Commission of Brooke County, West Virginia, in Deed Book No. 243, at Page 387.

 

 

(Weirton (25)

  

  

  

 

Irwin (30) - 9390 Route 30, Irwin, PA

 

All that certain part or parcel of ground situate in the Borough of Irwin, County of Westmoreland and Commonwealth of Pennsylvania, consisting of 2,398 square feet, said parcel being set forth on the revised plan of subdivision prepared for Theodore Sarniak III and Herman F. Skatell recorded in the Recorder’s Office of Westmoreland County on September 15. 1988 in Plan Book Volume 89, page 1640, said revised plan of subdivision revising the original subdivision recorded in Plan Book Volume 89. Page 1338 in the Recorder’s Office of Westmoreland county, said parcel being more fully described as follows:

 

BEGINNING at a point in the southerly right of way line of U.S. Route 30.-Lincoln Highway. said point of beginning being North 62° 43’ West, a distance of 75.00 feet from corner of land now or formerly of the Irwin Bank and Trust Company, and Parcel B of the original subdivision recorded in Plan Book Volume 89 page 1338; thence from said point of beginning and along the original dividing line of Parcels A and B of the original subdivision recorded in Plan Book Volume 89. page 1338 South 27° 27’ West 160.45 feet to a point; thence through Parcel B of the aforementioned original subdivision, South 66° 52’ East 15.04 feet to a point; thence continuing through Parcel B of the aforementioned original subdivision North 27° 27’ East 159.32 feet to a point in the southerly right of way line of U. S. Route 30-Lincoln Highway; thence by said right of way line, parallel to and 50 feet distant from the center line thereof. North 62° 43’ West 15.00 feet to a point, the place of beginning.

 

AND ALSO BEING

 

All that certain part or parcel of ground situate in the Borough of Irwin, County of Westmoreland and Commonwealth of Pennsylvania, consisting of 2,398 square feet, said parcel being set forth on the revised plan of subdivision prepared for Theodore Sarniak III and Herman F. Skatell recorded in the Recorder’s Office of Westmoreland County on September 15. 1988 in Plan Book Volume 89, page 1640, said revised plan of subdivision revising the original subdivision recorded in Plan Book Volume 89. Page 1338 in the Recorder’s Office of Westmoreland county, said parcel being more fully described as follows:

 

BEGINNING at a point in the southerly right of way line of U.S. Route 30.-Lincoln Highway. said point of beginning being North 62° 43’ West, a distance of 75.00 feet from corner of land now or formerly of the Irwin Bank and Trust Company, and land of which this was a part; thence from said point of beginning and through land of which this was a part, now designated Parcel B’ South 27° 27’ West, a distance of 180.51 feet to a point in line of land now or formerly of George K. Basel; thence by said land of George K. Basel North 66° 52’ West; a distance of 149.85 feet to a point on the Easterly right of way line of Caruthers Lane; thence by said right of way line North 28° 01’ East. a distance of 144.60 feet to a point; thence by same North 53° 36’ 08” East, a distance of 52.175 feet to a point in the Southerly right of way line of U.S. Route 30; thence by said right of way line, parallel to and 50 feet distant from the centerline thereof south 62° 43’ East, a distance of 125.00 feet to a point, the place of beginning.

 

 

Irwin (30)

  

  

  

 

W. 12th    (36) - 2656 W. 12th Street, Erie, PA

 

ALL THAT certain lot or piece of land situate in the Township of Millcreek, County of Erie and Commonwealth of Pennsylvania, bounded and described as follows:

 

BEGINNING at a point on the Northerly line of West 12th Street, 100 feet wide, distance eastwardly along the said northerly line of West 12th street, 111.10 feet from the easterly line of Lowell Avenue, 50 feet wide; thence from said point of Beginning along Lots Nos. 14, 13, 12, 11, 10, and 9 in Steens Subdivision Recorded in the Office of the Recorder of Deeds of Erie County, Pennsylvania in Plan Book Vol. 2, page 21, N. 26°33'30" W., a distance of 335.49' to the Southerly right of way line of 11th Street if extended; thence N. 63°12'30" E. a distance of 131.19' to a point; thence S. 26°33'00" E., a distance of 335.55' to a point on the northerly line of West 12th Street; thence along the northerly line of West 12th Street. S. 63°14'00" W., a distance of 131.14' to the point of beginning.

 

 

W. 12th (36)

  

  

  

 

Corapolis (50) - 6901 University Blvd., Moon Township, PA

 

BEGINNING AT A POINT OF COMPOUND CURVE ON THE SOUTHEASTERLY SIDE OF NARROWS RUN ROAD (120 FEET WIDE) WHICH POINT OF TANGENT IS ASURED EASTWARDLY ON THE ARC OF A CIRCLE CURVING TO THE RIGHT CONNECTING THE SAID SOUTHEASTERLY SIDE OF NARROWS RUN ROAD AND THE NORTHEASTERLY SIDE OF BEAVER GRADE ROAD, FORMERLY KNOWN AS BROADHEAD ROAD, HAVING A RADIUS OF 25. 00 FEET, THE ARC DISTANCE OF 34.29 FEET FROM A POINT OF CURVE ON THE NORTHEASTERLY SIDE OF BEAVER GRADE ROAD, FORMERLY KNOWN AS BROAD HEAD ROAD; THENCE EXTENDING ALONG THE SOUTHEASTERLY SIDE OF NARROWS RUN ROAD, THE FOLLOWING COURSES AND DISTANCES:

 

(1) ON THE ARC OF A CIRCLE TO THE RIGHT HAVING A RADIUS OF 759.02 FEET TO A POINT; THENCE EXTENDING SOUTH 27 DEG. 35' 15" EAST 5.85 FEET TO A POINT; THENCE EXTENDING SOUTH 49 DEG. 30' 00" EAST 129.22 FEET TO A POINT IN THE CENTER LINE OF OLD NARROWS RUN ROAD; THENCE EXPENDING ALONG SAME, SOUTH 33 DEG. 15' 00" WEST 183 FEET TO A POINT; THENCE PASSING THROUGH THE BED OF OLD NARROWS RUN ROAD, NORTH 56 DES. 45' 00" WEST 16.50 FEET TO A POINT ON THE NORTHWESTERLY SIDE OF OLD NARROWS RUN ROAD; THENCE EXTENDING ALONG SAME, THE TWO FOLLOWING COURSES AND DISTANCES: (1) SOUTH 33 DEG. 15' 00" WEST 19.52 FEET TO A POINT; AND (2) NORTH 28 DEG. 41' 00" WEST 9.73 FEET TO A POINT OF CURVE; THENCE EXTENDING ON THE ARC OF A CIRCLE CURVING TO THE RIGHT CONNECTING THE SAID NORTHWESTERLY SIDE OF OLD NARROWS RUN ROAD AND THE NORTHEASTERLY SIDE OF BEAVER GRADE ROAD, FORMERLY KNOWN AS BROADHEAD ROAD, HAVING A RADIUS OF 51.99 FEET, THE ARC DISTANCE OF 92.51 FEET TO A POINT OF TANGENT ON THE SAID NORTHEASTERLY SIDE OF BEAVER GRADE ROAD, FORMERLY KNOWN AS BROADHEAD ROAD; THENCE EXTENDING ALONG SAME, THE FOLLOWING THREE COURSES AND DISTANCES (1) NORTH 23 DES. 38' 00" WEST 36.00 FEET TO A POINT; (2) NORTH 66 DEG. 22' 00" EAST 10.00 FEET TO A POINT (3) NORTH 23 DEG. 38' 00" WEST 93.90 FEET TO A POINT OF CURVE; THENCE EASTWARDLY ON THE ARC OF A CIRCLE TO THE RIGHT CONNECTING THE SAID NORTHEASTERLY SIDE OF BEAVER GRADE ROAD FORMERLY KNOWN AS BROADHEAD ROAD, AND THE SOUTHEASTERLY SIDE OF NARROWS RUN ROAD, HAVING A RADIUS OF 25.00 FEET, THE ARC DISTANCE OF 34.29 FEET TO A POINT OF COMPOUND CURVE ON THE SAID SOUTHEASTERLY SIDE OF NARROWS RUN ROAD, BEING THE FIRST MENTIONED POINT AND PLACE OF BEGINNING.

 

Corapolis (50)

  

  

  

 

Whitehall (51) - 5130 Clairton Blvd., Pittsburgh, PA Premises A:

 

All THAT CERTAIN lot or piece of ground, situate in the Borough of Baldwin, County of Allegheny and Commonwealth of Pennsylvania, bounded and described as follows:

 

BEGINNING at a point on the Southerly line of Leech Road, 40’ wide, at a point common to the herein described property and the Northwest corner of property, now or formerly of Anthony Zebert, et ux, as recorded in the Recorder’s Office of Allegheny County In Deed Book Volume 3228, page 113; thence from said point of beginning, along the Westerly line of said last mentioned property of Anthony Zebert, at ux, South 16 degrees 27 minutes East, 120 feet to a point on property now or formerly of Dick Drabbe and Edith B. Drabbe, his wife; thence along some South 73 degrees 33 minutes West, 135 feet to a point on other property of grantors herein; thence through and along same, North 16 degrees 27 minutes West, 120 feet to a point on the Southerly line of Leech Road; thence along the Southerly side of Leech Road, North 73 degrees 33 minutes East, 135 feet to point of beginning.

 

EXCEPTING AND RESERVING however, to the grantors, their heirs and assigns a 7 foot wide easement for a sanitary sewer, as the same now exists, for the benefit of adjoining property now or formerly Dick Drabbe, et ux., on the South running Northwardly through said premises to Leech Drive with the right in the grantors, their heirs and assigns to relocate the same elsewhere on the premises.

 

Premises B:

 

All THAT CERTAIN lot or piece of ground, situate in the Borough of Baldwin, County of Allegheny and Commonwealth of Pennsylvania, bounded and described as follows, to-wit:

 

BEGINNING at a point in the Westerly line of Clairton Boulevard, 60 feet wide, said point being located South 15 degrees 56 minutes East, along said line of said Boulevard, a distance of 329.55 feet from the Southerly line of property of Olivia M. Wightman; thence Southwardly along said Westerly line of Clairton Boulevard by an arc of a circle having a radius of 985 feet and curving to the left for a distance of 105.10 feet to land now or formerly of Myna Cibek; thence along said land now or formerly of Myna Cibek, South 73 degrees 33 minutes West, a distance of 64.58 feet to land now or formerly of Carl M. Wolfe and Luigi M. Cecala: thence along land now or formerly of Carl M. Wolfe and Luigi M. Cecala, North 16 degrees 27 minutes West, for a distance of 120 feet to the Southerly line of Leech Drive, 40 feet wide; thence along the Southerly line of Leech Drive, North 73 degrees 33 minutes East, for a distance of 44.97 feet to a point; thence continuing along the Southerly line of Leech Drive by an arc of a circle having a radius of 14.90 feet and curving to the right for a distance of 23.54 feet to the point and place of beginning.

 

Whitehall (51)

  

  

  

 

Homestead (55) - 222 West 8th St., Homestead, PA

 

ALL THAT CERTAIN lot or piece of ground situate in the Borough of West Homestead, County of Allegheny and State of Pennsylvania, BEING Lot Nos. 17,18, 19, 20, 21,22, 23, 24 and 25 in the Kennedy and West Plan of Lots recorded in the Recorder of Deeds Office of Allegheny County, in Plan Book Volume 15, page 30, bounded and described as follows to wit:

 

BEGINNING ON THE Southerly side of West Eight Avenue, 80 feet wide at a Hub and Tack on the dividing line between Lot Nos. 25 and 26 in said Plan; thence from said point of beginning and along the southerly right of way side of West Eighth Avenue North 51o11'00" East, a distance of 225.00 feet to a Tait Capped Iron Pin on the dividing line between Lot Numbers 17 and 16 in said plan; thence along said dividing line South 38o49'00" East, a distance of 110.00 feet to a point on the Northerly side of Hazel Way, 20 feet wide, thence along said Hazel Way, South 51o11'00" West, a distance of 225.00 feet to a Hub and Tack on the dividing line between Lot. Nos. 25 and 26 in said plan; thence along said dividing line, North 38o49'00" West, a distance of 110.00 feet to a point it the place of beginning.

 

Homestead (55)

  

  

  

 

Bellevue (59) - 4306 Ohio River Blvd., Pittsburgh, PA

 

All that certain parcel of land situate in the Borough of Bellevue, County of Allegheny and Commonwealth of Pennsylvania, being bounded and described as follows:

 

BEGINNING at an iron pin at the intersection of the northerly side of Ohio River Boulevard (Legislative Route 652), 60.00 feet wide, and the westerly side of Shiloh Avenue, 50.00 feet wide; thence from side point of beginning by the northerly side of Ohio River Boulevard North 45° 03' 53" West a distance of 233. 34 feet to an iron pin; thence through former Riverview Avenue, as vacated by the County of Allegheny in 1930, and Lot No. 14 in the Thomas Bakewell Plan of Lots as recorded in the Recorder of Deeds Office of Allegheny County, Pennsylvania, in Plan Book Volume 4, page 37, by the line dividing lands now or formerly of Boron Oil Company and lands now or formerly of Robert K. Christy North 46° 44' 00" East a distance of 152.60 feet to an iron pipe; thence through Lots No.'s 14 and 15 in said Thomas Bakewell Plan of Lots by the line dividing lands now or formerly of Boron Oil Company and land now or formerly of William R. Richert South 43° 45' 00" East a distance of 134.23 feet to an iron pin; thence continuing by said dividing line through Lot No. 25 in Thomas Bakewell Plan of Lots South 46° 44' 00" West a distance of 26.00 feet to a pipe; thence by and through same South 43° 45' 00" East a distance of 99.00 feet to a pipe; thence by the Westerly side of Shiloh Avenue South 46° 44' 00" West a distance of 121.24 feet to the iron pin at the point of BEGINNING.

 

Bellevue (59)

  

  

  

 

Harmarville (61) - 1 Landings Dr., Pittsburgh, PA

 

ALL THAT CERTAIN PARCEL OF LAND SITUATE IN THE TOWNSHIP OF HARMAR, COUNTY OF ALLEGHENY AND COMMONWEALTH OF PENNSYLVANIA BEING MORE PARTICULARLY BOUND AND DESCRIBED AS FOLLOWS AND BEING LOT NO. 2 OF THE HARMAR LANDINGS PLAN NO. 2A, AS RECORDED IN PLAN BOOK VOLUME 158, PAGES 127 TO 132 INCLUSIVE:

 

BEGINNING AT A POINT ON THE SOUTHERLY SIDE OF LANDINGS DRIVE (50 FT. STREET) AT THE DIVIDING LINE OF LOT NO. 2 AND PARCEL "D" IN THE HARMAR LANDINGS PLAN NO. 2A AS RECORDED; THENCE ALONG SAID DIVIDING LINE S 25 DEG. 45' 00" E, 202.29 FEET TO A POINT ON THE NORTHERLY RIGHT OF WAY LINE OF THE PENNSYLVANIA TURNPIKE COMMISSION; THENCE ALONG LAND OF SAID PENNSYLVANIA TURNPIKE COMMISSION S 63 DEG. 33' 42" W, 175.42 FEET TO A POINT ON THE DIVIDING LINE OF LOT NO. 2 AND LOT NO. 1 AS RECORDED IN HARMAR LANDINGS PLAN NO. 2 IN PLAN BOOK VOLUME 157, PAGES 164 TO 169; THENCE ALONG SAID DIVIDING LINE N. 24 DEG. 22' 45" W, 204.59 FEET TO A POINT IN A CURVE ON THE SOUTHERLY SIDE OF THE AFOREMENTIONED LANDINGS DRIVE IN AN EASTERLY DIRECTION BY A CURVE TO THE LEFT HAVING A RADIUS OF 460.185 FEET, FOR AN ARC DISTANCE OF 11.01 FEET TO A POINT; THENCE ALONG SAME N 64 DEG. 15' 00" E, 159.50 FEET TO THE POINT OF BEGINNING.

 

Harmarville (61)

  

  

  

 

W. View (65) - 804 W. View Park Dr., West View, PA

 

ALL that certain tract of land situate in the Borough of West View, Allegheny County, Pennsylvania, designated as Lot No. 7 in the West View Associates G.P.F. Associates Plan of Lots recorded in Plan Book Volume 118, pages 33-34-35 in the Recorder’s Office of Allegheny County, Pennsylvania, being more particularly bounded and described as follows, to-wit:

 

BEGINNING at a point on the northerly line of West View Park Drive, a 50' street, said point being also on the common line between Lot No. 7 and Lot No. 8; thence running North 23°02'07" West along said common line, a distance of 150.00 feet to a point on the southerly right of way line of Center Avenue, an 80' street; thence running North 66°57'53" East along the southerly line of Center Avenue, a distance of 150.00 feet to a point on the common line between Lot No. 7 and Lot No. 6; thence running South 23°02'07" East, along said common line, a distance of 150.00 feet to a point on the northerly line of West View Park Drive; thence running South 66°57'53" West, along the northerly line of West View Park Drive, a distance of 150.00 feet to the point of beginning.

 

CONTAINING a total area of 0.517 acres, more or less.

 

W. View (65)

  

  

  

 

Braddock Hills (66) - 278 Yost Blvd., Pittsburgh, PA

 

ALL THAT CERTAIN IN LOT OR PIECE OF GROUND situate in the Borough of Braddock Hills, County of Allegheny and Commonwealth of Pennsylvania, being designated as Parcel “C” in the Gold Circle Plan of Lots, as recorded in the Recorder’s Office of Allegheny County, in Plan Book Volume 102, pages 147 and 148, bounded and described as follows: to-wit:

 

BEGINNING at a point on the Northerly line of Yost Boulevard, 60 feet wide, at the dividing line between Parcels "B" and "C" in said Plan; thence along said line of Yost Boulevard, South 77° 52' West, a distance of 86.21 feet to a point; thence continuing along the same, in a Southwesterly direction, by the arc of a circle curving to the left, having a radius of 230 feet, an arc distance of 257.12 feet to a point on the Northeasterly line of Brinton Road; thence by a line through said Road, South 11o 30' 20" West, a distance of 20 feet to a point in the center line of said Brinton Road; thence along said center line, North 78° 29' 40" West, a distance of 200.21 feet to a point; thence continuing along the same, in a Northwesterly direction by the arc of a circle curving to the right, having a radius of 232 feet, an arc distance of 42.07 feet to a point of line of land, now or formerly of Arthur Stern; thence along said line, North 41o 08' 20" East, a distance of 393.02 feet to a point; thence continuing along the same, North 04° 27' 20" East, a distance of 106.45 feet to a point on the dividing line between Parcels "B" and "C" in said Plan aforesaid; thence along said dividing line, South 52° 48' 30" East, a distance of 270 feet to a point thence continuing along same, South 12° 08' East, a distance of 85.13 feet to the point at the place of beginning.

 

Braddock Hills (66)

  

  

  

 

Lakewood (91) - 270 E. Fairmount Ave., Lakewood, NY

 

ALL THAT TRACT OR PARCEL OF LAND, situate in the Village of Lakewood, Town of Busti, County of Chautauqua, and State of New York being part of Lot No. 9, Township 2, and Range 12 of the Holland Land Company’s Survey; and designated and distinguished as being all of Lot Number 2, 3, and 4, and Part of Lot No. 1, as shown on a map of Lakecrest Farms, made by Walter F. Shaw, C. E., dated May 7, 1923, which map was filed in the Chautauqua County Clerk’s Office in Cabinet No. 1, Section A, as Map No. 34, and being further bounded and described as follows:

 

BEGINNING at an iron stake at the intersection of the southerly line of East Fairmount Avenue (New York State Route No. 394), and the easterly line of Elmcrest Avenue;

 

THENCE North 78 degrees 46 minutes 34 seconds east along the said southerly line of East Fairmount Avenue and the northerly line of Lot Nos. 4,3, 2 and 1 of Lakecrest Farms, a distance of 134.66 feet to an iron stake;

 

THENCE South 12 degrees 00 minutes 51 seconds East through said Lot No. 1, a distance of 136.95 feet to an iron stake in the easterly line of said Lot No. 1;

 

THENCE South 00 degrees 13 minutes 20 seconds East, a distance of 35.39 feet to a found iron stake at the northeasterly corner of Lot No. 38, as shown on the said map of Lakecrest Farms;

 

THENCE North 89 degrees 45 minutes 36 seconds West along the northerly line of said Lot No. 38, as distance of 160.26 feet to a found iron stake in the easterly line of Elmcrest Avenue;

 

THENCE North 00 degrees 11 minutes 26 seconds West along the said easterly line of Elmcrest Avenue, a distance of 142.46 feet to the iron stake at the point or place of BEGINNING.

 

BEING A PORTION of the same premises conveyed by Terrill P. Johnson and Deborah B. Johnson to Judith E. Scalise by Warranty Deed dated October 27, 1992 and recorded in the Chautauqua County Clerk’s Office on November 10, 1992 In Liber 2283 of Deeds at Page 235.

 

According to a survey and plat prepared by Abate Engineering Associates, P. C., Jerome E. Erickson, P. E. & L. L. S., plat dated October 15, 1999 and designated as Job No. 7-99-AE199590.

 

ALSO ALL THAT TRACT OR PARCEL O LAND, situate in the Village of Lakewood, Town of Busti, County of Chautauqua and State of New York, being part of Lot No. 9, Township 2, arid Range 12 of the Holland Land Company’s Survey and designated and distinguished as Lot No. 38 on a map of Lakecrest Farms made by Walter F. Shaw, C. E., dated May 7, 1923, which map was filed in the Chautauqua County Clerk’s Office in Cabinet No. 1, Section A, as Map No. 34; and being further bounded and described as follows:

 

BEGINNING at a found iron stake at the easterly line of Elmcrest Avenue at the southwesterly corner of Lot No. 4, as shown on said map of Lakecrest Farms, said iron stake being South 00° 11’ 26” East, a distance of 142.46 feet from a point at the intersection of the southerly line of Fairmount Avenue and the said easterly line of Elmcrest Avenue;

 

THENCE South 89° 45’ 36” East along the southerly line of said Lot No .4 and the southerly lines of Lot Nos. 3, 2, and 1 of said Lakecrest Farms Map, a distance of 160.26 feet to a found iron stake;

 

THENCE South 01° 01’ 18” West along the easterly line of Lakecrest Farms, a distance of 49.48 feet to a found iron stake at the northeasterly corner of Lot No. 39 of said map;

 

THENCE North 89156’ 35” West along the northerly line of Lot No, 39, a distance of 159.73 feet to a found iron stake in the said easterly line of Elmcrest Avenue;

 

THENCE North 00° 24’ 39” East along the said easterly line of Elmcrest Avenue, a distance of 49.99 feet to the point or place of BEGINNING.

 

Lakewood (91)

  

  

  

 

Farmington (324) – 627 Walmart Drive, Farmington, MO

 

PART OF LOT "A" OF ROSE LANE SUBDIVISION IN THE CITY OF FARMINGTON, MISSOURI, PER PLAT OF RECORD IN PLAT BOOK 7, PAGE 26, LAND RECORDS OF ST. FRANCOIS COUNTY, MISSOURI, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: FROM THE SOUTHEAST CORNER OF LOT "A" OF SAID ROSE LANE SUBDIVISION; THENCE N 16 DEGREES 49' 55" W. ALONG THE EASTERLY LINE OF LOT "A" 355.25 FEET TO A POINT ON THE WESTERLY LINE OF ROUTE 67, FARMINGTON SPUR; THENCE NORTHWESTERLY ALONG SAID WESTERLY LINE THE FOLLOWING COURSES AND DISTANCES, NORTHWESTERLY ON A CURVE TO THE LEFT, HAVING A RADIUS OF 11,358.36 FEET, A DISTANCE OF 322.71 FEET; THENCE N 52 DEGREES 56' 57" W. 145.36 FEET TO THE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE N 83 DEGREES 54' 46" W. 116.62 FEET; THENCE N 52 DEGREES 56' 57" W 77.55 FEET TO A POINT ON THE NORTHERLY LINE OF LOT "A" OF SAID ROSE LANE SUBDIVISION; THENCE LEAVING THE WESTERLY LINE OF SAID ROUTE 67, FARMINGTON SPUR S 53 DEGREES 05' 49" W ALONG THE NORTHERLY LINE OF SAID LOT "A", 93.26 FEET; THENCE S 36 DEGREES 54' 11" E. 154.05 FEET; THENCE N 53 DEGREES 05' 49" E. 200.00 FEET TO THE POINT OF BEGINNING.

 

PART OF LOT "A" OF ROSE LANE SUBDIVISION IN THE CITY OF FARMINGTON, MISSOURI, PER PLAT OF RECORD IN PLAT BOOK 7, PAGE 26, LAND RECORDS OF ST. FRANCOIS COUNTY, MISSOURI, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: FROM THE SOUTHEAST CORNER OF LOT "A" OF SAID ROSE LANE SUBDIVISION; THENCE N 16 DEGREES 49' 55" W ALONG THE EASTERLY LINE OF LOT "A" 355.25 FEET TO A POINT ON THE WESTERLY LINE OF ROUTE 67, FARMINGTON SPUR; THENCE NORTHWESTERLY ALONG SAID WESTERLY LINE THE FOLLOWING COURSES AND DISTANCES, NORTHWESTERLY ON A CURVE TO THE LEFT, HAVING A RADIUS OF 11,358.36 FEET, A DISTANCE OF 322.71 FEET; THENCE N 52 DEGREES 56' 57" W 145.36 FEET; THENCE N 83 DEGREES 54' 46" W 116.62 FEET; THENCE N 52 DEGREES 56' 57" W 77.55 FEET TO A POINT ON THE NORTHERLY LINE OF LOT "A" OF SAID ROSE LANE SUBDIVISION; THENCE LEAVING THE WESTERLY LINE OF SAID ROUTE 67, FARMINGTON SPUR, S 53 DEGREES 05' 49" W., ALONG THE NORTHERLY LINE OF SAID LOT "A" 93.26 FEET TO THE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE CONTINUE S 53 DEGREES 05' 49" W ALONG THE NORTHERLY LINE OF SAID LOT "A", 33.17 FEET; THENCE SOUTHEASTERLY ON A CURVE TO THE LEFT, HAVING A RADIUS OF 50.0 FEET, A DISTANCE OF 28.76 FEET; THENCE S 37 DEGREES 21' 05" E, 126.79 FEET; THENCE N 53 DEGREES 05' 49" E. 40.01 FEET; THENCE N 36 DEGREES 54' 11" W. 154.05 FEET TO THE POINT OF BEGINNING.

 

Farmington (324)

  

  

  

 

Moundsville (352) - 122 N. Lafayette Ave., Moundsville, WV

 

All those certain tract, piece or parcel of land lying and being situate in the City of Moundsville, Marshall County, State of West Virginia, and more particularly described as follows:

 

Commencing at a point at the southeastern intersection of U.S. Route 250 and Route 2 thence following Route 2 South along the eastern line 884 feet more or less to a 1/2 inch rod set; thence North 85 degrees 59 minutes 00 seconds East 110.00 feet to a 5/8 inch rod found; thence South 04 degrees 01 minutes 00 seconds East 160.00 feet to a nail set; thence South 85 degrees 59 minutes 00 seconds West to 95.00 feet to a nail set; thence North 04 degrees 26 minutes 36 seconds West 75.48 feet to a punch hole found; thence South 85 degrees 26 minutes 10 seconds West 14.94 feet to a 5/8 inch rod found; thence North 03 degrees 44 minutes 54 seconds West 84.67 feet to the point and place of beginning containing 16,502.7 square feet or 0.3789 acres.

 

Moundsville (352)

  

  

  

 

Kittaning (379) - 14 Hilltop Plaza, Kittanning, PA

 

ALL THAT CERTAIN PARCEL OR REAL PROPERTY LOCATED IN EAST FRANKLIN TOWNSHIP, ARMSTRONG COUNTY, PENNSYLVANIA, AS MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

BEGINNING AT A POINT ON THE SOUTHERLY SIDE OF AN ACCESS RIGHT-OF-WAY 50 FEET IN WIDTH AT THE DIVIDING LINE OF PARCEL NO. 3A AND NO. 38 IN THE HILLTOP PLAZA SHOPPING CENTER PLAN OF SUBDIVISIONS WHICH PLAN IS RECORDED IN THE ARMSTRONG COUNTY RECORDER’S OFFICE IN PLAN BOOK 3, PAGE 551, SLIDE 192; THENCE FROM SAID PLACE OF BEGINNING SOUTH 3o 35' 38" WEST ALONG THE LINE OF PARCEL NOS. 3A AND 38, A DISTANCE OF 223.78 FEET TO A POINT THE DIVIDING LINE OF PARCEL NO. 3A AND PARCEL NO. 6 IN THE AFOREMENTIONED PLAN; THENCE ALONG SAID DIVIDING LINE NORTH 88o 24' 22" WEST, A DISTANCE OF 180 FEET TO A POINT ON THE EASTERLY LINE OF AN ACCESS RIGHT-OF-WAY 68 FEET IN WIDTH; THENCE ALONG SAID RIGHT-OF-WAY NORTH 3o 35' 38" EAST, A DISTANCE OF 175.00 FEET TO A POINT; THENCE CONTINUING ALONG SAME BY THE ARC [OF A] CIRCLE CURVING TO THE RIGHT HAVING A RADIUS OF 50.00 FEET AND AN ARC DISTANCE OF 78.54 FEET TO THE SOUTHERLY LINE OF THE AFOREMENTIONED 50 FOOT ACCESS RIGHT-OF-WAY; THENCE ALONG SAID LINE SOUTH 66o 24' 22" EAST, A DISTANCE OF 98.92 FEET TO A POINT; THENCE CONTINUING ALONG SAME BY THE ARC OF A CIRCLE CURVING TO THE RIGHT HAVING A RADIUS OF 395.00 FEET AND AN ARC DISTANCE OF 31.11 FEET TO THE POINT OF BEGINNING, ALSO KNOWN AS PARCEL NO. 3A AS SHOWN ON THE HILLTOP PLAZA SHOPPING CENTER PLAN OF SUBDIVISION.

 

Wheeling (356)

  

  

  

 

EXHIBIT B

 

FORM OF SNDA

 

See attached.

 

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT B

  

 

THIS INSTRUMENT WAS PREPARED BY AND

WHEN RECORDED RETURN TO:

 

                                                           

                                                           

                                                           

                                                           

                                                           

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

 

	
Lease:

	
Master Land and Building Lease (Pool A) dated as of December __, 2011

	
Landlord:

	
DBMFI LLC, a Delaware limited liability company

	
Tenant:

	
MORGAN’S FOODS, INC., an Ohio corporation

	
Guarantor:

	
None

	
Property:

	
As described on Exhibit A

	
Property Address:

	
<<Address>>, <<City>>, <<State>>

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (hereinafter referred to as “Agreement”) made as of , 20__,

among [ ] (together with its successors and assigns hereinafter referred to as “Secured Party”), Tenant, and Landlord.

 

RECITALS:

 

A.     Landlord and Tenant have entered into the Lease relating to the Property described therein and on the attached Exhibit A; and

 

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

B.           Secured Party has committed to make a loan to Landlord (hereinafter referred to as the “Loan”) to be secured by certain mortgages, deeds of trust or deeds to secure debt (collectively, the “Mortgage”) and certain assignments of leases and rents (collectively, the “Assignment of Leases”) from Landlord to Secured Party covering the Property; and

 

C.           Tenant has agreed that the Lease shall be subject and subordinate to the Mortgage held by Secured Party, provided Tenant is assured of continued occupancy of the Property under the terms of the Lease as hereinafter provided;

 

NOW, THEREFORE, for and in consideration of the mutual covenants herein contained, the sum of Ten Dollars ($10.00) and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, Secured Party, Tenant and Landlord hereby agree to the subordination, attornment and other agreements in favor of Lender set forth herein.

 

1.           Subordination and Consent. Secured Party, Tenant and Landlord do hereby covenant and agree that the Lease with all rights, options, liens and charges created thereby (including, without limitation, any options, rights of first refusal, or rights contained in the Lease, or otherwise existing, to acquire any or all of the Property, or any superior leasehold interest therein), is and shall continue to be subject and subordinate in all respects to the Mortgage and to any renewals, modifications, consolidations, replacements and extensions thereof and to all advancements made thereunder. Tenant acknowledges that Landlord will execute and deliver to Secured Party an assignment of the Lease as security for said loan, and Tenant hereby expressly consents to such assignment. Tenant agrees that if there is a default by Landlord in the performance and observance of any of the terms of such Loan, Secured Party may, at its option, demand all rents due under the Lease be paid by Tenant directly to Secured Party at the address specified below, or as otherwise specified by Secured Party. Tenant agrees that upon Secured Party’s written request for payment of rent directly to Secured Party, Tenant will timely remit any and all payments due under the Lease directly to, and payable to the order of, Secured Party. Such payments to Secured Party will constitute performance of Tenant’s payment obligations under the Lease. Tenant agrees that it has no right or option of any nature to purchase the Property, or any portion thereof or any interest therein.

 

2.           Non-Disturbance. Secured Party does hereby agree with Tenant that, in the event Secured Party becomes the fee simple owner of the Property by foreclosure, conveyance in lieu of foreclosure or otherwise, so long as Tenant complies with and performs its obligations under the Lease and there exists no “Event of Default” on the part of the Tenant under the Lease, (a) the Lease shall continue in full force and effect as a direct Lease between the succeeding owner of the Property and Tenant, upon and subject to all of the terms, covenants and conditions of the Lease, for the balance of the terms of the Lease, and Secured Party will not disturb the possession of Tenant, and (b) the Property shall be subject to the Lease and Secured Party shall recognize Tenant as the tenant of the Property for the remainder of the terms of the Lease in accordance with the provisions thereof and be bound thereby as landlord thereunder until the succeeding owner takes title to the Property; provided, however, that Secured Party shall not be:

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT Loan No. [__- ]/ Unit No. «StoreUnit_»

 

a.           subject to any claims, offsets or defenses which Tenant might have against any prior landlord (including Landlord); or

 

b.           obligated to complete any construction work required to be done by any prior landlord (including Landlord) pursuant to the provisions of the Lease or to reimburse Tenant for any construction work done by Tenant; or

 

c.           required to make any repairs to the Property required as a result of fire or other casualty or by reason of condemnation unless Secured Party shall be obligated under the Lease to make such repairs and then shall be obligated to finance the completion of such repairs only to the extent of casualty insurance proceeds or condemnation awards received; or

 

d.           required to make any capital improvements to the Property which Landlord may have agreed to make, but had not completed, or to perform or provide any services not related to possession or quiet enjoyment of the Property; or

 

e.           be liable for any act or omission of any prior landlord (including Landlord); or

 

f.           bound by any rent or additional rent which Tenant might have paid for more than the current month or any security deposit or other prepaid charge paid to any prior landlord (including Landlord); or

 

g.           bound by any amendment or modification of the Lease that results in a reduction of Base Rent or Additional Rent (each as defined in the Lease), or a shortening of the Lease Term (as defined in the Lease) or a material increase in Landlord’s obligations made without Secured Party’s written consent.

 

h.           Secured Party shall not join Tenant in any action, suit or proceeding arising out of the Mortgage or seeking to foreclose the Mortgage, unless Tenant is deemed to be a necessary party under applicable Law in order for Secured Party to avail itself of and complete the foreclosure or other remedy.

 

3.           Attornment. Tenant does hereby agree with Secured Party that, in the event Secured Party becomes the owner of the Property by foreclosure, conveyance in lieu of foreclosure or otherwise, then Tenant shall attorn to and recognize Secured Party as the landlord under the Lease for the remainder of the term thereof, and Tenant shall perform and observe its obligations thereunder, subject only to the terms and conditions of the Lease. Tenant further covenants and agrees to execute and deliver upon request of Secured Party an appropriate agreement of attornment to Secured Party and any subsequent titleholder of the Property.

 

4.           Lease Defaults. In the event Landlord shall fail to perform or observe any of the terms, conditions or agreements in the Lease, Tenant shall give written notice thereof to Secured Party and Secured Party shall have the right (but not the obligation) to cure such default. Tenant shall not take any action with respect to such default under the Lease, including without limitation any action in order to terminate, rescind or avoid the Lease or to withhold any rent or other monetary obligations thereunder, provided that such default does not place Tenant’s business operations or the health, safety and welfare of Tenant’s employees, customers and invitees in immediate jeopardy, for a period of thirty (30) days following receipt of such written notice by Secured Party; provided, however, that if such default reasonably requires more than thirty (30) days to cure, Secured Party shall have a reasonable time, but in no event more than ninety (90) days, to cure the default provided Landlord commences to cure within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. Tenant will accept performance by Secured Party of any term of the Lease required to be performed by Landlord with the same force and effect as though performed by Landlord, although Secured Party shall in no event be required to do so.

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

5.           Obligations and Liability of Secured Party. Secured Party shall have no obligations nor incur any liability with respect to any warranties of any nature whatsoever, whether pursuant to the Lease or otherwise, including, without limitation, any warranties respecting use, compliance with zoning, hazardous wastes or environmental laws, Landlord’s title, Landlord’s authority, habitability, fitness for purpose or possession. Furthermore, in the event that Secured Party shall acquire Landlord’s interest in the Property, Secured party shall have no obligation with respect to the obligations imposed on the Landlord under the Lease prior to the date Secured Party acquires Landlord’s interest in the Property, nor incur any liability, beyond Secured Party’s interest in the Property (or the proceeds of sale of all or any portion thereof), and Tenant shall look exclusively to such interest of Secured Party in the Property for the payment and discharge of any obligations or liability imposed upon Secured Party hereunder, under the Lease, and Secured Party is hereby released and relieved of any other obligations or liability hereunder or under the Lease. Secured Party shall not, either by virtue of the Mortgage, the Assignment of Leases or this Agreement, be or become a mortgagee in possession or be or become subject to any liability or obligation under the Lease or otherwise until Secured Party shall have acquired the Landlord’s interest in the Property, by foreclosure or otherwise, and then such liability or obligation of Secured Party under the Lease shall extend only to those liabilities or obligations accruing subsequent to the date that Secured Party has acquired Landlord’s interest in the Property. Without limiting the generality of the foregoing, neither the Mortgage, the Assignment of Leases nor this Agreement shall, prior to Secured Party’s acquisition of Landlord’s interest in the Property, by foreclosure or otherwise, operate to place responsibility for the control, care, management or repair of the Property upon Secured Party or impose upon Secured Party responsibility for the carrying out of any of the terms or conditions of the Lease, and Secured Party shall not be responsible or liable for any waste committed on the Property by any party whatsoever, for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property.

 

6.           No Modification. Tenant agrees that the Lease shall not hereafter be modified or amended without the prior consent of Secured Party. Tenant will not consent to any termination or cancellation of the Lease or to any modification or amendment that results in a reduction of Base Rent or Additional Rent (each as defined in the Lease), or a shortening of the Lease Term (as defined in the Lease) or a material increase in Landlord’s obligations, without Secured Party’s prior written consent and will not make any payment to Landlord in consideration of any modification, termination or cancellation of the Lease without Secured Party’s prior written consent.

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

7.            Invalid or Inoperative Provisions. If any portion or portions of this Agreement shall be held invalid or inoperative, then all of the remaining portions shall remain in full force and effect, and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion or portions held to be invalid or inoperative.

 

8.            Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, except to the extent applicable laws of the jurisdiction in which the Property is located apply with respect to the validity hereof, the priority of the liens and interests, and the enforcement of the remedies granted herein.

 

9.            Notices. So long as the Mortgage remains outstanding and unsatisfied, Tenant will mail or deliver to Secured Party, at the address and in the manner herein below provided, a copy of all notices given to the Landlord by Tenant under and pursuant to the terms and provisions of the Lease. All notices or other communications required or permitted to be given pursuant to the provisions hereof shall be in writing and shall be considered as properly given if (i) mailed to the addressee by first class United States mail, postage prepaid, registered or certified with return receipt requested, (ii) by delivering same in person to the addressee, or (iii) by delivery to a third party commercial delivery service for same day or next day delivery to the office of the addressee with proof of delivery. Notice so given shall be effective, as applicable, upon (i) the third (3rd) day following the day such notice is deposited with the U.S. Postal Service, (ii) delivery to the addressee, or (iii) the second (2nd) business day following the day such notice is delivered to such third party delivery service. Notice given in any other manner shall be effective only if and when received by the addressee. For purposes of notice, the addresses of the Landlord, Tenant and Secured Party are as follows:

 

Landlord:                               DBMFI LLC

c/o Drawbridge Special Opportunities Fund LP

1345 Avenue of the Americas, 46th Floor

New York, New York 10105

Attn: Constantine M. Dakolias, President and

Glenn P. Cummins, CFO

 

with copy to:                         Sidley Austin LLP

555 West Fifth Street, Suite 4000

Los Angeles, California

Attn: Aimee Contreras-Camua, Esq.

 

Tenant: Morgan’s Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, Ohio 44122

Attn: Barton J. Craig, Esq

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

with copy to:                         Morgan’s Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, Ohio 44122

Attn: James Liguori

 

Secured Party:                                                                      

                                                                                                

                                                                                                

                                                                                                         

 

Notwithstanding the foregoing, any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other parties in the manner set forth herein.

 

10.           Binding Nature. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors, successors-in-title and assigns. When used herein, the term “Landlord” refers to Landlord and to any successor to the interest of Landlord under the Lease and “Secured Party” refers to Secured Party and to any assignee or subsequent holder of the note secured by the Mortgage (whether by assignment, secondary market transaction, or otherwise) and Secured Party’s servicer of the Loan, if any.

 

11.           Tenant’s Personal Property. In no event shall the Mortgage cover or encumber (and shall not be construed as subjecting in any manner to the lien thereof) any of Tenant’s personal property (defined in the Lease as “Restaurant Equipment”), which may include, but shall not be limited to, readily removable trade fixtures, restaurant and business equipment, furniture, signs and other personal property at any time placed on or about the Property; provided, however, that Tenant shall, at its expense, repair any damage caused by the removal of such items, in accordance with the terms of the Lease.

 

12.           Whole Agreement. This Agreement shall be the whole agreement and only agreement with regard to the subordination of the Lease to the lien of the Mortgage and shall supersede and cancel, but only insofar as would affect the priority between the Mortgage and the Lease, any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Lease which provide for the subordination of the Lease to a deed or deeds of trust or to a mortgage or mortgages.

 

13.           Subordination. Tenant acknowledges and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination.

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

14.            Heirs, Successors, Assigns and Transferees. The covenants herein shall be binding upon, and inure to the benefit of, the heirs, successors and assigns of the parties hereto.

 

15.            Subsequent Transfer. If Lender, by succeeding to the interest of Lessor under the Lease, should become obligated to perform the covenants of Lessor thereunder, then, upon any further transfer of Lessor’s interest by Lender, all of such obligations shall terminate as to Lender with respect to matters arising after the date of such transfer.

 

16.            Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute and be construed as one and the same instrument.

 

[Signature Pages Follow]

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth above.

 

LANDLORD:

 

DBMFI LLC,

a Delaware limited liability company

 

By:                                                    

Name:                                               

Title:                                                     

 

STATE OF                                                   §

                                                                       §

COUNTY OF                                               §

 

On                                  , 20__, before me,                                       , a Notary Public, personally appeared                                      , proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same for the purposes therein contained.

 

In witness whereof, I hereunto set my hand and official seal.

 

                                                                                      

Notary Public

My Commission Expires:                                                            

 

[Notary Seal]

 

 

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

TENANT:

 

MORGAN’S FOODS, INC.,

an Ohio corporation

 

By:                                                    

Name:                                               

Title:                                                                                                   

 

STATE OF                                                   §

                                                                       §

COUNTY OF                                               §

 

On                                , 20__, before me,                                   , a Notary Public, personally appeared                                   , proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same for the purposes therein contained.

 

In witness whereof, I hereunto set my hand and official seal.

 

                                                                                      

Notary Public

My Commission Expires:                                                                                                   

 

[Notary Seal]

 

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

SECURED PARTY:

 

[_______________________]

 

By:                                                    

Name:                                               

Title:                                                                                                   

 

STATE OF                                                   §

                                                                       §

COUNTY OF                                               §

 

On                                , 20__, before me,                                             , a Notary Public, personally appeared , proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person or the entity upon behalf of which the person acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of                  that the foregoing paragraph is true and correct.

 

                                                                                      

Notary Public

My Commission Expires:                                          

 

[Notary Seal]

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

EXHIBIT A

LEGAL DESCRIPTION

 

Description of Property. The Property referred to in this Agreement is situated in County of <<County>>, State of <<State>> and is described as follows:

 

[LEGAL DESCRIPTION TO BE INSERTED PRIOR TO CLOSING]

 

Property Address: <<Address>>, <<City>>, <<State>>

 

 

 

 

SUBORDINATION. NON-DISTURBANCE AND ATTORNMENT AGREEMENT

Loan No. [__-]/ Unit No. <<StoreUnit_>>

  

  

  

 

EXHIBIT C

FORM TENANT’S ESTOPPEL CERTIFICATE

 

THE UNDERSIGNED, MORGAN’S FOODS, INC., an Ohio corporation (“Tenant”), whose address is 4829 Galaxy Parkway, Suite S, Cleveland, Ohio 44122, represents and certifies as follows:

 

1.           Tenant is the tenant under that certain Master Land and Building Lease

 

(Pool A) dated December __, 2011 (the “Lease”) with DBMFI LLC, a Delaware limited liability company as landlord (“Landlord”), covering the properties described therein (collectively the “Demised Properties”), a true and correct copy of which (together with all amendments thereof) is attached hereto as Exhibit A. [Tenant understands that                                                (“Lender”) intends to enter into financing arrangements with Landlord, as borrower, to be secured, among other things, by certain mortgages, deeds of trust and assignments of leases and rents, as amended, covering the Demised Properties.]

 

2.           The Lease constitutes the only agreement, promise, understanding or commitment (either written or oral) Tenant has with respect to the Demised Properties and any right of occupancy or use thereof.

 

3.           The Lease is in full force and effect and has not been assigned, subleased, supplemented, modified or amended, in whole or in part.

 

4.           The Tenant has not given Landlord any notice of termination under the Lease.

 

5.           Tenant took possession of the Demised Properties on or about the date of the Lease and commenced paying rent on or about December __, 2011. Tenant presently occupies the Demised Properties, is open for business and in operation on the Demised Properties, and is paying rent on a current basis. No rent has been paid by Tenant in advance except for the monthly rental that became due on [                           ]  and no deposits, including security deposits, or prepayments of rent have been made in connection with the Lease. Tenant agrees not to pay rent more than one (1) month in advance unless otherwise specified in the Lease.

 

6.           The monthly base rental is the sum of [                          ] AND __/100THS DOLLARS (US$                                   ). Landlord has not agreed to reimburse Tenant for or to pay Tenant’s rent obligation under any other lease.

 

7.           The Lease term commenced on December __, 2011, expires on December___, 2031, and there are no options to renew except: four (4) option periods of five (5) years each.

 

8.           Tenant is not in default of any of its obligations under the Lease, nor have there occurred any events that with the passage of time or giving of notice or both, will result in any such default. To the best knowledge of Tenant, there are no defaults under the Lease by Landlord, nor have any events occurred that with the passage of time or giving of notice or both, will result in any such default. Tenant does not presently have (nor with the passage of time or giving of notice or both will have) any offset, charge, lien, claim, termination right or defense under the Lease.

Tennant Estoppel (Pool A)

  

  

  

 

9.              Landlord has no personal liability under the Lease (recourse against Landlord being limited to Landlord’s interest in the Demised Properties).

 

10.            Tenant has no right of first offer, right of first refusal, or option to purchase, with respect to all or any portion of any Demised Properties.

 

11.            Tenant is aware that third parties, including Lender, intend to rely upon this Certificate and the statements set forth herein and that the statements and facts set forth above shall be binding on Tenant.

 

12.            Tenant is not entitled to any concession or rebate of rent or other charges from time to time due and payable under the Lease, and there are no unpaid or unreimbursed construction allowances or other offsets due Tenant under the Lease.

 

13.            To the best of Tenant’s knowledge and belief, there are no rental, lease or similar commissions payable with respect to the Lease.

 

14.            Any notices to be provided hereunder shall be provided pursuant to the notice provisions of the Lease.

 

15.            Tenant and the persons executing this Tenant Estoppel Certificate on behalf of Tenant have the power and authority to execute and deliver this Tenant Estoppel Certificate, thereby binding Tenant.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

 

SIGNATURE PAGE(S) TO FOLLOW]

 

 

 

Tennant Estoppel (Pool A)

  

  

  

 

IN WITNESS WHEREOF, Tenant has executed this Tenant Estoppel Certificate this ___ day of                , 20__.

 

TENANT:

 

MORGAN’S FOODS, INC.,

an Ohio corporation

 

By:                                                                              

Name:                                                                        

Title:                                                                          

 

 

Tennant Estoppel (Pool A)

  

  

  

 

EXHIBIT “A”

Lease and all Amendments

See attached.

 

 

 

 

Tennant Estoppel (Pool A)

  

  

  

 

EXHIBIT D-1

 

FORM OF MEMORANDUM OF LEASE

(Missouri)

 

 

 

 

 

	
Space Above for Recorder’s Use Only

 

DOCUMENT COVER SHEET

 

TITLE OF DOCUMENT:                                       Memorandum of Lease

 

DATE OF DOCUMENT:                                                               , 2011

 

GRANTOR:                                                                                                       

(Landlord)

 

Mailing Address:                                                                                              

                                                                                                                              

 

GRANTEE:                                                                                                         

(Tenant)

 

 

Mailing Address:                                                                                             

                                                                                                                                  

 

LEGAL DESCRIPTION:                                       See Exhibit A

 

REFERENCE BOOK & PAGE:                                                                       

 

 

 

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

 

	
This instrument prepared by and

after recording return to:

 

Sidley Austin LLP

555 West Fifth Street, Suite 4000

Los Angeles, CA 90013-1010

Attention: Marc I. Hayutin, Esq.

	 

 

MEMORANDUM OF LEASE

This Memorandum of Lease is made and entered into as of                             , _____, _____ by and between                    , a                            (“Landlord”), and                                               , a                                    , whose address is                        (“Tenant”), who agree as follows:

 

1.   Terms and Premises. Pursuant to a certain Master Land and Building Lease (the “Lease”) dated on or about the date hereof entered into between Landlord and Tenant, Landlord has leased to Tenant and Tenant has leased from Landlord that certain real property, together with all the improvements thereon and appurtenances thereunto belonging (the “Premises”), more particularly described on Exhibit “A” attached hereto and incorporated herein, for a term of [                              ] ([       ]) years from                        , ____, expiring on                       , ____. Tenant has [                       ] ([     ]) [     ]-year options to extend the term of the Lease, all as more particularly set forth in the Lease.

 

2.           Subordination Provisions. Tenant’s rights under the Lease shall at all times be subject and subordinate to any fee mortgages and/or deed or deeds of trust now or hereafter filed against the Premises and to the rights of any Landlord’s Mortgagee thereunder, subject to Section 22.01 of the Lease (and the subordination provisions therein) and as set forth in Article 23 of the Lease.

 

3.           Purpose of Memorandum of Lease. This Memorandum of Lease is executed and recorded to give public notice of the Lease between the parties and all terms and conditions of the Lease are incorporated by reference into this Memorandum and this Memorandum of Lease does not modify the provisions of the Lease. If there are any conflicts between the Lease and this Memorandum of Lease, the provisions of the Lease shall prevail. The rights and obligations set forth herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any capitalized term not defined herein shall have the meaning as set forth in the Lease.

 

[SIGNATURES AND ACKNOWLEDGMENTS ON NEXT PAGE]

 

 

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

 

 

	
LANDLORD:

 

                         ,

a                      

	
TENANT:

 

                         ,

a                      

 

	By:                                                                       	By:                                                                        

 

	Date:                                                                   	Date:                                                                     

 

STATE OF                                                   )

) SS.

COUNTY OF                                               )

 

On this ____ day of                                                           , 2011, before me appeared                                                  , to me personally known, who, being by me duly sworn, did say

that (s)he is the                                of                                    , a Delaware limited liability company, and that the foregoing instrument was signed on behalf of said limited liability company by authority of its [manager/members], and said                                 acknowledged said instrument to be the free act and deed of said limited liabilty company.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

 

	 	 	
                                                      

Notary Public

 

Printed Name                                       

 

My Commission Expires:

 

 

 

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

 

STATE OF                                                   )

) SS.

COUNTY OF                                               )

 

On this ____ day of                                      , 2011, before me appeared                                      , to me personally known, who, being by me duly sworn, did say that (s)he is the                             of                       , a                            corporation, and that the seal affixed to the instrument is the corporate seal of said corporation and the foregoing instrument was signed [and sealed] on behalf of said corporation in behalf of its board of directors, and said                                      acknowledged said instrument to be the free act and deed of said corporation.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

 

 

	 	 	
                                                      

Notary Public

 

Printed Name                                       

 

My Commission Expires:

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

 

NOTE: Is it your intent to have the Seller sign the Memorandum of Lease? Typically, we only have the Landlord and Tenant sign.

 

SELLER:

 

                             ,

a                                               

 

 

By:                                                              

 

Date:                                                           

 

 

 

STATE OF                                                 

SS

 

COUNTY OF                                              

 

On this ____ day of                                    , 2011, before me appeared                               , to me personally known, who, being by me duly sworn, did say that (s)he is the                                   of                               , a                              corporation, and that the seal affixed to the instrument is the seal of the corporation and the foregoing instrument was signed and sealed on behalf of said corporation by authority of its board of directors, and said                                    acknowledged said instrument to be the free act and deed of said corporation.

 

IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County and State aforesaid, the day and year first above written.

 

 

	 	 	
                                                      

Notary Public

 

Printed Name                                       

 

My Commission Expires:

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

  

EXHIBIT “A”

 

 

 

 

 

 

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-1

  

 

EXHIBIT D-2

 

FORM OF MEMORANDUM OF LEASE

(New York)

 

(Above space reserved for recorder and recording information) This instrument prepared by and

 

	
This instrument prepared by and

after recording return to:

 

Sidley Austin LLP

555 West Fifth Street, Suite 4000

Los Angeles, CA 90013-1010

Attention: Marc I. Hayutin, Esq.

	 

 

MEMORANDUM OF LEASE

 

This Memorandum of Lease is made and entered into as of          , _____, _____ by and between                       , a                    , whose address is                                           (“Landlord”), and                           , a                            , whose address is                              (“Tenant”), who agree as follows:

 

1.   Terms and Premises. Pursuant to a certain Master Land and Building Lease (the “Lease”) dated [                            ] entered into between Landlord and Tenant, Landlord has leased to Tenant and Tenant has leased from Landlord that certain real property, together with all the improvements thereon and appurtenances thereunto belonging (the “Premises”), more particularly described on Exhibit “A” attached hereto and incorporated herein, for a term of [                    ] ([     ]) years from,                          , expiring on                        ,          . Tenant has [                   ] ([        ]) [     ]-year options to extend the term of the Lease, all as more particularly set forth in the Lease.  

 

2.             Subordination Provisions. Tenant’s rights under the Lease shall at all times be subject and subordinate to any fee mortgages and/or trust deeds now or hereafter filed against the Premises and to the rights of any Landlord’s Mortgagee thereunder or as otherwise set forth in Article 26 of the Lease.

3.   Purpose of Memorandum of Lease. This Memorandum of Lease is executed and recorded to give public notice of the Lease between the parties and all terms and conditions of the Lease are incorporated by reference into this Memorandum and this Memorandum of Lease does not modify the provisions of the Lease. If there are any conflicts between the Lease and this Memorandum of Lease, the provisions of the Lease shall prevail. The rights and obligations set forth herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Any term not defined herein shall have the meaning as set forth in the Lease.

 

[SIGNATURES AND ACKNOWLEDGMENTS ON NEXT PAGE]

 

MASTER LAND AND BUILDING LEASE

  

EXHIBIT D-2ex10-8.htm

Exhibit 10.8

 

 

CREDIT AND SECURITY AGREEMENT

 

among

 

MORGAN’S FOODS, INC.

 

as Borrower

 

 

and

 

 

FORTRESS CREDIT CORP.

 

as Lender

U.S. $7,500,000

 

Dated as of December 9, 2011

Credit and Security Agreement

  

  

 

 

TABLE OF CONTENTS

 

 

Page

	
ARTICLE I

	
DEFINITIONS AND INTERPRETATION

	 	 	 
	
Section 1.01.

	
Certain Defined Terms 

	1
	 	 	 
	
Section 1.02.

	
Accounting Terms

	23
	 	 	 
	
Section 1.03.

	
Uniform Commercial Code

	23
	 	 	 
	
Section 1.04.

	
Construction 

	23
	 	 	 
	
Section 1.05.

	
Time Periods 

	23
	 	 	 
	
ARTICLE II

	
AMOUNT AND TERMS OF THE LOAN

	 	 	 
	
Section 2.01.

	
The Loan 

	24
	 	 	 
	
Section 2.02.

	
Intentionally Omitted] 

	24
	 	 	 
	
Section 2.03.

	
Repayment 

	24
	 	 	 
	
Section 2.04.

	
Interest

	24
	 	 	 
	
Section 2.05.

	
Prepayments 

	25
	 	 	 
	
Section 2.06.

	
Increased Costs

	27
	 	 	 
	
Section 2.07.

	
[Intentionally Omitted] 

	28
	 	 	 
	
Section 2.08.

	
Payments and Computations 

	28
	 	 	 
	
Section 2.09.

	
Taxes 

	29
	 	 	 
	
Section 2.10.

	
Use of Proceeds 

	31
	 	 	 
	
ARTICLE III

	
CONDITIONS TO THE LOAN 

	 	 	 
	
Section 3.01.

	
Conditions Precedent to Making the Loan on the Closing Date 

	31

 

Credit and Security Agreement

i

  

 

	
ARTICLE IV 

	REPRESENTATIONS AND WARRANTIES
	  	  	  
	
Section 4.01.

	
Representations and Warranties of the Borrower 

	
34

	  	  	  
	
ARTICLE V 

	COVENANTS OF THE BORROWER
	  	  	  
	
Section 5.01.

	
Affirmative Covenants

	
41

	  	  	  
	
Section 5.02.

	
Negative Covenants 

	
45

	  	  	  
	
Section 5.03.

	
Reporting Requirements 

	
51

	  	  	  
	
ARTICLE VI

EVENTS OF DEFAULT

	  	  	  
	
Section 6.01.

	
Events of Default 

	
54

	  	  	  
	
ARTICLE VII

	
GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT

	  	  	  
	
Section 7.01.

	
Pledge and Assignment

	
56

	  	 	  
	
Section 7.02.

	
Security for Obligations

	
57

	  	  	  
	
Section 7.03.

	
Delivery of Borrower Pledged Collateral 

	
57

	  	  	  
	
Section 7.04.

	
Borrower Remains Liable 

	
58

	  	  	  
	
Section 7.05.

	
Further Assurances

	
58

	  	  	  
	
Section 7.06.

	
Lender Appointed Attorney-in-Fact 

	
59

	  	  	  
	
Section 7.07.

	
Lender May Perform 

	
59

	  	  	  
	
Section 7.08.

	
Reasonable Care

	
59

	  	  	  
	
Section 7.09.

	
[Intentionally Omitted] 

	
59

	  	  	  
	
Section 7.10.

	
Remedies Upon Default 

	
59

	  	  	  
	
Section 7.11.

	
Continuing Assignment and Security Interest; Transfer of the Loan 

	
60

	  	  	  
	
Section 7.12.

	
Quiet Enjoyment

	
60

 

Credit and Security Agreement

ii

  

 

	
ARTICLE VIII 

	[INTENTIONALLY OMITTED]
	  	  	  
	
ARTICLE IX

RESERVES

	  	  	  
	
Section 9.01.

	
Remodel Reserve 

	
61

	  	  	  
	
ARTICLE X 

	ASSIGNMENTS AND PARTICIPATIONS
	  	  	  
	
Section 10.01.

	
Assignments and Participations 

	
64

	  	  	  
	
ARTICLE XI 

	INDEMNIFICATION
	  	  	  
	
Section 11.01.

	
Indemnification 

	
66

	  	  	  
	
Section 11.02.

	
Procedure; Notification 

	
67

	  	  	  
	
ARTICLE XII 

	MISCELLANEOUS
	  	  	  
	
Section 12.01.

	
Amendments, Actions Under This Agreement, etc 

	
67

	  	  	  
	
Section 12.02.

	
Notices, etc

	
68

	  	  	  
	
Section 12.03.

	
No Waiver; Remedies 

	
68

	  	  	  
	
Section 12.04.

	
Costs and Expenses

	
68

	  	  	  
	
Section 12.05.

	
Right of Set-off 

	
69

	  	  	  
	
Section 12.06.

	
Severability 

	
69

	  	  	  
	
Section 12.07.

	
Binding Effect 

	
69

	  	  	  
	
Section 12.08.

	
Governing Law 

	
69

	  	 	  
	
Section 12.09.

	
Execution in Counterparts

	
69

	  	  	  
	
Section 12.10.

	
Consent to Jurisdiction

	
69

	  	  	  
	
Section 12.11.

	
Waiver of Jury Trial 

	
70

	  	  	  
	
Section 12.12.

	
Confidentiality 

	
71

	  	  	  
	
Section 12.13.

	
Patriot Act Notice 

	
71

 

Credit and Security Agreement

iii

  

 

	
Section 12.14.

	
Registration

	
72

Exhibits and Schedules

 

Exhibit A - [Intentionally Omitted]

Exhibit B - [Intentionally Omitted] Exhibit C-Form of Note

Exhibit D - Form of Pledge Agreement Exhibit E-[Intentionally Omitted]

Exhibit F - [Intentionally Omitted]

Exhibit G - [Intentionally Omitted]

Exhibit H - [Intentionally Omitted]

Exhibit I - Form of Subsidiaries Pledge and Security Agreement Exhibit J-Form of Section 5.03(d) Compliance Certificate

Exhibit K - [Intentionally Omitted]

Exhibit L-    [Intentionally Omitted]

Exhibit M - [Intentionally Omitted] Exhibit N-Form of Security Amendment Exhibit O-[Intentionally Omitted] Exhibit P-Form of Solvency Certificate

Exhibit - Form of Borrower Proxy Agreement

Exhibit R - Form of Account Control Agreement

 

Schedule 1 - Non-Operating Properties and Properties To Be Relocated

Schedule 2 - Franchise Agreements

Schedule 3 - Copyrights, Trademarks and Patents

Schedule 4 - [Intentionally omitted] Schedule 5-Closing Statement

Schedule 6 - Litigation and Contingent Obligations

Schedule 7 - Borrower Corporate Information

Schedule 8 - Borrower and Subsidiaries Organizational Structure and Equity Interests

Schedule 9 - Joint Ventures and Partnerships Schedule 10-Indebtedness and Liens

Schedule 11 - Environmental Matters

Schedule 12 - Affiliate Transactions

Schedule 13 - Labor Matters

Schedule 14 - [Intentionally omitted] Schedule 15-Real Property and Leases

Schedule 16 - Deposit Accounts and Securities Accounts

Schedule 17- Material Contracts

Schedule 18 - Financial Statements

Schedule 19 - Collateral Locations

Schedule 20 - Scheduled Work

Schedule 21 - Commercial Tort Claims Schedule 22-[Intentionally Omitted]

Schedule 23 - Letter-of-Credit Rights, Chattel Paper and Equipment

 

Credit and Security Agreement

iv

  

 

CREDIT AND SECURITY AGREEMENT

 

THIS CREDIT AND SECURITY AGREEMENT dated as of December 9, 2011 (this “Agreement”), is entered into between MORGAN’S FOODS, INC., an Ohio corporation (the “Borrower”), and FORTRESS CREDIT CORP., a Delaware corporation (the “Lender”). Borrower and Lender agree as follows:

 

RECITALS

 

WHEREAS, the Borrower has requested, and the Lender has agreed to make available to the Borrower a term loan, upon the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Borrower intends to use the proceeds of the term loan made by the Lender to it under this Agreement (a) to refinance existing debt, (b) to fund certain re-image upgrades to certain restaurants leased and/or owned by Borrower and/or certain of its Subsidiaries, (c) to fund the Remodel Reserve (as defined hereinafter), and (d) to fund certain fees and expenses associated with and incurred with respect to the funding of the term loan to be made hereunder, with any excess proceeds to be used by Borrower for working capital and general corporate purposes; and

 

WHEREAS, as an inducement for Lender to provide the term loan to the Borrower under this Agreement, Lender requires Borrower and certain of its Subsidiaries to secure all of their respective Obligations (as defined hereinafter) under the Loan Documents (as defined hereinafter) by granting to the Lender, a security interest in and lien upon all of their respective Property (as hereinafter defined).

 

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

Section 1.01. Certain Defined Terms. Capitalized terms used herein and not otherwise defined herein (including the recitals and preamble above) shall have the following meanings (such meanings to be qually applicable to both the singular and the plural forms of the terms defined):

 

“Account Control Agreement” means that certain Blocked Account Control Agreement among Borrower, Lender and U.S. Bank National Association dated of even date herewith relating to the Borrower’s Operating Account.

 

“Accounts” has the meaning set forth in Article 9 of the UCC.

 

“Additional Financing Costs” means interest, fees, costs, indemnities, additional amounts payable under Section 2.06, taxes payable under Section 2.09, costs and expenses and similar amounts that are required to be paid (or reimbursed) by (or an obligation to pay which has been incurred by) the Borrower under the Loan Documents, except interest payable under this Agreement pursuant to Section 2.04.

 

Credit and Security Agreement

  

  

 

“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes of this definition, a Person shall be deemed to be “controlled by” another Person if such other Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of voting stock (or other ownership interest), by contract or otherwise, and “Affiliated” has a correlative meaning to Affiliate.

 

“Applicable Percentage” has the meaning set forth in Section 2.05(c) hereof.

 

“Asset Sale” means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, conveys, leases or subleases, licenses or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person.

 

“Assigned Contracts” means, collectively, all of the Borrower’s rights and remedies under, and all moneys and claims for money due or to become due to the Borrower under any Material Contracts, and any and all amendments, supplements, extensions, and renewals thereof including all rights and claims of the Borrower now or hereafter existing: (a) under any insurance, indemnities, warranties, and guarantees provided for or arising out of or in connection with any of the foregoing agreements; (b) for any damages arising out of or for breach or default under or in connection with any of the foregoing contracts; (c) to all other amounts from time to time paid or payable under or in connection with any of the foregoing agreements; or (d) to exercise or enforce any and all covenants, remedies, powers and privileges thereunder.

 

“Assignee” has the meaning set forth in Section 10.01(b) .

 

“Authorized Officer” means the Chief Executive Officer, Chief Operating Officer or Chief Financial Officer of the Borrower.

 

“Bankruptcy Code” means the bankruptcy code of the United States of America codified in Title 11 of the United States Code.

 

“Benefit Plan” means any Plan (other than a Multiemployer Plan) subject to the provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA and in respect of which Borrower or any ERISA Affiliate is, or within the immediately preceding five (5) years was an “employer” as defined in Section 3(5) of ERISA.

 

“Board of Directors” means the board of directors (or comparable managers) of Parent or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

 

“Borrower” has the meaning set forth in the preamble to this Agreement.

 

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“Borrower’s Operating Account” means the account no. 573873536 of Borrower maintained at U.S. Bank National Association.

 

“Borrower Pledged Collateral” has the meaning set forth in Section 7.01  .

 

“Borrower Pledged IP Interests” means the Trademarks and Copyrights of the Borrower, subject to Permitted Liens.

 

“Borrower Proxy Agreement” means that certain Irrevocable Proxy Agreement among the Borrower, Morgan’s Properties and the Lender substantially in the form of Exhibit Q.

 

“Borrower-Related Law” means any Law relating to the Borrower, its business, its properties, any Pledged Collateral, any Loan Documents or any other Transaction Documents to which it is at any time a party and/or its execution, delivery and/or performance of any such Loan Documents or any other Transaction Documents.

 

“Borrowing” means the borrowing of the Loan.

 

“Business Day” means any day of the year except Saturday, Sunday and any day on which banks are required or authorized by law to close in New York City.

 

“Capital Expenditures” means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that are expenditures for capital improvements, furnishings, fixtures and equipment (whether paid in cash or property or accrued as liabilities) made by Borrower that, in conformity with GAAP, are required to be included in the property, plant, or equipment, or similar fixed asset account or otherwise capitalized.

 

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

“Capital Stock” means, with respect to any Person, any shares of common or preferred stock, any other equity securities, any limited liability company interests, membership interests or units, any general or limited partnership interests or other equivalents of such Person, regardless of class or designation, and all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or claims of any character with respect thereto.

 

“Cash Interest Expense” means, for any period, the Interest Expense that is required to be paid in cash during such period.

 

“Change in Control” means the occurrence of any of the following events without the prior written consent of Lender: (i) a majority of the members of the Board of Directors do not constitute Continuing Directors or (ii) any sale, transfer, pledge, or encumbrance of the direct ownership or beneficial interest in any Subsidiary of Borrower, or any profits or proceeds of any such ownership interest. Any consent by Lender, if granted, may be subject to satisfaction of such conditions as Lender may specify. The erm “Change in Control” shall also include the creation or issuance of new stock, membership interests, partnership interests or other ownership or beneficial interests in any Subsidiary of Borrower.

 

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“Chattel Paper” has the meaning set forth in Article 9 of the UCC. “Claim” has the meaning specified in Section 11.01(a) .

 

“Closing Date” has the meaning specified in Section 3.01  .

 

“Closing Material Adverse Effect” has the meaning set forth in Section 3.01(j) .

 

“Commercial Tort Claims” has the meaning set forth in Article 9 to the UCC.

 

“Common Units” means all of the common equity of the Borrower, represented by stock units.

 

“Consolidated EBITDA” means, with respect to any Person for any period, (i) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (ii) without duplication, the sum of all or a portion of the following amounts of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, in each case to the extent deducted in determining Consolidated Net Income of such Person for such period: (a) Consolidated Net Interest Expense, (b) income tax expense, (c) depreciation expense, and (iv) amortization expense.

 

“Consolidated Debt” means, for any period, with respect to any Person, all Debt of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP, and, in any event, shall include, but not be limited to, the Loan.

 

“Consolidated Net Income” means, for any period, with respect to any Person, the net income (loss) of such Person and its Subsidiaries for such period, determined on a consolidated basis and in accordance with GAAP, but excluding from the determination of Consolidated Net Income (without duplication) (i) any extraordinary or non-recurring (a) gains or (b) non-cash losses (and including in any event any non-cash losses from Asset Sales), (ii) non-cash restructuring charges, and (iii) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to such Person or to any other Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary (excluding general restrictions under applicable law on the making of distributions based on solvency, surplus and similar applicable legal restrictions).

 

“Consolidated Net Interest Expense” means, for any period, as determined with respect to any Person and its Subsidiaries in accordance with GAAP, the amount equal to: (i) total Interest Expense of such Persons on a consolidated basis for such period, whether paid or accrued (including the interest component of any Capitalized Lease for such period), and in any event, including, without limitation, (a) all bank fees, commissions, discounts and other fees and charges owed with respect to letters of credit, (b) interest payable by addition to principal or in the form of property other than cash and any other interest expense not payable in cash, minus (ii) any net payments received by such Person and its Subsidiaries on a consolidated basis during such period as interest income received in respect of its investments in cash.

 

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“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take or pay contract or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership.

 

“Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of Borrower on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors or Permitted Holders, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Borrower and whose initial assumption of office resulted from such contest or the settlement thereof.

 

“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, applications to register copyrights, (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

 

“Credit Agreement Indemnified Parties” means the Lender and its Affiliates, officers, directors, managers, members, general partners, clients and managed accounts, employees, agents or advisors (including investment advisors) (in the case of individuals, in their respective capacities as such officers, directors, managers, members, general partners, clients, employees, agents and advisors).

 

“DBMFI” means DBMFI LLC, a Delaware limited liability company. “DBMFI Sale-Leaseback” has the meaning set forth in Section 3.01(k) .

 

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“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the applicable trade and in respect of which no material amount is more than sixty (60) days past due), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (whether or not the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all Obligations, contingent or otherwise, of such Person under banker’s acceptance, letters of credit or similar instruments, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any partnership or membership or other equity interests of such Person, (h) all other financial Obligations of such Person under any contract or other agreement to which such Person is a party (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the applicable trade and in respect of which no amount is more than sixty (60) days past due), (i) all Debt of other Persons referred to in clauses (a) through (h) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) to otherwise assure a creditor against loss, and (j) all Debt referred to in clauses (a) through (i) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

 

“Debt Collection Date” means the first day after the Closing Date on which (a) the aggregate outstanding principal amount of the Loan, together with all interest accrued thereon but not yet capitalized and added thereto, and (b) all other Obligations of the Borrower under this Agreement and the other Loan Documents accrued through the date of such payment of such principal of and interest on the Loan shall have been Paid in Full by or on behalf of the Borrower.

 

“Debt Issuance” means any issuance or sale after the Closing Date of any debt securities, any indebtedness for borrowed money, or any obligations evidenced by bonds, debentures, notes or other similar instruments or upon which interest payments are customarily made.

 

“Default” means any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

 

“Default Interest” has the meaning set forth in Section 2.04(b).

 

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“Default Rate” has the meaning set forth in Section 2.04(b)

 

“Defined Benefit Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and no Person other than the Borrower and the ERISA Affiliate or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4062 of ERISA in the event such plan has been or were to be terminated.

 

“Deposit Accounts” has the meaning set forth in Article 9 of the UCC.

 

“Direct Competitor” means any Person that (i) is engaged in active litigation with any Morgan’s Entity or which has, in writing, expressly threatened any Morgan’s Entity with litigation as certified in writing by the Borrower to the Lender from time to time, or (ii) is a Person engaged primarily in a Related Business; it being agreed that a Person providing financing predominantly in its capacity as an investor (such as Lender) for any of the foregoing activities and such person or its designees serving as managers, managing members, general partners or directors of another Person in connection with such financing, shall not be deemed to be a “Direct Competitor” unless that Person (or any of its Affiliates) is also engaged in one or more of the foregoing activities.

 

“Documents” has the meaning set forth in Article 9 of the UCC.

 

“Dollars”, “$” and “U.S. $” each means the lawful currency of the United States.

 

“Environmental Law” means any and all federal, state, local or municipal Laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to, or imposing liability or standards of conduct concerning, any Hazardous Material or environmental protection or health and safety, as now or at any time hereafter in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et  seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq., the Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Superfund Amendments and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq ., the Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and § 657, together, in each case, with any amendment thereto, and the regulations adopted and the publications promulgated thereunder and all substitutions thereof.

 

“Equipment” has the meaning set forth in Article 9 of the UCC.

 

“Equity Issuance” means any issuance or sale after the Closing Date of (i) Capital Stock, (ii) any warrants or options exercisable in respect of Capital Stock or (iii) any other security or instrument representing a membership or other equity interest (or the right to obtain a membership or other equity interest); provided, that any Equity Issuance shall not include any issuance or sale of such Capital Stock or grant of such warrants or options in respect thereof to the issuer’s employees pursuant to any employee stock option or stock purchase plan, other employee benefits plan, or other employee benefits arrangement in connection with a bona fide employment relationship, with employees of such issuer.

 

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

 

“ERISA Affiliate” means a trade or business (whether or not incorporated) which together with the Borrower or any Subsidiary of the Borrower would be deemed to be a “single employer” within the meaning of Sections 414(b), (c), (m) or (o) of the Internal Revenue Code.

 

“ERISA Termination Event” means (i) a Reportable Event with respect to any Pension Plan; (ii) the withdrawal of Borrower or any of its ERISA Affiliates from a Pension Plan during a plan year in which Borrower or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (iii) the imposition of an obligation on Borrower or any of its ERISA Affiliates under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Pension Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar foreign governmental authority of proceedings to terminate a Pension Plan or Foreign Pension Plan; (v) any event or condition which could reasonably constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) a foreign governmental authority shall appoint or institute proceedings to appoint a trustee to administer any Foreign Pension Plan; or (vii) the partial or complete withdrawal of Borrower or any of its ERISA Affiliates from a Multiemployer Plan or Foreign Pension Plan or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Event of Default” has the meaning specified in Section 6.01  .

 

“Excess Cash Flow” means, with respect to any Person for any period of determination, Consolidated EBITDA minus cash interest expense on the Loan minus Capital Expenditures for maintenance of existing assets and properties minus scheduled debt repayments, and any prepayments on the Loan, minus the amount of any income taxes paid in cash, minus any amounts necessary to fund Required Capital Expenditures, minus any amounts necessary to fund the amount of reserve cash required to cover potential negative cash flow in the next following Fiscal Quarter based on a projection that is mutually acceptable to both Lender and Borrower.

 

“Excess Cash Flow Prepayments” has the meaning specified in Section 2.05(b)(i) .

 

“Excess Interest” has the meaning specified in Section 2.04(c).

 

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“Excluded Taxes” means, in the case of Lender, any of the following Taxes imposed on or with respect to Lender or required to be withheld or deducted from a payment to Lender, Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case (i) imposed as a result of Lender being organized under the laws of, or having its principal office or its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) Taxes imposed as a result of a present or former connection between Lender and the jurisdiction imposing such Tax (other than connections arising from Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

“Fee Letter” means the letter agreement with respect to payment of that certain fee payable to the Lender dated as of the date hereof by and between the Borrower and the Lender.

 

“Fiscal Quarter” means, as applicable:

 

(a) the period commencing on November 7, 2011 and ending on (and including) February 26, 2012;

 

(b )the period commencing on February 27, 2012 and ending on (and including) May 20, 2012;

 

(c) the period commencing on May 21, 2012 and ending on (and including) August 12, 2012;

 

(d) the period commencing on August 13, 2012 and ending on (and including) November 4, 2012;

 

(e) the period commencing on November 5, 2012 and ending on (and including) March 3, 2013;

 

(f) the period commencing on March 4, 2013 and ending on (and including) May 26, 2013;

 

(g) the period commencing on May 27, 2013 and ending on (and including) August 18, 2013;

 

(h) the period commencing on August 19, 2013 and ending on (and including) November 10, 2013;

 

(i) the period commencing on November 11, 2013 and ending on (and including) March 2, 2014;

 

(j) the period commencing on March 3, 2014 and ending on (and including) May 25, 2014;

 

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(k) the period commencing on May 26, 2014 and ending on (and including) August 17, 2014;

 

(l) the period commencing on August 18, 2014 and ending on (and including) November 9, 2014;

 

(m) the period commencing on November 10, 2014 and ending on (and including) March 1, 2015;

 

(n) the period commencing on March 2, 2015 and ending on (and including) May 24, 2015;

 

(o) the period commencing on May 25, 2015 and ending on (and including) August 16, 2015;

 

(p) the period commencing on August 17, 2015 and ending on (and including) November 8, 2015;

 

(q) the period commencing on November 9, 2015 and ending on (and including) February 28, 2016;

 

(r) the period commencing on February 29, 2016 and ending on (and including) May 22, 2016;

 

(s) the period commencing on May 23, 2016 and ending on (and including) August 14, 2016; and

 

(t) the period commencing on August 15, 2016 and ending on (and including) November 6, 2016.

 

“Fiscal Year” means any period commencing on the day after the Sunday nearest the last day of February and ending on (and including) the Sunday nearest the last day of February of the following calendar year.

 

“Fixed Charge Coverage Ratio” means, with respect to Borrower and its Subsidiaries for any period, the ratio of (i) Consolidated EBITDA for such period to (ii) Fixed Charges for such period.

 

“Fixed Charges” means with respect to the Borrower and its Subsidiaries for any period, the sum, without duplication, of (a) Cash Interest Expense incurred during such period and (b) scheduled principal payments required to be paid during such period in respect of Indebtedness.

 

“Fixtures” has the meaning set forth in Article 9 of the UCC.

 

“Foreign Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA (other than a Canadian Benefit Plan or a Canadian Pension Plan) which is maintained or contributed to for the benefit of the employees of the Borrower, any of its Subsidiaries or any of its ERISA Affiliates, but which is not covered by ERISA pursuant to Section 4(b)(4) of ERISA.

 

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“Foreign Pension Plan” means any Foreign Employee Benefit Plan which under applicable local law is required to be funded through a trust or other funding vehicle.

 

“Franchise Agreements” means, collectively, the franchise, trademark and license agreements entered into by Borrower (or any Affiliate of Borrower) and the applicable franchisor relating to the Properties, as more particularly described on Schedule 2.

 

“Franchisor Consents” means, collectively, (i) that certain letter agreement among Borrower, Morgan’s Missouri, Morgan’s New York, Morgan’s Ohio, Morgan’s Pennsylvania, Morgan’s West Virginia, Lender and KFC Corporation dated as of even date herewith, (ii) that certain estoppel letter from Taco Bell Corp., in favor of Lender dated as of even date herewith and (iii) that certain estoppel letter from Pizza Hut, Inc. dated as of even date herewith.

 

“Funded Debt” means, with respect to Borrower and its Subsidiaries as of any date of determination, the sum of all Debt constituted by the outstanding principal amount of the Loan.

 

“Funded Debt to EBITDA Ratio” means, with respect to Borrower and its Subsidiaries for any period, the ratio of Funded Debt as of the date of determination with respect to such period to Consolidated EBITDA for such period.

 

“GAAP” means generally accepted accounting principles in the United States in effect from time to time, consistently applied.

 

“General Intangibles” has the meaning set forth in Article 9 of the UCC.

 

“Goods” has the meaning set forth in Article 9 of the UCC.

 

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, certificate or articles of formation, operating or limited liability company agreement, certificate of partnership, or partnership agreement or other organizational documents of such Person.

 

“Governmental Authority” means the government of the United States of America or any other nation, any federal, state, city, town, municipal, county, local government or the government of any other political subdivision thereof and any department, commission, board, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, in each case whether associated with a state of the United States, the United States or a foreign entity or government.

 

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“Hazardous Materials” means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances or similar materials defined in any Environmental Law.

 

“Indemnified Amounts” has the meaning set forth in Section 11.01(a) hereof.

 

“Indemnified Taxes” means all Taxes other than Excluded Taxes.

 

“Instruments” has the meaning set forth in Article 9 of the UCC.

 

“Interest Expense” means, for any period, with respect to any Person, the aggregate of the interest expense of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

 

“Interest Period” means each period of time commencing on a Payment Date and continuing through the day before the next Payment Date, subject to the following. The first Interest Period shall commence on the Closing Date and shall continue through the day before the Payment Date in the following calendar month. The final Interest Period shall commence on the Payment Date prior to the Maturity Date and shall end on the Maturity Date.

 

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“IRS” means the Internal Revenue Service and any successor department or agency.

 

“Inventory” has the meaning set forth in Article 9 of the UCC.

 

“Investment” in any Person means any loan or advance to such Person, any purchase or other acquisition of any capital stock, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person, including, without limitation, any arrangement pursuant to which the Borrower or any of its Subsidiaries incurs Debt of the type referred to in clause (j) of the definition of “Debt” in respect of such Person.

 

“Investment Property” has the meaning set forth in Article 9 of the UCC.

 

“Law” means any present or future statute or ordinance, whether municipal, county, state, national or territorial; any executive, administrative or judicial regulation, order, judgment or decree; any treaty or international convention; any rule or principle of common law or equity; or any requirement with force of law, each as amended from time to time.

 

“Lender” has the meaning set forth in the preamble to this Agreement; provided, however, that upon any assignment pursuant to Section 10.01 by Lender to any Assignee, such Assignee shall be the Lender for all purposes hereof.

 

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“Lender’s Account” means the account no. 2047628893919 of the Lender maintained at Bank of America, ABA no. 026-009-593, Account Name: Trust Wires, Further Credit to: Fortress Credit Corp., FCC account 721622.2, Reference: Morgan’s Foods, or such other account as shall be notified to the Borrower in writing by the Lender from time to time.

 

“Lending Office” means the office, branch, or Affiliate of Lender listed on the signature page hereof or on a Schedule or otherwise selected by Lender pursuant to Section 2.07(b).

 

“Letter-of-Credit Rights” has the meaning set forth in Article 9 of the UCC.

 

“LIBOR” means the LIBOR Reference Rate rounded upwards to the next 1/8 of 1%. “LIBOR Reference Rate” means the rate of interest designated as “LIBOR” for U.S. dollar deposits with one month maturities as fixed by the British Bankers’ Association and as published by such service as Lender may designate that is then an information vendor for the purpose of displaying the British Bankers’ Association LIBOR for U.S. dollar deposits (which services may include, without limitation, Bloomberg (published as of the date hereof, on the display designated “Index Page 3745” on the Bloomberg British Bankers’ Association Service) or Telerate (published as of the date hereof, on the display designated “Page 3750” on the Associated Press-Dow Jones Telerate Service)); provided, however, that if such LIBOR is not fixed by the British Bankers’ Association or published by a British Bankers’ Association nominated information vendor, then the “LIBOR Reference Rate” shall mean the rate of interest per annum as reasonably determined by Lender at which U.S. dollar deposits in an amount approximately equal to the Loan, and with one month maturities, are offered in immediately available funds by leading banks in the London interbank market at 11:00 a.m., London time. Any LIBOR Reference Rate determined on the basis of the British Bankers’ Association LIBOR shall be subject to corrections, if any, published on the same day that such LIBOR is first published.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance, lien (statutory or other), security interest, or other security device or security arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the UCC (as in effect from time to time in the relevant jurisdiction) or any other similar recording or notice statute, and any lease having substantially the same effect as any of the foregoing).

 

“Loan” has the meaning set forth in Section 2.01  .

 

“Loan Documents” means this Agreement, the Fee Letter, the Pledge Agreement, the Note, the Subsidiaries Pledge and Security Agreement, the Borrower Proxy Agreement, and all other instruments, documents and agreements executed and delivered by the Borrower in connection with the foregoing, and all amendments, waivers and consents related thereto. For any avoidance of doubt, “Loan Documents” shall not include the Master Lease.

 

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“Master Lease” means, collectively, that certain Master Land and Building Lease (Pool A) and that certain Master Land and Building Lease (Pool B), each of which is by and between Borrower, as tenant, and DBMFI, as landlord, and dated of even date herewith.

 

“Material Adverse Business Effect” means, with respect to a Person, a material adverse effect on such Person, its businesses, assets or properties, liabilities, condition (financial or otherwise) or future prospects taken as a whole.

 

“Material Adverse Change” has the meaning set forth in Section 3.01(j) .

 

“Material Adverse Effect” means a material adverse effect on (a) the rights, remedies, interests and benefits of the Lender under any Loan Document or other Transaction Document, or (b) the ability of the Borrower to perform its Obligations under any Loan Document or other Transaction Document to which it is or is to be a party, or (c) the validity or enforceability of any Loan Document or other Transaction Document to which the Borrower is or is to be a party.

 

“Material Contract” means each agreement, instrument, lease, license or other document to which the Borrower is a party, or by which it or its assets or properties are bound, and (i) the loss of which, or a breach by a party thereunder, could be reasonably likely to have a Material Adverse Business Effect and/or (ii) the goods or services provided for under such agreement, instrument, lease, license or other document is of a value in excess of $15,000 (other than the Master Lease), as set forth on Schedule 17  hereto.

 

“Material Subsidiary Contract” has the meaning specified in Section 4.01(q) . “Maturity Date” means December 8, 2016.

 

“Maximum Rate” has the meaning set forth in Section 2.04(c) .

 

“Minimum Interest Rate” has the meaning specified in Section 2.04(a) .

 

“Monthly Reporting Date” means the fifteenth (15th) day of each month of each year (or if such day is not a Business Day, the immediately succeeding Business Day).

 

“Moody’s” means Moody’s Investors Service, Inc., and its successors. “Morgan’s Entity” means any Affiliate or Subsidiary of Borrower.

 

“Morgan’s Missouri” means Morgan’s Foods of Missouri, Inc., a Missouri corporation.

 

“Morgan’s New York” means Morgan’s Restaurants of New York, Inc., a New York corporation.

 

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“Morgan’s Ohio” means Morgan’s Restaurants of Ohio, Inc., an Ohio corporation.

 

“Morgan’s Pennsylvania” means Morgan’s Restaurants of Pennsylvania, Inc., a Pennsylvania corporation.

 

“Morgan’s Properties” means Morgan’s Restaurant Properties, Inc., an Ohio corporation.

 

“Morgan’s Tacos” means Morgan’s Tacos of Pennsylvania, Inc., a Pennsylvania corporation.

 

“Morgan’s West Virginia” means Morgan’s Restaurants of West Virginia, Inc., a West Virginia corporation.

 

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six years was, contributed to by either Borrower or any of its ERISA Affiliates.

 

“Net Cash Proceeds” means with respect to any Asset Sale, Equity Issuance, Debt Issuance, Property Loss Event or sale of Borrower or any Subsidiary of Borrower, the cash proceeds received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of Borrower or any Subsidiary of Borrower in respect of such Asset Sale, Equity Issuance, Debt Issuance, Property Loss Event or sale of the Capital Stock, after deducting therefrom only:

 

(a) in the case of any Asset Sale, (i) the reasonable and customary expenses incurred by Borrower or such Subsidiary of Borrower directly related to such sale, (ii) reasonable and customary brokerage costs, fees, or commissions incurred by Borrower or such Subsidiary of Borrower directly related to such sale; or (iii) taxes paid (directly or indirectly) to any taxing authorities by a Borrower or such Subsidiary of Borrower, as the case may be, in connection with, or directly attributable to, such sale at the time thereof or not later than the end of the tax year immediately following the year during which the sale occurs,

 

(b )in the case of any Equity Issuance or Debt Issuance, (i) reasonable and customary expenses directly related to such Equity Issuance or Debt Issuance, and (ii) reasonable and customary underwriting or brokerage costs, fees and commissions directly related to such Equity Issuance or Debt Issuance, and

 

(c) in the case of any Property Loss Event, reasonable and customary expenses related to obtaining such proceeds.

 

In each case of clauses (a), (b) and (c), the amounts set forth therein shall only be so deducted to the extent actually paid to a Person that is not an Affiliate of Borrower or any Subsidiary of Borrower and to the extent properly attributable to such transaction or to the asset that is the subject thereof.

 

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“1940 Act” means the Investment Company Act of 1940 and any rule, order or regulation promulgated thereunder.

 

“Non-Operating Properties” means the Properties designated as “Non-Operating Properties” on Schedule 1.

 

“Non-Recourse Debt” means Debt incurred by any Subsidiary of the Borrower, recourse for the repayment of which is limited solely to revenues and other proceeds derived from specified assets and/or revenues of such Subsidiary and for which the applicable documentation evidencing, securing or guaranteeing such Debt expressly provides that there is no recourse to the Borrower or any other assets of the Borrower.

 

“Non-U.S. Lender” means a Lender that is not a “United States person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code.

 

“Note” means a promissory note executed by the Borrower in favor of the Lender in the form of Exhibit C.

 

“Note Rate” has the meaning specified in Section 2.04(a) .

 

“Obligation” means, with respect to any Person, any obligation of such Person of any kind, including, without limitation, any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(d) . Without limiting the generality of the foregoing, the Obligations of the Borrower under the Loan Documents include (a) the obligation to pay principal, interest, Additional Financing Costs, attorneys’ fees and disbursements, prepayment fees, indemnities and other amounts payable by the Borrower under any Loan Document and (b) the obligation to reimburse any amount in respect of any of the foregoing that the Lender, in its sole discretion, may elect to pay or advance on behalf of the Borrower.

 

“Other Taxes” means any and all present or future stamp, registration, recording, filing, transfer or documentary Taxes and any excise or property Taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to or in connection with, any Loan Document.

 

“Paid in Full” and “Payment in Full” means, with respect to the Loan and other Obligations of the Borrower (other than, as of any date of payment, Obligations which are contingent and unliquidated and not then due and owing and which pursuant hereto, survive the making and repayment of the Loan), the indefeasible payment in full in cash of such Loan and other Obligations.

 

“Participant” has the meaning set forth in Section 12.14(d) .

 

“Participant Register” has the meaning set forth in Section 12.14(d).

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“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to: (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

 

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001, as amended.

 

“Payment Date” has the meaning specified in Section 2.08(a) .

 

“PBGC” means the Pension Benefit Guaranty Corporation and any successor department or agency thereto.

 

“Pension Plan” means any Plan, which is subject to Title IV of ERISA or Section 412 of the IRC or Section 302 of ERISA (other than a Multiemployer Plan), and to which Borrower or any of its ERISA Affiliates, may have any liability, including any liability by reason of having been an “employer” within the meaning of Section 3(35) of ERISA at any time during the preceding six years or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

 

“Permitted Acquisition(s)” means any acquisition, whether structured as a merger with, or an acquisition of, the stock or all or substantially all of the assets of one or more third parties, which acquisition is in one or more Related Businesses, provided, that (i) the aggregate amount of such acquisitions in any twelve-month period shall not exceed $1,000,000 plus the amount of Non-Recourse Debt, if any, incurred in connection with each such acquisition and (ii) no Default or Event of Default shall have occurred and be continuing at the time of such acquisition.

 

“Permitted Investments” means:

 

(a) cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (b) below);

 

(b) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America;

 

(c) obligations of any federal agencies of the United States which obligations represent the full faith and credit of the United States of America;

 

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(d) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America:

 

(i) senior debt obligations rated on the date of purchase “Aaa” by Moody’s and “AAA” by S&P issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC); and

 

(ii) senior debt obligations of the Federal Home Loan Bank System;

 

(e )dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P which mature no more than 360 calendar days after the date of purchase (ratings on holding companies are not considered as the ratings of the bank);

 

(f) commercial paper which is rated at the time of purchase “P-1” by Moody’s and “A-1” or “A-1+” by S&P and which matures not more than 270 calendar days after the date of purchase;

 

(g) investments in money market funds rated on the date of purchase “AAm” or “AAm-G” or better by S&P, and Aa3 or better by Moody’s (including those managed by the Lender or its Affiliates); and

 

(h) municipal obligations rated on the date of purchase “Aaa/AAA” or general obligations of States of the United States of America with a rating on the date of purchase of at least “Aa2/AA” or higher by Moody’s and S&P and maturing no more than 360 calendar days after the date of purchase.

 

Any Permitted Investment may be purchased by or through the Lender or its Affiliates.

 

“Permitted Liens” has the meaning set forth in Section 5.02(a) .

 

“Person” means any legal person, including any individual, partnership, corporation (including a business trust), joint stock company, trust, joint venture, unincorporated association, limited liability company or other entity, or a government or any political subdivision or agency thereof.

 

“Plan” means any material employee benefit plan as defined in Section 3(3) of ERISA (other than a Multiemployer Plan) sponsored, maintained or contributed to by the Borrower or any of its Subsidiaries or with respect to which the Borrower or any of its Subsidiaries has or may in the future have any liability (contingent or otherwise).

 

“Pledge Agreement” means that certain pledge agreement, dated as of the Closing Date, between the Borrower and the Lender, in substantially the form of Exhibit D attached hereto.

 

“Pledged Collateral” means, collectively, the Borrower Pledged Collateral, the Borrower Pledged IP Interests, and the Pledged Equity Interests.

 

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“Pledged Equity Interests” means the Borrower’s equity interests in Morgan’s Properties, subject to Liens granted by the Borrower in favor of Lender pursuant to the Pledge Agreement.

 

“Properties To Be Relocated” means the Properties designated as “Properties to be Relocated” on Schedule 1.

 

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible.

 

“Property Loss Event” means (i) any loss of or damage to any assets or property of Borrower or any of its Subsidiaries that results in a claim to proceeds of insurance or (ii) any condemnation or other taking of any assets or property of Borrower or any of its Subsidiaries.

 

“Quiet Enjoyment” has the meaning set forth in Section 7.12 .

 

“Reduced Spread Threshold” has the meaning set forth in Section 2.04(a) .

 

“Register” has the meaning set forth in Section 12.14(b) .

 

“Registered Loan” has the meaning set forth in Section 12.14(b) .

 

“Registrar” has the meaning set forth in Section 12.14(a) .

 

“Related Business” has the meaning specified in Section 5.02(j) .

 

“Remodel Agreement” means that certain Remodel Agreement between KFC Corporation, Morgan’s Missouri, Morgan’s New York, Morgan’s Ohio, Morgan’s Pennsylvania, Morgan’s West Virginia, and Borrower dated as of December 9, 2011.

 

“Remodel Reserve” has the meaning specified in Section 9.01(a) .

 

“Remodel Reserve Threshold Amount” means an amount equal to $1,500,000.

 

“Reportable Event” means any of the events described in Section 4043 of ERISA.

 

“Required Capital Expenditures” means Capital Expenditures associated with the remodels and relocations of any of the restaurant Properties as mandated by the applicable franchisor in accordance with their franchise agreements, including the Remodel Agreement.

 

“Reserve Disbursement Conditions” has the meaning specified in Section 9.01(b) .

 

“Reserves” means the reserves held by or on behalf of Lender pursuant to this Agreement or other Loan Document, including without limitation, the Remodel Reserve.

 

“Restoration” has the meaning set forth in Section 2.05(b) hereof.

 

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“Restricted Payment” means any dividend or other distribution, direct or indirect (whether in cash, securities or other property) with respect to any Capital Stock of any Person or any of its Subsidiaries now or hereafter outstanding, or any payment (whether in cash, securities or other property), including any sinking fund or similar payment or deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Capital Stock, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment.

 

“S&P” means Standard and Poor’s, a division of The McGraw-Hill Companies, Inc., and its successors.

 

“Scheduled Work” has the meaning specified in Section 9.01(a) .

 

“Secondary Market Transaction” means any of (i) the sale, assignment, or other transfer of all or any portion of the Obligations or the Loan Documents or any interest therein to one or more investors, (ii) the sale, assignment, or other transfer of one or more participation interests in the Obligations or Loan Documents to one or more investors, or (iii) the transfer or deposit of all or any portion of the Obligations or Loan Documents to or with one or more trusts or other entities which may sell certificates or other instruments to investors evidencing an ownership interest in the assets of such trust or the right to receive income or proceeds therefrom.

 

“Section 5.03(d) Compliance Certificate” means a certificate of the Chief Financial Officer of the Borrower substantially in the form of Exhibit J .

 

“Secured Obligations” has the meaning set forth in Section 7.02 hereof. “Securities” has the meaning set forth in Article 8 of the UCC.

 

“Servicer” means a servicer selected by Lender from time to time in its sole discretion to service the Loan, including any “master servicer’ and “special servicer” appointed pursuant to any pooling and servicing agreement or similar agreement entered into in connection with a Secondary Market Transaction.

 

“Servicing Fees” means any fees charged by a Servicer in connection with the servicing of the Loan.

 

“Severed Loan Documents” has the meaning set forth in Section 10.01(e) .

 

“Shareholders” means each Person in whose name a shareholder interest is registered on the books of the Borrower pursuant to the Borrower’s Governing Documents.

 

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“Solvent” means, when used with respect to any Person, that at the time of determination:

 

(a) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including, without limitation, contingent liabilities); and

 

(b) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and

 

(c) it is then able and expects to be able to pay its debts (including, without limitation, contingent debts and other commitments) as they mature; and

 

(d) it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

 

For purposes of determining whether a Person is Solvent at any time, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Spread” has the meaning set forth in Section 2.04(a) .

 

“Stock Rights” means any securities, dividends or other distributions and any other right or property which the Borrower shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Capital Stock constituting Borrower Pledged Collateral or Pledged Equity Interests, any right to receive Capital Stock and any right to receive earnings, in which the Borrower now has or hereafter acquires any right, issued by an issuer of such Capital Stock.

 

“Subsidiaries Pledge and Security Agreement” means the Subsidiaries Pledge and Security Agreement among Morgan’s Properties, Morgan’s Tacos, Morgan’s New York, Morgan’s Missouri, Morgan’s Ohio, Morgan’s Pennsylvania and Morgan’s West Virginia and the Lender, in substantially the form of Exhibit I attached hereto.

 

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such partnership, joint venture, or limited liability company or (c) the beneficial interest in such trust or estate, is at the time directly or indirectly owned or controlled by such Person or by such Person and one or more of such Person’s other Subsidiaries.

 

“Supporting Obligations” has the meaning set forth in Article 9 of the UCC.

 

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“Tax” or “Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees, tariffs, imposts or other charges of any kind, together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto, imposed by any Governmental Authority, including income, business, franchise, windfall or other profits, gross receipts, property, sales, use, net worth, capital, capital stock, payroll, employment, social security, national insurance, workers' compensation, unemployment compensation, excise, goods and services, withholding, ad valorem, stamp, transfer, value-added, gains tax and license, registration and documentation fees and (ii) liability for amounts described under clause (i) above under Treasury Regulation Section 1.1502-6 (or any similar provision of federal, state, local or foreign Law), as a result of transferee or successor liability, by contract, by Law or otherwise.

 

“Tax Related Person” means any Person (including a beneficial owner of an interest in a pass-through entity) whose income is realized through or determined by reference to the Lender, Assignee or Participant or any Tax Related Person of any of the foregoing.

 

“Tax Return” means any report, filing, return, information return, document, election, including amendments to any of the foregoing, filed or furnished or required to be filed or furnished with respect to Taxes.

 

“Termination Event” means the partial or complete withdrawal of Borrower or any ERISA Affiliate from a Multiemployer Plan or a determination that a Multiemployer Plan is, or is reasonably expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

 

“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following: (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof, and unregistered trademarks that are registrable, and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.

 

“Transaction Documents” means each of the Loan Documents and each other document or agreement executed and delivered in connection with the foregoing, and all amendments, waivers and consents related thereto.

 

“UCC” means the Uniform Commercial Code as enacted in the State of New York, as it may be amended from time to time; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the creation, attachment, perfection, priority or enforcement of the Lender's Liens over the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall include the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such creation, attachment, perfection, priority or enforcement and for purposes of definitions related to such provisions.

 

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Section 1.02. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto.

 

Section 1.03. Uniform Commercial Code. Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein, provided, however, that to the extent that the UCC is used to define any term herein and such term is defined differently in different Divisions of the UCC, unless expressly stated otherwise the definition of such term contained in Article 9 of the UCC shall govern.

 

Section 1.04. Construction. The foregoing definitions shall be equally applicable to both the singular and plural forms of the terms defined. Unless expressly stated otherwise, the terms “include”, “includes” and “including” shall not be limiting. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and section, subsection, clause, subclause, schedule, annex and exhibit references herein are to this Agreement unless expressly stated otherwise. Unless expressly stated otherwise, any reference in this Agreement to any Loan Document, Transaction Document or other agreement, instrument, or document shall include all amendments, amendments and restatements, supplements or other modifications thereto from time to time, as applicable (subject to any restrictions on such amendments, amendments and restatements, supplements or other modifications thereto set forth herein). Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any reference to any law or regulation shall refer to such law or regulation as amended, consolidated, replaced and/or supplemented from time to time.

 

Section 1.05. Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding”. Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. Any period determined hereunder by reference to a month or months or year or years shall end on the day in the relevant calendar month in the relevant year, if applicable, immediately preceding the date numerically corresponding to the first day of such period, provided that if such period commences on the last day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month during which such period is to end), such period shall, unless otherwise expressly required by the other provisions of this Agreement, end on the last day of the calendar month. Unless otherwise specified, all references to specific times shall mean and be a reference to such time in New York, New York.

 

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ARTICLE II

AMOUNT AND TERMS OF THE LOAN

 

Section 2.01. The Loan. Lender agrees, on the terms and conditions hereinafter set forth, to make a single, non-recurring term loan advance to the Borrower on the Closing Date in the original principal amount of $7,500,000 (the “Loan”). No repayment or prepayment of the Loan may be reborrowed by the Borrower.

 

Section 2.02. [Intentionally Omitted].

 

Section 2.03. Repayment. The principal amount outstanding of the Loan and all other Obligations of the Borrower under the Loan Documents shall be Paid in Full on the Maturity Date.

 

Section 2.04. Interest.

 

(a) Interest Rate. The “Note Rate” shall be the rate of interest per annum equal to the sum of 7.25 percent (the “Spread”) plus the LIBOR, provided however that the Note Rate in no event shall be less than 9 percent per annum (the “Minimum Interest Rate”). Notwithstanding the foregoing, in the event the Funded Debt to EBITDA Ratio is less than 2.0:1.0 for two sequential Fiscal Quarters, then the Spread shall be reduced from 7.25 percent to 6.25 percent for so long as the Funded Debt to EBITDA Ratio remains less than 2.0:1.0 (the “Reduced Spread Threshold”). In the event Borrower no longer satisfies the Reduced Spread Threshold, the Spread shall immediately revert back to 7.25 percent. Each component of the Note Rate is expressed as a percentage of the principal balance of the Loan. The outstanding principal balance of the Loan shall bear interest at a rate per annum equal to the Note Rate. The Note Rate for each Interest Period shall be determined by reference to the LIBOR in effect on the second Business Day immediately preceding the day on which such Interest Period commences, or if major commercial banks in London, England are not generally open for interbank or foreign exchange transactions on such second Business Day, then on the next Business Day when such banks are so open. If Lender determines that for any period of time the LIBOR Reference Rate is not determinable in accordance with the criteria set forth herein, then for such period of time Lender shall select another generally recognized index in substitution for the LIBOR Reference Rate for purposes of determining the Note Rate, and Lender may adjust the Spread to achieve a Note Rate which Lender in good faith estimates reasonably approximates the Note Rate that would have been applicable had the LIBOR Reference Rate been available, and the Note Rate determined in accordance with this sentence conclusively shall be the Note Rate hereunder applicable to such period, subject to the Minimum Interest Rate.

 

(b) Default Interest. Upon the occurrence and during the continuance of an Event of Default, the outstanding principal amount of the Loan shall bear interest (“Default Interest”), after as well as before entry of judgment thereon to the extent permitted by law, at a rate per annum equal at all times to 4% per annum plus the Note Rate (the “Default Rate”). All interest accruing and payable pursuant to this clause (b) shall be capitalized as described in subsection (a) above.

 

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(c) Excess Interest. Notwithstanding any provision to the contrary contained herein or in the Note or the other Loan Documents, Borrower shall not be required to pay, and Lender shall not be permitted to collect, any amount of interest in excess of the maximum amount of interest permitted by law (the “Excess Interest”). If any Excess Interest is provided for, whether in the Note Rate, the Default Rate, through any contingency or event, or otherwise, or is determined by a court of competent jurisdiction to have been provided for herein or in the Note or in any of the other Loan Documents, then in such event: (1) the provisions of this subsection shall govern and control; (2) Borrower shall not be obligated to pay any Excess Interest; (3) any Excess Interest that Lender may have received hereunder shall be, at Lender’s option, to the fullest extent provided by applicable law: (a) applied as a credit against either or both of the outstanding principal balance of the Loan or accrued and unpaid interest thereunder (not to exceed the maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any combination of the foregoing; (4) the Note Rate provided for herein shall be automatically reduced to the maximum lawful rate allowed from time to time under applicable law (the “Maximum Rate”), and this Agreement, the Note and the other Loan Documents shall be deemed to have been and shall be, reformed and modified to reflect such reduction; and (5) Borrower shall not have any action against Lender for any damages arising out of the payment or collection of any Excess Interest. Notwithstanding the foregoing, if for any period of time interest on any Obligation is calculated at the Maximum Rate rather than the applicable rate under the Note, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on such Obligations shall, to the extent permitted by law, remain at the Maximum Rate until Lender shall have received or accrued the amount of interest which Lender would have received or accrued during such period on Obligations had the rate of interest not been limited to the Maximum Rate during such period. If the Default Rate shall be finally determined to be unlawful, then the applicable Note Rate shall be applicable during any time when the Default Rate would have been applicable hereunder, provided however that if the Maximum Rate is greater or lesser than the applicable Note Rate, then the foregoing provisions of this paragraph shall apply.

 

Section 2.05. Prepayments.

 

(a) Optional Prepayments. The Borrower may prepay all or a portion of the Loan upon at least five (5) Business Days’ written notice to the Lender stating the proposed date and aggregate principal amount of the prepayment, together with (i) interest accrued to and including the date of such prepayment on the principal amount prepaid but not yet capitalized and added thereto, (ii) any Additional Financing Costs, and (iii) the prepayment fee applicable thereto (if any) pursuant to Section 2.05(c), and provided that any partial prepayment shall be in an aggregate minimum principal amount of $100,000.

 

(b) Mandatory Prepayments.

 

(i) Excess Cash Flow Prepayments. Within ten (10) Business Days after the date of the receipt by Lender of the financial statements for each Fiscal Quarter or, if such financial statements are not delivered to Lender on the date such statements are required to be delivered pursuant to Section 5.03, ten (10) Business Days after the date such statements are required to be delivered to Lender pursuant to Section 5.03, Borrower shall, absolutely and unconditionally without notice or demand, pay to Lender an amount equal to fifty percent (50%) of the Excess Cash Flow of the Borrower and its Subsidiaries for the immediately preceding Fiscal Quarter first for deposit into the Remodel Reserve until the amount of funds in the Remodel Reserve equals the Remodel Reserve Threshold Amount and then any remaining amount of such Excess Cash Flow shall then be applied to prepay the outstanding principal amount of the Loan (each such prepayment, an “Excess Cash Flow Prepayment”).

 

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(ii) Asset Sales. If Borrower or any Subsidiary of Borrower at any time or from time to time makes or agrees in writing to make an Asset Sale, then (A) the Borrower shall promptly notify Lender of such proposed Asset Sale (including the amount of the estimated Net Cash Proceeds to be received by Borrower or such Subsidiary of Borrower in respect thereof) and (B) within two (2) Business Days after such Asset Sale, Borrower shall, absolutely and unconditionally without notice or demand, prepay the outstanding principal amount of the Loan in an amount equal to one hundred percent (100%) of such Net Cash Proceeds payable to or for the benefit of such Person in connection therewith; provided, however, (y) that such Net Cash Proceeds from the Asset Sale of any of the Properties To Be Relocated shall first be applied for deposit into the Remodel Reserve until the amount of funds in the Remodel Reserve equals the Remodel Reserve Threshold Amount, with any remaining amount then being applied by Lender to prepay the outstanding principal amount of the Loan and (z) such Net Cash Proceeds from the Asset Sale of any of the Non-Operating Properties shall be deposited into Borrower’s Operating Account.

 

(iii) Debt Issuance or Equity Issuance. Within two (2) Business Days after any Debt Issuance or Equity Issuance by Borrower or any Subsidiary of Borrower, Borrower shall, absolutely and unconditionally without notice or demand, prepay the outstanding principal amount of the Loan in an amount equal to one hundred (100%) percent of the Net Cash Proceeds payable to or for the benefit of such Person in connection with such Debt Issuance or Equity Issuance (except in connection with any Debt Issuance and/or Equity Issuance made for the purpose of a business acquisition by Borrower or any Subsidiary of Borrower pursuant to a business plan prepared by Borrower and approved by Lender in Lender’s sole discretion).

 

(iv) Property Loss Event. If Borrower or any Subsidiary of Borrower shall at any time or from time to time suffer a Property Loss Event, then (A) the Borrower shall promptly notify Lender of such Property Loss Event (including the amount of the estimated Net Cash Proceeds to be received by the Borrower or such Subsidiary of Borrower in respect thereof) and (B) immediately upon the receipt by or on behalf of Borrower or any Subsidiary of Borrower (or of Lender as the loss payee with respect thereto) of any proceeds of insurance or condemnation award in respect of any Property Loss Event, Borrower shall, absolutely and unconditionally without notice or demand, prepay the outstanding principal amount of the Loan in an amount equal to one hundred (100%) percent of the Net Cash Proceeds payable to or for the benefit of such Person in connection therewith. Notwithstanding the foregoing, in the event that (1) no Event of Default exists, (2) Borrower deposits such Net Cash Proceeds immediately with Lender and (3) Borrower promptly commences and diligently prosecutes to completion the Restoration (as hereinafter defined), then such proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to time during the course of the Restoration, but not more frequently than once a month and in requested amounts of not less than $50,000, upon receipt of evidence satisfactory to Lender that (y) all materials installed and work and labor performed in connection with the Restoration have been paid for in full, and (z) there exist no notices of pendency, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the applicable Property. “Restoration” means the repair and restoration of the applicable Property as nearly as possible to the condition of such Property prior to the casualty or loss.

 

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(c) Prepayment Fee. If the Borrower makes any payment after acceleration of the Obligations of the Borrower under the Loan Documents or makes or is required to make a full or partial prepayment of the Loan, the Borrower shall pay the Lender, as liquidated damages and compensation for the costs of being prepared to make funds available hereunder, an additional amount equal to the Applicable Percentage multiplied by the sum of the principal amount of the Loan paid after acceleration or prepaid. As used herein, the term “Applicable Percentage” shall mean: (x) 2.0%, in the case of any prepayment prior to the first anniversary of the Closing Date, (y) 1.0%, in the case of any prepayment after the first anniversary of the Closing Date and prior to the second anniversary of the Closing Date; and (z) 1.0%, in the case of any prepayment on or after the second anniversary of the Closing Date and prior to the third anniversary of the Closing Date. The Borrower agrees that the Applicable Percentages are a reasonable calculation of the Lender’s lost profits in view of the difficulties and impracticality of determining actual damages resulting from a prepayment and/or early repayment of the Loan. Notwithstanding the foregoing, no prepayment fee shall be payable by the Borrower upon any prepayment of the Loan on or after the third anniversary of the Closing Date or in connection with any mandatory prepayments pursuant to Section 2.05(b) .

 

(d) Information. Within four (4) Business Days after receipt of notice of any optional or mandatory prepayment, the Lender shall notify the Borrower of accrued and unpaid interest on the principal amount to be prepaid and all other amounts payable concurrently therewith pursuant to Section 2.05(a).

 

(e) Notice. Each prepayment shall be accompanied by written notice to the Lender of the specific provision of Section 2.05(a) or 2.05(b) under which such prepayment is to be made, and identifying the source of the proceeds of such prepayment.

 

Section 2.06. Increased Costs.

 

(a) If Lender determines that the adoption of or any change in, after the date hereof, any Law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by Lender or any entity controlling Lender and that the amount of such capital is increased by or based upon the existence of Lender’s loans or obligations hereunder, then, upon written demand by Lender, the Borrower shall pay to the Lender from time to time within ten (10) Business Days after the Borrower’s receipt of such demand, additional amounts sufficient to compensate Lender or such entity in the light of such circumstances, to the extent that Lender reasonably determines such increase in capital to be allocable to the existence of Lender’s loans or obligations hereunder. A certificate setting forth in reasonable detail such amounts and the basis for the determination thereof, submitted to the Borrower by such Lender shall be conclusive and binding for all purposes, absent manifest error.

 

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(b) If Lender determines that the adoption of or any change in, after the date hereof, any Law or regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) subjects or will subject Lender to any Taxes (other than Indemnified Taxes and Excluded Taxes covered by Section 2.09) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto, and the result shall be to increase the cost to such Lender of making, converting to, continuing or maintaining the Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, or to reduce the amount of any sum received or receivable by such Lender, whether of principal, interest or any other amount then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender, as the case may be, for such additional costs incurred or reduction suffered. A certificate setting forth in reasonable detail such amounts and the basis for the determination thereof, submitted to the Borrower by such Lender shall be conclusive and binding for all purposes, absent manifest error.

 

(c) Lender will make the determinations contemplated by Sections 2.06(a) and (b) in good faith and without discrimination against the Borrower (as compared to other similarly situated customers of Lender and its Affiliates); provided that Lender shall not be obligated to take any steps that it determines, in its sole discretion, to be adverse to its business or operations. Lender shall notify Borrower of any event occurring after the Closing Date that will entitle Lender to compensation pursuant to this Section 2.06, as promptly as practicable. No Person purchasing from Lender a participation in the Loan (as opposed to an assignment) shall be entitled to any payment from or on behalf of Borrower pursuant to Section 2.06(a) or (b) which would be in excess of the applicable proportionate amount (based on the portion of the Loan in which such Person is participating) which would then be payable to Lender if Lender had not sold a participation in that portion of the Loan.

 

Section 2.07. [Intentionally Omitted].

 

Section 2.08. Payments and Computations.

 

(a) Unless changed in accordance herewith, the “Payment Date” shall be the first (1st) day of each calendar month prior to the Maturity Date, beginning with the first full calendar month after the Closing Date.

 

(b) On each Payment Date, Borrower shall pay to Lender all interest having accrued hereunder during the immediately preceding Interest Period. Notwithstanding the foregoing, if interest for the first Interest Period shall have been paid in full in advance at the Closing, then no payment shall be due on the Payment Date in the first full calendar month thereafter. In addition to payments of interest as required herein, Borrower shall repay principal to Lender monthly in an amount equal to $62,500 commencing on the Payment Date in the thirteenth full calendar month after the Closing Date, and continuing on each Payment Datethereafter until the Maturity Date. The amounts of such principal payments shall not be affected by changes in the Note Rate nor by partial prepayments.

 

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(c) The Borrower shall make each payment hereunder, irrespective of any right of counterclaim or set-off, not later than 3:00 P.M. on the day when due in Dollars to the Lender at the Lender’s Account in immediately available funds.

 

(d) The Borrower hereby authorizes Lender, if and to the extent payment owed to Lender is not made when due hereunder, to charge from time to time against any or all of the Borrower’s accounts with Lender any amount so due.

 

(e) All computations of interest and fees hereunder shall be made on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Lender of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(f) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be; provided, however , that, if such extension would cause payment of interest on the Loan to be made in the next following calendar month, such payment shall be made on the immediately preceding Business Day.

 

Section 2.09. Taxes.

 

(a) Withholding. Except as required by applicable law, any and all payments by or on account of any Obligation of the Borrower under a Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided, however, that if any deduction of Indemnified Taxes or Other Taxes shall be required, then (i) the Borrower shall increase the sum payable so that after all required deductions (including deductions applicable to additional sums payable under this Section 2.09 ) the Lender and each of its Tax Related Persons receives and retains an amount equal to the sum it would have received and retained had no such deductions been made; (ii) the Borrower shall make such deductions; and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authorities in accordance with applicable law.

 

(b) Other Taxes. In addition, the Borrower shall pay all Other Taxes to the relevant Governmental Authorities in accordance with applicable law. The Borrower shall deliver to Lender official receipts or other evidence of such payment reasonably satisfactory to Lender in respect of any Taxes or Other Taxes payable hereunder promptly after payment of such Taxes or Other Taxes.

 

(c) Indemnification. The Borrower shall indemnify Lender (including for these purposes an Assignee and a Participant) for the full amount of any Indemnified Taxes and Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted or attributable to amounts payable under this Section 2.09) paid or incurred by the Lender or its respective Tax Related Persons, as the case may be, relating to, arising out of, or in connection with, this Agreement, any other Loan Document or any payment or transaction contemplated hereby or thereby (including any Obligation under the Loan Documents). Such indemnification shall be paid within ten (10) days from the date on which Lender makes written demand therefor specifying in reasonable detail the nature and amount of such Taxes or Other Taxes. Such written demand shall be conclusive, absent manifest error.

 

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(d) Receipts. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lender the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lender.

 

(e) Withholding Forms. To the extent legally entitled to do so, the Lender shall furnish to the Borrower Internal Revenue Service Forms W-8BEN, W-8ECI, W-8IMY or W-9 and, if applicable for claiming an exemption from withholding under Sections 871(h) or 881(c) of the Internal Revenue Code, a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Internal Revenue Code, is not a 10% shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower or any guarantor and is not a controlled foreign corporation related to the Borrower or any guarantor of any Loan Document (within the meaning of Section 864(d)(4) of the Internal Revenue Code)), in each case, to the extent necessary to obtain a reduction of or exemption from withholding Taxes imposed by the United States of America with respect to payments made by the Borrower under any Loan Document. Lender shall provide such forms upon request by the Borrower prior to the first Payment Date after becoming a party to this Agreement and thereafter when reasonably and timely requested by the Borrower (as applicable). “United States persons” (within the meaning of Code section 7701(a)(30)) that are “exempt recipients” (within the meaning of Treasury Regulations section 1.6049-4(c)(1)(ii) (without regard to the second sentence thereof)) shall not be required to furnish an Internal Revenue Service Form W-9, except to the extent required under Treasury Regulations section 1.1441-1(d)(4) (if applicable) or upon the request of Borrower. Neither Lender, nor any of its Tax Related Persons shall be required to make available its Tax Returns (or any other information that it deems confidential) to the Borrower or any other Person.

 

(f) Treatment of Certain Refunds. If the Lender determines in good faith that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Lender, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Lender agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Lender if the Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

 

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(g) Survival. The obligations of the Borrower under this Section 2.09 shall survive the termination of this Agreement and the Payment in Full of the Loan and all other amounts payable hereunder or in connection herewith, including all Obligations.

 

Section 2.10. Use of Proceeds. The proceeds of the Loan funded at Closing shall be used to (i) refinance existing debt; (ii) fund certain re-image upgrades to certain restaurants leased and/or owned by Borrower and/or certain of its Subsidiaries; (iii) pay the fees owing to Lender and all reasonable costs and expenses incurred by Lender, including the legal fees and expenses of counsel to Lender, and the costs and expenses for title insurance, survey, recordation, and other expenses related to the Loan approved by Lender, which approval will not be unreasonably withheld; (iv) establish the Reserves required hereunder and make the initial deposits therein, and (v) to pay such other costs as are listed on the closing statement attached hereto as Schedule 5  annexed hereto.

 

ARTICLE III

 

CONDITIONS TO THE LOAN

 

Section 3.01. Conditions Precedent to Making the Loan on the Closing Date. The agreement of Lender to make the Loan shall become effective on and as of the first date (the “Closing Date”) on which all of the following conditions have been satisfied (unless waived in writing by the Lender):

 

(a) The Closing Date shall be no later than December 9, 2011, unless a later date is mutually agreed in writing by the Borrower and the Lender;

 

(b) The Lender shall have received the following documents, together with all schedules and exhibits thereto, each (to the extent applicable) dated as of the Closing Date and duly executed by the respective party or parties thereto (other than, to the extent so required, by the Lender), and otherwise in form and substance satisfactory to the Lender:

 

(i) the Credit Agreement;

 

(ii) the Note;

 

(iii) the Pledge Agreement;

 

(iv) the Subsidiaries Pledge and Security Agreement;

 

(v) the Fee Letter;

 

(vi) the Borrower’s Governing Documents;

 

(vii) the Borrower Proxy Agreement;

 

(viii) the Account Control Agreement;

 

(ix) the Franchisor Consents;

 

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(x)each other Loan Document;

 

(xi) a UCC Policy issued by a national title company acceptable to Lender;

 

(xii) the original Stock Certificates evidencing Borrower’s 100% equity ownership of Morgan’s Properties, together with, in connection therewith, the original Transfer Powers with respect to such certificate executed in blank and the original acknowledgment of pledge, executed by Morgan’s Properties and substantially in the form set forth in the applicable Exhibit to the Pledge Agreement;

 

(xiii) a Certificate of the Chief Financial Officer of the Borrower certifying that the Borrower is Solvent on and as of the Closing Date in substantially the form of Exhibit P;

 

(xiv) certificates of insurance evidencing full compliance with the requirements of this Agreement in relation thereto;

 

(xv) a copy of the Financing Statements (Form UCC-1) in a form acceptable to the Lender, with the Borrower, Morgan’s Properties, Morgan’s Tacos, Morgan’s New York, Morgan’s Missouri, Morgan’s Ohio, Morgan’s Pennsylvania or Morgan’s West Virginia as debtor, as applicable, and, in each case, the Lender as secured party, covering the Pledged Collateral;

 

(xvi) evidence that all other actions to the extent necessary or desirable, in the reasonable judgment of the Lender, to perfect and protect the first priority Liens (subject to Permitted Liens) created hereby over the Pledged Collateral have been taken, including, without limitation, receipt by the Lender of UCC and other searches satisfactory to it indicating that no other filings, encumbrances or transfers (other than Permitted Liens) with respect to the Pledged Collateral are of record in any jurisdiction in which it shall be necessary or desirable for the Lender to make a UCC filing or other filing in order to provide the Lender (for its own benefit and the benefit of each other Credit Agreement Indemnified Party) with a perfected security interest in the Pledged Collateral;.

 

(xvii) with respect to each of the Borrower, Morgan’s Properties, Morgan’s Tacos, Morgan’s New York, Morgan’s Missouri, Morgan’s Ohio, Morgan’s Pennsylvania or Morgan’s West Virginia, a Certificate of the Secretary of State of (A) as applicable, Missouri, Ohio, Pennsylvania, West Virginia and New York attaching its articles of incorporation dated on or a recent date prior to the Closing Date and attaching each amendment thereto on file in such office and certifying that (i) such articles of incorporation is a true and complete copy thereof, (ii) such amendments are the only amendments to such certificate on file in the applicable office, and (iii) the Borrower is duly incorporated and (B) as applicable, Missouri, Ohio, Pennsylvania, West Virginia, Illinois and New York dated on or a recent date prior to the Closing Date certifying that it is qualified and in good standing to do business under the Laws of the applicable state;

 

(xviii) a Certificate of the Secretary of each of the Borrower, Morgan’s Properties, Morgan’s Tacos, Morgan’s New York, Morgan’s Missouri, Morgan’s Ohio, Morgan’s Pennsylvania or Morgan’s West Virginia (the statements made in which certificate shall be true and correct on and as of the Closing Date), certifying:

 

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(A) as to the absence of any amendments to its articles of incorporation since the date of the certificate referred to in Section 3.01(b)(xvii) ,

 

(B) that attached thereto is a true and correct copy of its by-laws as in effect on the Closing Date,

 

(C) as to the due formation and good standing of it as a corporation under the Laws of Missouri, Ohio, Pennsylvania, West Virginia and New York, as applicable, as to the good standing of it as a foreign corporation under the Laws of Missouri, Ohio, Pennsylvania, West Virginia, Illinois and New York, as applicable, and as to the absence of any proceeding for the dissolution or liquidation of it;

 

(D) in the case of the Borrower’s certificate, that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of the Borrower authorizing the execution, delivery and performance of the Transaction Documents to which it is or is to be a party, and that such resolutions have not been revoked, annulled or modified in any manner and are in full force and effect; and

 

(E) as to the incumbency and specimen signature of each of its officers executing the Transaction Documents to which it is or is to be a party, and a certification of another officer of it as to the signatures of the officers signing the certificates referred to in this clause (E); and

 

(xix) A favorable opinion of Tucker Ellis & West LLP, special counsel to the Borrower, as to New York law and Ohio law, with respect to, among other things, general corporate matters, perfection of security interests and enforceability of agreements, in form and substance satisfactory to the Lender;

 

(c) All necessary governmental and third-party approvals in connection with the transactions contemplated hereby and by the other Transaction Documents and otherwise referred to herein shall have been received, except for such governmental and third party approvals that, pursuant to the provisions hereof or the Transaction Documents, are not required to be obtained on or prior to the Closing Date;

 

(d) No litigation by any entity (private or governmental) shall be pending or, to the Borrower’s knowledge, threatened with respect to this Agreement, any other Loan Document or any other Transaction Document or any documentation executed in connection therewith or the transaction contemplated hereby and thereby that would reasonably be expected to have a Material Adverse Business Effect on the Borrower and its Subsidiaries;

 

(e) All fees (including pursuant to the Fee Letter) and reasonable out-of-pocket costs and expenses including, without limitation, reasonable legal fees and expenses (and other compensation contemplated hereby) payable to the Lender required to be paid or reimbursed by the Borrower hereunder;

 

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(f) The representations and warranties of the Borrower contained in each

 

Transaction Document to which it is a party are correct in all material respects on and as of the Closing Date, before and after giving effect to the Loan to be made on the Closing Date and to the application of the proceeds therefrom, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate in all material respects on and as of such earlier date));

 

(g) An operating budget for the Fiscal Year beginning February 27, 2012 for the Borrower and its Subsidiaries;

 

(h) The Lender shall have received such other approvals, opinions or documents as the Lender may reasonably request;

 

(i) There shall have occurred no (i) material adverse change in the condition (financial or otherwise), business, operations, assets or liabilities of Borrower individually or Borrower and its Subsidiaries as a whole, from that reflected in the Borrower’s annual financial statements for the Fiscal Year ended February 27, 2011 or in the Borrower’s quarterly financial statements for the Fiscal Quarter ended August 14, 2011, shall have occurred (a “Material Adverse Change”) or (ii) any event on or after August 14, 2011 that either would be likely to have a material adverse effect on the financial condition, liquidity or future prospects of the Borrower, or which materially affects the financial and credit markets for the provision of senior secured facilities of approximately the same type and size as the Loan in the restaurant industry (a “Closing Material Adverse Effect”);

 

(j) No event shall have occurred and be continuing, or would result from the making of the Loan to be made on the Closing Date or from the application of the proceeds thereof, that constitutes a Default or an Event of Default; and

 

(k) The closing of the sale and leaseback transaction between Borrower and DBMFI shall have occurred (the “DBMFI Sale-Leaseback”).

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Section 4.01. Representations and Warranties of the Borrower.The Borrower represents and warrants as follows as of the Closing Date, and on each other date that a Section 5.03(d) Compliance Certificate is delivered by Borrower (other than those made only as of a specific date, which shall be true and correct as of such date):

 

(a) Existence and Power. The Borrower (i) is validly existing and in good standing as a corporation under the Laws of the State of Ohio with all requisite corporate power and authority under the Borrower’s Governing Documents to execute, deliver and perform its obligations under this Agreement and each other Transaction Document to which it is a party and to conduct its business as described in the Borrower’s Governing Documents, and (ii) has all requisite corporate power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted after the Closing Date.

 

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(b) Authority and No Violation. The execution, delivery and performance by the Borrower of this Agreement and each other Transaction Document to which it is or is to be a party, and the other transactions contemplated hereby and thereby, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action of the Borrower, and do not (i) contravene, or constitute a default under, the Borrower’s Governing Documents, (ii) violate in any material respect any Borrower-Related Law, order, writ, judgment, injunction, decree, determination or award applicable to the Borrower, (iii) conflict with or result in the breach of, or constitute a default under any material contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument binding on the Borrower or any of its properties, or (iv) except for Liens created under the Loan Documents and other Permitted Liens, result in or require the creation or imposition of any Lien upon or with respect to any of the properties of the Borrower. The Borrower is not in violation of any Borrower-Related Law, order, writ, judgment, injunction, decree, determination or award or in breach of any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, except for such violations and breaches that could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, except as disclosed in Borrower’s public filings, copies of which have been delivered to Lender.

 

(c) Governmental Approval. No consent of any Person and no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required (except, in each case, for any such consent, authorization, approval, filing or notice that has been obtained or made, as applicable) for (i) the due execution, delivery or performance by the Borrower of this Agreement or any other Transaction Document to which it is or is to be a party, or for the consummation of the other transactions contemplated hereby, (ii) the grant by the Borrower of the security interest granted by it pursuant hereto and pursuant to the Pledge Agreement, (iii) the perfection or maintenance of the security interest created hereby and by the Pledge Agreement (including the first priority nature thereof, subject only to Permitted Liens), or (iv) the exercise by the Lender of its rights under the Transaction Documents or the remedies in respect of the Pledged Collateral pursuant hereto and the Pledge Agreement, except in each case for and (x) the filing of the Form UCC-1 Financing Statement(s) (or amendments thereto) filed pursuant to this Agreement, and any continuation statements with respect to such filings.

 

(d) Binding Agreements. This Agreement has been, and each other Transaction Document to which it is a party when delivered hereunder will have been, duly executed and delivered by the Borrower. This Agreement is, and each other Transaction Document to which it is a party when delivered hereunder will be, the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to or limiting creditors’ rights generally or by equitable principles.

 

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(e) Litigation and Contingent Obligations. Except as set forth on Schedule 6, there are (i) no actions, suits, litigation, investigations, or proceedings pending or, to the Borrower’s knowledge, threatened and (ii) no Contingent Obligations incurred, that (A) to the knowledge of the Borrower, purport to affect the Borrower or its Subsidiaries or any of their assets or properties which could reasonably be expected to have a Material Adverse Effect on a consolidated basis, or (B) purport to affect the legality, validity or enforceability of this Agreement or any other Transaction Document or the consummation of the transactions contemplated hereby and thereby.

 

(f) Financial Statements. The financial statements of the Borrower attached as Schedule 18 hereto and the financial statements delivered pursuant to Section 5.03 have been prepared in accordance with GAAP in effect as of such date, except for those financial statements delivered pursuant to Section 5.03(c)(ii) and, with respect to those financial statements delivered pursuant to Section 5.03(c)(i) , subject to year-end and audit adjustments and footnotes that may be condensed from those presented with the financial statements for a full Fiscal Year. Such financial statements are complete and correct and fairly present in all material respects the financial position and the results of operations of the Borrower and its Subsidiaries, on a consolidated basis, as of the dates of and for the periods covered by such financial statements, and (z) reflect all known liabilities, contingent or otherwise, that GAAP requires, as of such dates, to be shown or reserved against.

 

(g) Copyrights, Trademarks and Other Rights. Schedule 3 (as updated by the Borrower from time to time in connection with the acquisition or transfer of any such rights) lists all registered copyright interests, registered trademarks and registered patents owned by the Borrower. The Borrower has duly recorded, or caused to be duly recorded, its Copyrights, Trademarks and Patents, if any, in the United States Copyright Office and the United States Patent and Trademark Office, as applicable, and has delivered copies of all such recordations to the Lender. There is no claim, suit, action or proceeding pending or, to the Borrower’s knowledge, threatened against Borrower that involves a claim of infringement of any Copyright, Trademark or Patent which, in each case, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on Borrower on a consolidated basis.

 

(h) ERISA. Neither the Borrower nor any ERISA Affiliate is now, or has been in the past five years obligated to contribute to any Defined Benefit Plan. Each Plan (and each related trust, insurance contract or fund) is in compliance in all material respects with its terms and with all applicable laws, including without limitation ERISA and the Internal Revenue Code. Except as would not reasonably be expected to result in material liability to the Borrower or any of its Subsidiaries: (i) each Plan which is intended to be qualified under Section 401(a) of the Internal Revenue Code as currently in effect has been determined by the IRS to be so qualified, and each trust related to any such Plan has been determined to be exempt from federal income tax under Section 501(a) of the Internal Revenue Code as currently in effect, and no event has taken place which could reasonably be expected to cause the loss of such qualified and exempt status; (ii) each Benefit Plan has satisfied the minimum funding standard under Section 412(a) of the Internal Revenue Code and has timely paid all required minimum contributions under Section 430(j) of the Internal Revenue Code; (iii) no Benefit Plan has applied for or received a waiver of the minimum funding standard pursuant to Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA; and (iv) there are no existing, pending or, to the knowledge of the Borrower, threatened claims (other than routine claims for benefits in the normal course), sanctions, actions, lawsuits or other proceedings or investigation involving any Plan to which the Borrower or any of its Subsidiaries has incurred or otherwise has or could have an obligation or any liability.

 

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(i) Taxes, Etc. All material Tax Returns and other reports required by applicable law to be filed by the Borrower have been filed, or extensions have been obtained, and all material Taxes imposed upon the Borrower or any property of the Borrower and which are required to have been paid, withheld, deducted or deposited have been paid, withheld, deducted or deposited, except those which are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP. There is no tax assessment proposed in writing against the Borrower which is not being actively contested by the Borrower in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with GAAP. Borrower is not a “foreign person” within the meaning of Sections 1445 or 7701 of the Code.

 

(j) Investment Company Act. The Borrower is not an “investment company,” or “affiliated person” of, or a “promoter” or “principal underwriter” for, an “investment company,” within the meaning of the 1940 Act, and neither the making of the Loan, nor the application of the proceeds or repayment thereof by the Borrower, nor the consummation of the other transactions contemplated hereby, will require the Borrower to register as an “investment company” under the 1940 Act.

 

(k) Environmental Laws. Except as set forth on Schedule 11  , neither the Borrower nor any Subsidiary of the Borrower has (i) any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, which could reasonably be expected to have a Material Adverse Effect, and (ii) no claims have been made against the Borrower or any Subsidiary of the Borrower and no presently outstanding citations or notices have been issued against the Borrower or any Subsidiary of the Borrower , which could reasonably be expected to have a Material Adverse Effect, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Borrower or any Subsidiary of the Borrower, or any of its employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to the Borrower or any Subsidiary of the Borrower or any of their owned or leased properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Borrower or any Subsidiary of the Borrower or any other location where such could reasonably be expected to have a Material Adverse Effect.

 

(l) Anti-Money Laundering Regulations. The Borrower and each of its Subsidiaries has complied in all material respects with all applicable anti-money laundering Laws and regulations, including, without limitation, applicable provisions of the Patriot Act

 

(m) Compliance with Laws. The Borrower and each of its Subsidiaries is not in violation of any Borrower-Related Law, except for such violations which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. The making of the Loan hereunder, the intended use of the proceeds of such Loan and any other transactions contemplated under the Transaction Documents do not violate any Borrower-Related Law in any material respect.

 

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(n) Federal Reserve Regulations. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “Margin Stock” (as defined in Regulation U). No part of the proceeds of the Loan will be used (i) to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock, or (ii) for any other purpose, in each case, violative of or inconsistent with any of the provisions of any regulation of the Board of Governors, including, without limitation, Regulations T, U and X thereto.

 

(o) Subsidiaries; Organizational Structure. As of the Closing Date, the Borrower has no Subsidiaries other than Morgan’s Properties, Morgan’s Tacos, Morgan’s Ohio, Morgan’s Pennsylvania, Morgan’s West Virginia, Morgan’s Missouri and Morgan’s New York. Attached hereto as Schedule 8 is an organizational chart of Borrower and its subsidiaries, including a true, correct and complete list of all equity interests in Borrower and in each of Borrower’s Subsidiaries. Except as set forth on Schedule 8, Borrower has not outstanding (i) equity interests, (ii) securities or other obligations convertible into, or exchangeable for, equity interests of Borrower or any of its Subsidiaries, (iii) subscription, right, warrant or option entitling any Person to purchase equity interests of Borrower or any of its Subsidiaries, or (iv) right of any Person to receive any phantom equity or share of profits or distributions on a basis similar to holders of membership interests in Borrower.

 

(p) Ownership of Pledged Collateral. All of the existing Pledged Collateral is owned legally and beneficially by the Borrower, and Morgan’s Properties is free and clear of all Liens, except for Permitted Liens. Article VII of this Agreement, together with the filing of the financing statement(s) pursuant to this Agreement and the Subsidiaries Pledge and Security Agreement (as such filings may be updated from time to time in accordance with the terms hereof and thereof) and the Pledge Agreement and each Account Control Agreement, create in favor of the Lender, a valid and perfected first priority security interest (subject only to Permitted Liens) in the Pledged Collateral, securing the payment of all Obligations purported to be secured thereby.

 

(q) Material Contracts. The Borrower has made available for the Lender’s review, true, correct and complete copies of (i) all Material Contracts and (ii) all material agreements, instruments and documents to which a Subsidiary is a party or by which its assets may be bound (each a “Material Subsidiary Contract”). Each Material Contract and each Material Subsidiary Contract is in full force and effect. The Borrower is not in material default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any agreement, instruments or other document (including, without limitation, any Material Contract) and no Subsidiary is in material default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any Material Subsidiary Contract, and to the knowledge of the Borrower, no other party to any such agreement, instrument or other document is in default of its obligations under any such agreement which default could reasonably be expected to have a Material Adverse Business Effect.

 

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(r) Books and Records. The Borrower has maintained its books, records, resolutions and agreements as official records.

 

(s) [Intentionally Omitted].

 

(t) Solvency. The Borrower was not organized with the intent to hinder, delay or defraud any of its creditors or any creditor of any other Person, and has not entered into the arrangements contemplated under this Agreement, the other Loan Document or by the other Transaction Documents, nor does it intend to make any transfer or incur any obligations thereunder, with actual intent to hinder, delay or defraud either present or future creditors. On and as of the Closing Date, on a pro forma basis after giving effect to all indebtedness (including the Loan), the Borrower is and will be Solvent.

 

(u) Accuracy of Information. All written information, reports, certificates and statements provided by the Borrower to any Secured Party for purposes of or in connection with this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby are true, correct and complete in all material respects as of the date to which such information speaks and no such information contains any material misrepresentation or any omission to state therein matters necessary to make the statements made therein not misleading in any material respect under the circumstances in which they were made.

 

(v) No Side Agreements. The Loan Documents and the other Transaction Documents constitute the only agreements, instruments or other documents with respect to the transactions contemplated thereby among the parties thereto (other than the organizational documents of the Borrower and Subsidiaries, including their respective operating agreements) and the Borrower has not entered into any side agreements with any such parties with respect to the subject matter thereof.

 

(i) [Intentionally Omitted].

 

(w) [Intentionally Omitted].

 

(x) [Intentionally Omitted].

 

(y) Title to Collateral. The Borrower has good and valid rights in or the power to transfer the Pledged Collateral and title to the Pledged Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Permitted Liens, and has full power and authority to grant to the Lender the security interest in such Pledged Collateral pursuant to Section 7. When financing statements have been filed in the appropriate offices against the Borrower listed on Schedule 7 , Lender will have a fully perfected first priority security interest in that Pledged Collateral in which a security interest may be perfected by filing, subject only to Permitted Liens.

 

(z) Borrower’s Name. The Borrower’s name in which it has executed this Agreement is the exact name as it appears in the Borrower’s organizational documents, as amended, as filed with the Borrower’s jurisdiction of organization.

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(aa)     Type  of  Entity.     The  type  of  entity  of  the  Borrower,  its  state  of organization, the organizational number issued to it by its state of organization and its federal employer identification number are set forth on Schedule 7.

 

(bb) Collateral Locations. All locations where Pledged Collateral is located are listed on Schedule 19. All of said locations are owned by the Borrower except for locations (i) which are leased by the Borrower as lessee and designated on Schedule 15 and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment as designated on Schedule 19.

 

(cc) Accounts. All of the Borrower’s and Subsidiaries Deposit Accounts and securities accounts are listed on Schedule 16 .

 

(dd) Letter-of-Credit Rights and Chattel Paper. Schedule 23 lists all Letter-of­Credit Rights and Chattel Paper of the Borrower. All action by the Borrower necessary or desirable to protect and perfect the Lender’s Lien on the Letter-of-Credit Rights and the Chattel Paper listed on Schedule 23  (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken.

 

(ee) Copyrights, Trademarks and Patents. The Borrower has no interest in, or title to, any Patent, Trademark or Copyright except as set forth on Schedule 3  .

 

(ff) Equipment. None of the Equipment is covered by any certificate of title, except for the vehicles described on Schedule 23. None of the Pledged Collateral is of a type for which security interests or liens may be perfected by filing under any federal statute except for (a) any vehicles described on Schedule 23 and (b) any registered Copyrights held by the Borrower and described on Schedule 3. The legal description, county and street address of each property on which any Fixtures are located is set forth on Schedule 23  together with the name and address of the record owner of each such property.

 

(gg) Financing Statements. No financing statement or security agreement describing all or any portion of the Pledged Collateral which has not lapsed or been terminated naming the Borrower as debtor has been filed or is of record in any jurisdiction except (i) for financing statements or security agreements naming the Lender as the secured party and (ii) as permitted by Section 5.02(a).

 

(hh) Ownership of Collateral. The Borrower is the direct, sole beneficial owner and sole holder of record of the Pledged Collateral, free and clear of any Liens, except for Permitted Liens and the security interest granted to the Lender. The Borrower further represents and warrants that (i) all Pledged Collateral constituting Capital Stock has been (to the extent such concepts are relevant with respect to such Pledged Collateral) duly authorized, validly issued, are fully paid and non assessable, (ii) with respect to any certificates delivered to the Lender representing any Capital Stock, either such certificates are “securities” as defined in Article 8 of the UCC as a result of actions by the issuer or otherwise, or, if such certificates are not securities, the Borrower has so informed the Lender so that the Lender may take steps to perfect its security interest therein as a General Intangible, (iii) all Pledged Collateral held by a securities intermediary is covered by an Account Control Agreement and (iv) all Pledged Collateral which represents Indebtedness owed to the Borrower has been duly authorized, authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and binding obligation of such issuer and such issuer is not in default thereunder. In addition, (i) none of the Pledged Collateral has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (ii) there are existing no options, warrants, calls or commitments of any character whatsoever relating to the Pledged Collateral or which obligate the issuer of any Capital Stock included in the Pledged Collateral to issue additional Capital Stock, and (iii) no consent, approval, authorization, or other action by, and no giving of notice, filing with, any governmental authority or any other Person is required for the pledge by the Borrower of the Pledged Collateral pursuant to Section 7  or for the execution, delivery and performance of this Agreement by the Borrower, or for the exercise by Lender of the voting or other rights provided for in this Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

 

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(ii) Joint Ventures and Partnerships. Except as set forth on Schedule 9 , as such Schedule may be updated from time to time by Borrower to add joint ventures and partnerships thereto to the extent permitted hereunder, neither Borrower nor any of its Subsidiaries is engaged in any joint venture or partnership with any other Person.

 

(jj) Indebtedness. Neither Borrower nor any of its Subsidiaries has any Debt other than as permitted pursuant to Section 5.02(b) .

 

(kk) Transactions with Affiliates. Neither Borrower nor any of its Subsidiaries has entered into or is a party to any transaction with any Affiliate except as permitted pursuant to Section 5.02(p).

 

(ll) Labor Matters. Except as set forth in Schedule 13  , as of the Closing Date there is no collective bargaining agreement or certification covering, or being negotiated on behalf of, any of the employees of Borrower or any of its Subsidiaries. As of the Closing Date, no attempt is being or will be made to organize the employees of Borrower or any of its Subsidiaries, nor is any such activity pending, threatened or planned.

 

(mm) Commercial Tort Claims. Schedule 21 identifies all existing Commercial Tort Claims of the Borrower as of the Closing Date and, as updated from time to time, any other Commercial Tort Claims identified in accordance with an amendment required pursuant to Section 7.03(b).

 

ARTICLE V

COVENANTS OF THE BORROWER

 

Section 5.01. Affirmative Covenants .Until the Payment in Full of the Secured Obligations on the Debt Collection Date, Borrower will, unless consented to in writing by the Lender:

 

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(a) Compliance with Laws, etc. Comply with, and cause its properties to be maintained and used in accordance with, all applicable Borrower-Related Laws and orders applicable to it or its properties, including, without limitation, compliance with all Environmental Laws and the obtaining and compliance in all respects with and maintaining of any and all licenses, approvals, registrations or permits required by Environmental Laws, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

 

(b) Payment of Taxes and Claims. Duly and timely file all material Tax Returns that it is required by applicable law to file, and duly and timely pay (i) all material Taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property before any penalty or interest accrues thereon, and (ii) all claims (including claims for labor, services, materials and supplies) for sums which have become due and payable prior to the same becoming subject to a Lien upon any of its properties or assets and prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however, that no such Taxes, assessments and governmental charges referred to in clause (i) above or claims referred to in clause (ii) above need be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if adequate reserves shall have been set aside therefor in accordance with GAAP. After the occurrence and during the continuance of an Event of Default, or as necessary in the discretion of the Lender to prevent seizure or attachment of any Collateral by any Governmental Authority, the Lender is authorized, in its sole discretion, to pay any Taxes imposed on the Borrower (not paid or protested by the Borrower) to the proper taxing authority for the account of the Borrower and to charge the Borrower or any guarantor thereof; provided, however, that none of Lender or any of its affiliates shall be liable for any Taxes that may be due by the Borrower.

 

(c) Preservation of Existence, etc. Preserve and maintain its existence as a corporation, and its rights (charter and statutory) and authority, except such rights and authority the loss of which could not reasonably be expected to have a Material Adverse Effect.

 

(d) Inspection Rights. Upon reasonable notice, at any reasonable time during normal business hours and not more often than is reasonable under the circumstances, permit the Lender or any agents or representatives thereof to examine and make copies of and abstracts from the records and books of account of the Borrower, and to discuss the affairs, finances and accounts of the Borrower with any officer of the Borrower, and permit any officer of the Borrower to disclose to the Lender or any agents or representatives thereof any and all financial statements and other information of any kind that either of them may have with respect to the Borrower and, after prior notice to the Borrower (setting forth the time and place of such meeting), and provided that the Borrower may be present therefor, to discuss the affairs, finances and accounts of the Borrower with its independent certified public accountants and permit such accountants to disclose to the Lender any and all financial statements and other information of any kind that they may have with respect to the Borrower; provided that the Lender and any such agents or representatives shall keep confidential all nonpublic information obtained pursuant to the terms of Section 12.12. Prior to the occurrence of any Event of Default, the costs of any such examination, discussion or copying shall be paid by the Lender. After the occurrence and during the continuation of an Event of Default, the Borrower shall assume or pay all reasonable costs and expenses associated with any such examination, discussion or copying.

 

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(e) Keeping of Books. Keep complete, proper and separate books of record and account, including a record of all costs and expenses incurred, all charges made, all credits made and received, and all income derived in connection with the operation of the business of the Borrower, all in accordance with GAAP, in each case to the extent necessary to enable the Borrower to comply with the periodic reporting requirements of this Agreement.

 

(f) Performance of Obligations. Duly observe and perform all material terms and conditions of the Material Contracts and diligently protect and enforce the rights of the Borrower (or any Affiliate of Borrower) under all such Material Contracts in a manner consistent with prudent business judgment.

 

(g) Assigned Contracts. Promptly enforce in all material respects each Assigned Contract in accordance with the terms (subject to the terms of Article VII) hereof), and take all such action to such end as may be from time to time reasonably requested by the Lender and, upon the occurrence and during the continuance of an Event of Default, and upon the reasonable request of Lender, make to each other party to each such Assigned Contract demands and requests for information and reports or for action as the Borrower is entitled to make under such Assigned Contract, and not take any action, and shall not to permit any action to be taken by others, that would release any party from any of such party’s material covenants or obligations under any Assigned Contract, except with the prior written consent of the Lender.

 

(h) Maintenance of Licenses, Permits and Properties. Maintain all licenses and permits necessary to own its properties and to conduct its activities in accordance with all Laws, rules, regulations and orders applicable to the Borrower or its properties, except where the failure to maintain such licenses or permits could not reasonably be expected to have a Material Adverse Effect. Keep its tangible properties which are material to its business in good repair, working order and condition (ordinary wear and tear excepted).

 

(i) Rating. Subject to standard confidentiality undertakings, the Borrower will take all actions reasonably requested by the Lender to seek a non-published rating by Moody’s, S&P or, to the extent considered necessary by the Lender, such other rating agency reasonably approved in writing by the Borrower, for collateral that includes the Loan or for a trust that owns such collateral, and shall otherwise cooperate with the reasonable efforts of the Lender in connection therewith. The Lender agrees to pay or reimburse all reasonable out-of-pocket costs and expenses incurred by the Borrower in connection with the foregoing rating process.

 

(j) Insurance. The Borrower will maintain, with reputable insurance companies rated no less than “A-, VIII” by A.M. Best (or an equivalent rating by another insurance rating company reasonably satisfactory to the Lender), and insurance on all of its Property, wherever located, in such amounts and covering such risks as is consistent with sound business practice (including, without limitation, loss or damage by fire or explosion, business interruption and public liability insurance) and, in all cases, acceptable to Lender, and Borrower will furnish to Lender upon request full information (including documentation) as to the insurance carried. Each certificate and policy relating to the Property of the Borrower and/or business interruption coverage shall contain an endorsement, in form and substance acceptable to Lender, showing loss payable to Lender. Each certificate and policy relating to coverage other than the foregoing shall, if required by Lender, contain an endorsement naming Lender as an additional insured under such policy. Such endorsement or an independent instrument furnished to Lender shall provide that the insurance companies will give Lender at least thirty (30) days’ written notice before any such policy or policies of insurance shall be altered adversely to the interests of Lender or cancelled (for non-payment of premium or otherwise) and that no act, whether willful or negligent, or default of any Credit Party or any other Person shall affect the right of Lender to recover under such policy or policies of insurance in case of loss or damage. In the event any Credit Party, at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto, then Lender, without waiving or releasing any obligations or resulting Default hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which Lender deems advisable. All sums so disbursed by Lender shall be part of the Obligations, payable as provided in this Agreement.

 

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(k) Control Agreements. Take all reasonable steps in order for Lender to obtain control in accordance with Section 8-106, 9-104, 9-105, 9-106, and 9-107 of the UCC with respect to all of Borrower’s and its Subsidiaries’ Securities Accounts (as such term is defined in the UCC), Deposit Accounts, Chattel Paper, Investment Property and Letter-of-Credit Rights.

 

(l) ERISA. The Borrower, its Subsidiaries and all ERISA Affiliates shall establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA, the Internal Revenue Code and all applicable laws, the regulations and interpretation thereunder and the respective requirements of the governing documents for such Plans. As soon as reasonably possible, and in any event, within ten (10) Business Days after the Borrower or any of its Subsidiaries or any ERISA Affiliate knows of the occurrence of any of the following events which would reasonably be expected to result in material liability to the Borrower or any of its Subsidiaries, the Borrower will deliver to the Lender, at Borrower’s expense, written notice of: (i) the failure to timely pay a minimum required contribution or installment to a Benefit Plan provided under Section 430 of the Internal Revenue Code, (ii) the filing by a Benefit Plan of an application for the waiver of the minimum funding standard under Section 412(c) of the Internal Revenue Code or Section 302(c) of ERISA, (iii) the failure to pay a required contribution or installment or a Multiemployer Plan on or before the applicable due date; and (iv) the occurrence of a Termination Event and any action that the Borrower or ERISA Affiliate proposed to take with respect thereto, together with a copy of any notices received from or filed with the PBGC, IRS or Multiemployer Plan pertaining thereto. The Borrower will deliver to the Lenders a copy of each funding waiver request filed with the Internal Revenue Service or any other governmental agency with respect to any Benefit Plan and all communications received by Borrower or any of its Subsidiaries or ERISA Affiliates from the Internal Revenue Service or other government agency with respect to such funding waiver request.

 

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(m) Formation of Subsidiaries. At the time that Borrower forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, Borrower shall (a) cause such new Subsidiary to deliver such security documents (including mortgages, deeds of trust or deeds to secure debt, as applicable, with respect to any real property owned by such new Subsidiary, as well as appropriate financing statements (and with respect to all property subject to a mortgage, deed of trust or deed to secure debt, as applicable, fixture filings), all in form and substance reasonably satisfactory to Lender (including being sufficient to grant Lender a first priority Lien (subject only to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Lender a pledge agreement and appropriate certificates and share transfer powers and financing statements, pledging and hypothecating all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance reasonably satisfactory to Lender, and (c) provide to Lender all other documentation reasonably satisfactory to Lender, including one or more opinions of counsel, which in Lender’s opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance or other documentation with respect to all real property subject to a mortgage). Any document, agreement, or instrument executed or issued pursuant to this Section 5.01(m) shall be a Loan Document.

 

(n) After Acquired Real Property. Any estate or interest in real property acquired by or for the benefit of Borrower (or any of its Subsidiaries) from and after the date hereof shall be vested in the name of Morgan’s Properties. If Borrower or any Subsidiary of Borrower acquires any estates or interests (other than a leasehold interest) in real property after the Closing Date, Borrower or such Subsidiary shall, concurrently with such acquisition, (i) execute and deliver a mortgage, deed of trust or deed to secure debt, as applicable, (and any other documents reasonably requested by Lender) in favor of Lender encumbering such estate or interest in real property in form and substance acceptable to Lender, (ii) provide to Lender all other documentation, which in its opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including without limitation, policies of title insurance and applicable endorsements, environmental reports and a reliance letter with respect thereto and ALTA surveys of such real property, in each case in form, substance and scope satisfactory to Lender and as provided by title companies, environmental consultants and surveyors satisfactory to Lender) and (iii) take such further action as Lender may reasonably deem necessary or desirable in connection therewith.

 

(o) Transfer of Non-Operating Properties. Borrower shall use diligent efforts to market and sell the Non-Operating Properties. If Borrower has not sold all Non-Operating Properties by September 15, 2012, then fee title to each such remaining Non-Operating Property shall be immediately transferred to Morgan’s Properties by recording a grant deed in favor of Morgan Properties in the applicable county recorder’s office. Borrower shall promptly deliver a copy of each such recorded deed to Lender.

 

(p) Borrower’s Operating Account. Borrower shall maintain the Borrower’s Operating Account and not change the location from U.S. Bank National Association throughout the term of the Loan.

 

Section 5.02. Negative Covenants. Until the Payment in Full of the Secured Obligations on the Debt Collection Date, Borrower will not, and will not cause or permit its Subsidiaries to, unless consented to in writing by the Lender:

 

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(a) Liens, etc. Create, incur, assume or suffer to exist any Lien on or with respect to any of its properties or assets of any character (including, without limitation, the Pledged Collateral) whether now owned or hereafter acquired, or sign or file, under the UCC of any jurisdiction, a financing statement or copyright mortgage that names the Borrower as debtor, or sign any security agreement authorizing any secured party thereunder to file such financing statement or copyright mortgage, or assign any accounts or other right to receive income, excluding, however , from the operation of the foregoing restrictions the following (such exclusions collectively being “Permitted Liens”):

 

(i) bankers’ rights of set-off for uncollected items and routine fees and expenses arising in the ordinary course of business;

 

(ii) Liens for taxes and other governmental charges and assessments (and other Liens imposed by law) not yet delinquent or being contested in good faith and by proper proceedings and as to which appropriate reserves (in the reasonable judgment of the Borrower) are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors;

 

(iii) Liens existing as of the date hereof and set forth on Schedule 10 ;

 

(iv) restrictions on transfers of Securities under applicable Laws;

 

(v) Liens granted under the Transaction Documents;

 

(vi) Liens arising out of attachments, judgments or awards which do not otherwise result in a Default or Event of Default under this Agreement;

 

(vii) Liens arising from deposits made in connection with obtaining worker’s compensation or other unemployment insurance;

 

(viii) Liens granted as security for Non-Recourse Debt;

 

(ix) Liens granted by Subsidiaries to licensors under any license agreement; and

 

(x) other Liens securing assets with a value, at the time of such grant, not to exceed $50,000 in the aggregate at any one time outstanding.

 

(b) Debt . Create, incur, assume or suffer to exist, any Debt other than:

 

(i) Debt incurred pursuant to the Loan Documents;

 

(ii) trade payables incurred in the ordinary course of business and payable on customary trade terms and not otherwise prohibited hereunder incurred;

 

(iii) intercompany Debt, and guarantees (solely to the extent such guarantees are on Debt permitted to be incurred hereunder); and

 

(iv) Debt existing as of the date hereof and set forth on Schedule 10 .

 

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(c) Mergers, etc. Whether in one transaction or a series of transactions, wind up, liquidate or dissolve its affairs, or enter into any transaction of merger or consolidation, or sell or otherwise dispose of all or substantially all of its property, stock, Common Units or assets or agree to do or suffer any of the foregoing, except that (i) any Subsidiary of the Borrower may merge with and into, or transfer assets to, the Borrower or another Subsidiary of the Borrower; provided, that at the time of such merger or transfer and after giving effect thereto no Default or Event of Default shall have occurred and be continuing; provided further, that if such merger involves the Borrower, the Borrower shall be the surviving entity, (ii) in connection with any Permitted Acquisition, any Subsidiary of the Borrower may merge with and into, or transfer assets to, another Subsidiary of the Borrower or a third-party, and (iii) any Subsidiary of the Borrower may wind up, liquidate or dissolve its affairs, or sell or otherwise dispose of all or substantially all of its property, stock, equity interests or assets (each of the foregoing, a “Dissolution”); provided, that at the time of any such Dissolution and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; provided further , that prior to any such Dissolution, such Subsidiary makes a Disposition of its property, stock, equity interests or assets to another Subsidiary.

 

(d) Acquisitions, Sales, etc. of Assets. Enter into any partnership, joint venture or sale and leaseback transaction (other than the DBMFI Sale-Leaseback), or purchase or otherwise acquire (in one or a series of related transactions) any portion of the property or assets of any Person or sell, lease, transfer, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, directly or indirectly (or agree to any of the foregoing at any future time), all or any material portion of its property or assets or any of the Pledged Collateral, except (i) acquisitions and dispositions of the Permitted Investments in the ordinary course of business, (ii) the entering into of any Permitted Acquisition, and (v) sales of obsolete, worn-out or surplus property no longer useful in the business of the Borrower.

 

(e) Investments in Other Persons. Make or hold any Investment in any Person except for (i) Investments made in connection with any Permitted Acquisition, and (ii) Investments made with the proceeds of the issuance of additional equity interests of the Borrower, provided, that (x) the aggregate amount of Investments made under this sub-clause (ii) shall not exceed $150,000 in any twelve-month period and (y) no Investments under sub-clauses (i), or (ii) shall occur if at the time thereof a Default or Event of Default shall have occurred and be continuing.

 

(f) Amendment, etc. of Transaction Documents and Governing Documents. Cancel or terminate any Transaction Document or the Borrower’s Governing Documents or consent to or accept any cancellation or termination thereof, amend, modify or change in any manner any material term or condition of any Transaction Document or the Borrower’s Governing Documents, waive any default under or any breach of any material term or condition of any Transaction Document or the Borrower’s Governing Documents, agree in any manner to any other amendment, modification or change of any material term or condition of any Transaction Document or the Borrower’s Governing Documents.

 

(g) Financial Covenants. Fail to maintain or achieve the following financial covenants with respect to Borrower and its Subsidiaries:

 

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(i) Leverage Ratio. A Funded Debt to EBITDA Ratio, measured on a Fiscal Quarter-end basis, of less than or equal to the required applicable ratio set forth in the following table for the period of twelve (12) consecutive months ending on the date of such Fiscal Quarter end set forth opposite thereto:

 

	
Applicable Ratio

	
Applicable Fiscal Quarter End

	
2.50:1.00

	
February 26, 2012

	
2.50:1.00

	
May 20, 2012

	
2.50:1.00

	
August 12, 2012

	
2.50:1.00

	
November 4, 2012

	
2.25:1.00

	
March 3, 2013

	
2.25:1.00

	
May 26, 2013

	
2.25:1.00

	
August 18, 2013

	
2.25:1.00

	
November 10, 2013

	
2.00:1.00

	
March 2, 2014

	
2.00:1.00

	
May 25, 2014

	
2.00:1.00

	
August 17, 2014

	
2.00:1.00

	
November 9, 2014

	
1.50:1.00

	
March 1, 2015

	
1.50:1.00

	
May 24, 2015

	
1.50:1.00

	
August 16, 2015

	
1.50:1.00

	
November 8, 2015

	
1.25:1.00

	
February 28, 2016

	
1.25:1.00

	
May 22, 2016

	
1.25:1.00

	
August 14, 2016

	
1.25:1.00

	
November 6, 2016

 

 

(ii) Minimum EBITDA. Consolidated EBITDA, measured on a Fiscal Quarter-end basis, of at least the amount set forth in the following table for the period of twelve (12) consecutive months ending on the date of such Fiscal Quarter end set forth opposite thereto:

 

	
Minimum EBITDA

	
Applicable Fiscal Quarter End

	
2,700

	
February 26, 2012

	
2,700

	
May 20, 2012

	
2,700

	
August 12, 2012

	
2,700

	
November 4, 2012

	
3,000

	
March 3, 2013

	
3,000

	
May 26, 2013

	
3,000

	
August 18, 2013

	
3,000

	
November 10, 2013

	
3,400

	
March 2, 2014

	
3,400

	
May 25, 2014

	
3,400

	
August 17, 2014

	
3,400

	
November 9, 2014

	
3,800

	
March 1, 2015

	
3,800

	
May 24, 2015

	
3,800

	
August 16, 2015

	
3,800

	
November 8, 2015

	
4,200

	
February 28, 2016

	
4,200

	
May 22, 2016

	
4,200

	
August 14, 2016

	
4,200

	
November 6, 2016

 

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(iii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a Fiscal Quarter-end basis, of at least the required applicable ratio set forth in the following table for the period of twelve (12) consecutive months ending on the date of such Fiscal Quarter end set forth opposite thereto:

 

	
Applicable Ratio

	
Applicable Fiscal Quarter End

	
1.25:1.00

	
February 26, 2012

	
1.50:1.00

	
May 20, 2012

	
1.75:1.00

	
August 12, 2012

	
1.75:1.00

	
November 4, 2012

	
2.00:1.00

	
March 3, 2013

	
2.00:1.00

	
May 26, 2013

	
2.00:1.00

	
August 18, 2013

	
2.00:1.00

	
November 10, 2013

	
2.50:1.00

	
March 2, 2014

	
2.50:1.00

	
May 25, 2014

	
2.50:1.00

	
August 17, 2014

	
2.50:1.00

	
November 9, 2014

	
3.00:1.00

	
March 1, 2015

	
3.00:1.00

	
May 24, 2015

	
3.00:1.00

	
August 16, 2015

	
3.00:1.00

	
November 8, 2015

	
3.50:1.00

	
February 28, 2016

	
3.50:1.00

	
May 22, 2016

	
3.50:1.00

	
August 14, 2016

	
3.50:1.00

	
November 6, 2016

 

(iv) Minimum Liquidity. Unrestricted cash as of the end of any accounting period of at least $1,500,000.

 

(h) Negative Pledge. Enter into or suffer to exist any agreement prohibiting or conditioning the creation or assumption of any Lien upon any of its Property, other than (i) any such agreement in favor of the Lender, (ii) in connection with any Permitted Acquisition by a Subsidiary, or (iii) with respect to Non-Recourse Debt.

 

(i) Capital Expenditures. Make any Capital Expenditures and Required Capital Expenditures in the aggregate in excess of $4,000,000 per Fiscal Year.

 

(j) Nature of Activities. Directly or indirectly engage in any business other than (i) the ownership and operation of “Kentucky Fried Chicken”, “KFC”, “Pizza Hut”, “Taco Bell” or any other Yum! Brands, Inc. brand restaurants and (ii) other activities incidental to, or necessary or desirable to effect, the foregoing, including acquisitions of, and investments in, Business is not otherwise prohibited by this Agreement or any other Loan Document.

 

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(k) Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so; provided that each Subsidiary may make Restricted Payments to the Borrower.

 

(l) ERISA . (i) Sponsor, maintain or contribute to any Defined Benefit Plan; (ii) fail to satisfy the minimum funding standard under Section 412(a) of the Internal Revenue Code; (iii) fail to timely pay all required minimum contributions and all required installments under Section 430(j) of the Internal Revenue Code; (iv) apply for a waiver of the minimum funding standard under Section 412(c) of the Internal Revenue Code, (v) fail to pay a required contribution or installment to a Multiemployer Plan on or before the applicable due date; or (vi) cause a Termination Event, except, with respect to items (ii), (iii), (iv), (v) and (vi) above, that would not reasonably be expected to result in material liability to the Borrower or any of its Subsidiaries.

 

(m) No Impairment of Pledged Collateral. Impair in any material respect the value, interest or rights of the Lender in the Pledged Collateral.

 

(n) Consolidated Tax Returns. File consolidated tax returns with any other Person, except as required by law.

 

(o) Certain Conveyances. Make any conveyance or enter into any transaction or incur any obligations with any intent to hinder, delay or defraud any of its creditors or any creditor of any other Person.

 

(p) Transactions with Affiliates. Enter into or be party to any transaction with an Affiliate, except (i) amendments to the organizational documents of the Borrower not prohibited hereunder, (ii) transactions contemplated by the Transaction Documents or any Permitted Acquisition, (iii) payment of reasonable compensation to officers and employees for services actually rendered, (iv) payment of customary directors’ or managers’ fees and indemnities, (v) transactions with Affiliates in the ordinary course of business, upon fair and reasonable terms and no less favorable, in the aggregate, than would be obtained in a comparable arm’s-length transaction with a non-Affiliate, and (vi) any other transactions in effect as of the date hereof and set forth on Schedule 12.

 

(q) Fiscal Year End. Change its fiscal year end to a date other than the Sunday nearest the last day of February in each year.

 

(r) Use of Proceeds. Use the proceeds of the Loan for any purpose other than to (i) refinance existing debt; (ii) fund certain re-image upgrades to certain restaurants leased and/or owned by Borrower and/or certain of its Subsidiaries; (iii) pay the fees owing to Lender and all reasonable costs and expenses incurred by Lender, including the legal fees and expenses of counsel to Lender, and the costs and expenses for title insurance, survey, recordation, and other expenses related to the Loan approved by Lender, which approval will not be unreasonably withheld; (iv) establish the Reserves required hereunder and make the initial deposits therein, and (v) to pay such other costs as are listed on the closing statement attached hereto as Schedule 5 annexed hereto and (vi) thereafter, consistent with the terms and conditions hereof, for working capital and general corporate purposes.

 

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(s) Hazardous Materials . Cause or permit any of its properties or assets to be used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or process Hazardous Materials, except in compliance in all material respects with all applicable Environmental Laws, nor release, discharge, dispose of or permit or suffer any release or disposal as a result of any intentional act or omission on its part of any Hazardous Materials onto any such property or asset in violation of any Environmental Law, in each case, except where the same could not reasonably be expected to result in a Material Adverse Effect.

 

Section 5.03.Reporting Requirements. Until the Payment in Full of the Secured Obligations on the Debt Collection Date Borrower will, unless consented to in writing by the Lender:

 

(a) Default Notice . As soon as possible and in any event within five (5) Business Days after an Authorized Officer of the Borrower obtains actual knowledge thereof, a notice setting forth the details of (i) any Default or Event of Default and the action that the Borrower has taken and proposes to take with respect thereto and (ii) any action or event which could reasonably be expected to have a Material Adverse Effect.

 

(b) Annual Financial Reports . As soon as available, but not later than ninety (90) days after the end of each Fiscal Year beginning with the Fiscal Year ending February 26, 2012, a copy of the audited annual report of the Borrower and each of its Subsidiaries, on a consolidated basis, for such Fiscal Year, accompanied by the report of any “Big Four” or other nationally-recognized independent public accounting firm reasonably acceptable to the Lender, which report shall (i) contain an unqualified opinion, stating that such consolidated financial statements present fairly in all material respects the financial position for the periods indicated in conformity with GAAP and (ii) not include any explanatory paragraph expressing substantial doubt as to going-concern status, and that includes the following information:

 

(i) Consolidated balance sheets of the Borrower and its Subsidiaries as of the last day of such Fiscal Year and the related consolidated statements of income, members’ equity, and cash flow for such Fiscal Year and the notes associated with each, all prepared in accordance with GAAP, and setting forth in each case in comparative form the figures for the previous Fiscal Year;

 

(ii) Unaudited consolidating balance sheets of Borrower, its Subsidiaries and for each Subsidiary of the Borrower formed or acquired after the date hereof for such Fiscal Year as of the last day of such Fiscal Year; and

 

(iii) Copies of all management letters issued to the Borrower by its auditors.

 

(c) Quarterly Financial Reports .

 

(i) As soon as available, but not later than forty-five (45) days after the end of each Fiscal Quarter, copies of the following:

 

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(A) the consolidated balance sheets of the Borrower and its Subsidiaries as of the last day of such Fiscal Quarter, and the related consolidated statements of income and cash flow for such Fiscal Quarter and setting forth in each case in comparative form the figures for the corresponding Fiscal Quarter, in the previous Fiscal Year;

 

(B) the financial statements referred to in this Section 5.03(c) will be unaudited, prepared in accordance with GAAP (except that footnotes may be condensed from those presented with financial statements for a full Fiscal Year and may be subject to year end adjustments) and certified as complete and correct, fairly presenting in all material respects the financial position and results of operations of the Borrower and its Subsidiaries by the Chief Financial Officer of the Borrower and

 

(C) Unaudited consolidating balance sheets of Borrower, its Subsidiaries and for each Subsidiary of the Borrower formed or acquired after the date hereof for such Fiscal Quarter as of the last day of such Fiscal Quarter.

 

(ii) As soon as available, but not later than sixty (60) days after the end of each Fiscal Year, beginning with the Fiscal Year ending February 26, 2012, a draft of the unaudited financial statements of the Borrower and its Subsidiaries referred to in subsection (A) immediately above, together with a summary of material events occurring during such Fiscal Quarter with respect to Borrower and its Subsidiaries. The Borrower shall not be required to certify as to the completeness and correctness of the financial statements furnished pursuant to this Section 5.03(c)(ii) .

 

(d) Reports by Management; Compliance Certificates. Concurrently with delivery of financial statements required under Section 5.03(b) and (c) above:

 

(i) a management discussion and analysis report, in reasonable detail, outlining the financial condition and results of operations of the Borrower and its Subsidiaries for that Fiscal Year or Fiscal Quarter, and for that portion of the Fiscal Year then ended with respect to Section 5.03(c) above, in a form reasonably acceptable to the Lender;

 

(ii) a report setting forth in comparative form the corresponding figures for the corresponding period of the previous Fiscal Year and the corresponding figures from the most recent annual operating budget for the current Fiscal Year delivered pursuant to Section 5.03(j) and discussing the reasons for any significant variations; and

 

(iii) a signed Section 5.03(d) Compliance Certificate.

 

The Lender acknowledges and agrees that the form of management discussion and analysis report contained in the financial statements on Schedule 18 is reasonably acceptable to the Lender for purposes of subsection (i) above.

 

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(e) Periodic Financial Reports. So long as the Funded Debt to EBITDA Ratio, measured on an accounting period-end basis, is equal to or greater than 2.0:1.0 for the period of thirteen (13) consecutive accounting periods ending on the date of such accounting period end, as soon as practicable and in any case within forty-five (45) calendar days after the end of each such accounting period, consolidated and consolidating financial statements (including a balance sheet and cash flow and operations statements) showing the financial condition and results of operations of the Borrower and its Subsidiaries as of the end of each such accounting period and for the then elapsed portion of the current Fiscal Year, together with comparisons to the corresponding periods in the preceding year and the budget for such periods, accompanied by a certificate of an officer that such financial statements have been prepared in accordance with GAAP consistently applied (except for the absence of notes thereto and the making of certain normal year-end or quarterly accruals and adjustments, none of which will be individually or in the aggregate material).

 

(f) Litigation. Promptly and in any event within five (5) Business Days upon an Authorized Officer of the Borrower obtaining knowledge thereof, notice of all actions, suits, litigation and proceedings involving amounts in excess of $75,000 or which could reasonably be expected to have a Material Adverse Effect before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Borrower or any Transaction Document of the type described in Section 4.01(e) .

 

(g) [Intentionally Omitted].

 

(h) [Intentionally Omitted].

 

(i) [Intentionally Omitted].

 

(j) Annual Operating Budgets. As soon as available and in any event no later than the last day of the first Fiscal Quarter of each Fiscal Year of the Borrower, an annual operating and capital expenditure budget for the Fiscal Year (arranged by quarter) and a twelve (12) month cash flow projection for such Fiscal Year (arranged by month) of the Borrower and its Subsidiaries on a consolidated and consolidating basis, approved by the Board of Directors of the Borrower. The Lender acknowledges and agrees that the Borrower delivered to the Lender the operating budget of the Borrower and its Subsidiaries for the Fiscal Year beginning February 27, 2012 pursuant to Section 3.01(g).

 

(k) Reports, Financial Statements and Press Releases. Promptly upon their becoming available, copies of all reports, financial statements, press releases and other information which the Borrower shall release, send or make available to its Shareholders generally.

 

(l) [Intentionally Omitted].

 

(m) [Intentionally Omitted].

 

(n) Other Notices. Promptly upon receipt thereof, copies of any other material notices, requests, reports, financial statements, audit results and other material written information and documents received by the Borrower under or pursuant to any other Transaction Document, (other than those issued or sent by the Lender) and, from time to time upon request by the Lender, such information and reports required under such other Transaction Documents as the  Lender  may  reasonably  request;  provided,  however,  that  the  failure  to  deliver  such documents shall not constitute a breach of this Agreement by the Borrower if the Lender has received such documents from any other Person.

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(o) Other Information . Such other information with respect to the business, condition (financial or otherwise), operations, performance or properties of the Borrower in the possession or control of the Borrower promptly after the Lender’s reasonable request in writing therefor.

 

ARTICLE VI

EVENTS OF DEFAULT

 

Section 6.01. Events of Default. If any of the following events (each an “Event of Default”) shall occur and be continuing:

 

(a) the Borrower shall fail to pay (i) any principal on the Loan on the Maturity Date (ii) any interest or principal on the Loan as and when the same is due under this Agreement or under any other Loan Document (provided, however, Borrower shall have a one time 3 day grace period during the term of the Loan) or (iii) or any fees or other amounts payable by it under this Agreement or under any other Loan Document within 10 days of when the same becomes due and payable; or

 

(b )any representation or warranty made or deemed made by the Borrower under or in connection with any Loan Document or any other certificate or report made by or on behalf of the Borrower hereunder or thereunder shall prove to have been false or misleading in any material respect when made or deemed made and the events or circumstances which gave rise to such false or misleading representation and warranty shall remain unremedied for thirty (30) days after an Authorized Officer of the Borrower has actual knowledge thereof; or

 

(c) the Borrower or any of its Subsidiaries (as applicable to such Subsidiary) fails to perform or observe any term, covenant or other agreement contained in any of Sections 5.02(a), 5.02(b), 5.02(g), 5.02(h), 5.02(m) or 5.02(o); or

 

(d) the Borrower or any of its Subsidiaries (as applicable to such Subsidiary) shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any of the other Loan Documents, in each case, other than any such term, covenant or agreement that is the subject of another provision of this Section 6.01 (in which event such other provision of this Section 6.01  shall govern) and such failure, if capable of being remedied, shall remain unremedied for fifteen (15) days after the earlier of (i) an Authorized Officer of the Borrower has actual knowledge thereof and (ii) written notice thereof is given to Borrower by Lender; or

 

(e) (i) the Borrower shall generally be unable to pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors, or (ii) any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or 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 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 if such case, proceeding or other action is instituted against the Borrower, such case, proceeding or other action results in the entry of any order of relief against it or shall remain undismissed for a period of sixty (60) days), or (iii) the Borrower shall take any action to authorize any of the actions set forth in clause (i) or (ii) of this subsection (d); or

 

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(f) any judgment or order (which, in the case of a judgment or order for the payment of money shall equal or exceed $75,000) shall be rendered against the Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order and such proceedings shall not have been stayed within thirty (30) days or (ii) there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

 

(g) default shall be made with respect to any payment of any Debt (of the Borrower or any Subsidiary of the Borrower in excess of $25,000 in the aggregate when due, or in the performance of any other obligation incurred in connection with any such Debt if the effect of such non-payment default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior to its stated maturity and such default shall not be remedied, cured, waived or consented to within the grace periods provided for; or

 

(h) any material provision of any Loan Document to which the Borrower is a party shall for any reason cease, in any material respect, to be valid and binding on or enforceable against the Borrower or the Borrower denies that it has any or further liability or obligation under such Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

 

(i) the Lender shall at any time not have a valid and perfected first priority security interest in any of the Pledged Collateral, other than due to any action or inaction on the part of Lender, with an aggregate value (as determined by the Lender in its sole discretion) of greater than $500,000 subject only to Permitted Liens; or

 

(j) (i) An ERISA Termination Event shall occur that in the opinion of the Lender, could reasonably be expected to result in a liability or obligation, in excess of $100,000 under Title IV of ERISA or (ii) the Borrower or any of its ERISA Affiliates fails to make a contribution with respect to any Pension Plan sufficient to give rise to a Lien under Section 430(k) of the IRC or Section 303(k) of ERISA; or

 

(k) a Change in Control shall have occurred with respect to the Borrower or any of its Subsidiaries; or

 

(l) the Borrower or any of its Subsidiaries shall for any reason dissolve or the Board of Directors of Borrower shall have voted or consented to the dissolution of the Borrower or any of its Subsidiaries, 

 

then, and in any such event, the Lender may declare the Loan, all interest accrued thereon, and all other Obligations of the Borrower under the Loan Documents to be forthwith due and payable, whereupon the Loan, all such interest and all such other Obligations of the Borrower under the Loan Documents shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however , that upon the occurrence of an event described in clause (d) above, the Loan, all such interest and all other such other Obligations of the Borrower under the Loan Documents shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. As a result of such acceleration, (i) Default Interest shall start accruing on any amounts due and payable hereunder, and capitalized and added to the Loan, and (ii) the Lender shall have the right to foreclose on the Pledged Collateral. The Lender shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of each applicable jurisdiction and other applicable Laws, which rights shall be cumulative.

 

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ARTICLE VII

GRANT OF SECURITY INTEREST, PLEDGE AND ASSIGNMENT

 

Section 7.01. Pledge and Assignment.

 

The Borrower hereby pledges, assigns and grants to the Lender, a security interest in all of its right, title and interest in, to and under all the following property, whether now owned by or owing to, or hereafter acquired by or arising in favor of the Borrower (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, the Borrower, and regardless of where located, together with the proceeds thereof (all of which will be collectively referred to as the “Borrower Pledged Collateral”):

 

(a) all Accounts;

 

(b) all Assigned Contracts;

 

(c) all Chattel Paper;

 

(d) all Copyrights, Patents and Trademarks;

 

(e) all Documents;

 

(f) all Equipment;

 

(g) all Fixtures;

 

(h) all General Intangibles (other than the Franchise Agreements);

 

(i) all Goods;

 

(j) all Instruments;

 

(k) all Inventory;

 

(l) all Investment Property;

 

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(m) all cash or cash equivalents;

 

(n) all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

 

(o) all Deposit Accounts with any bank or other financial institution;

 

(p) all Securities Accounts;

 

(q) all Commercial Tort Claims; and

 

(r) and all accessions to, substitutions for and replacements, proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing. Notwithstanding the foregoing, Borrower Pledged Collateral shall not include any equity interests in Morgan’s Missouri, Morgan’s New York, Morgan’s Ohio, Morgan’s Pennsylvania, Morgan’s Taco’s or Morgan’s West Virgina.

 

Section 7.02. Security for Obligations. This Article VII secures the payment of all Obligations of the Borrower now or hereafter existing or incurred under, arising out of or in connection with this Agreement and each of the other Loan Documents, whether for principal, interest, fees, expenses, indemnities or otherwise (all such Obligations of the Borrower being the “Secured Obligations”)

 

Section 7.03.Delivery of Borrower Pledged Collateral.

 

(a) The Borrower shall (i) deliver to the Lender on or prior to the Closing Date the originals of all Instruments, Securities, Chattel Paper, Investment Property and Documents (if any then exist), (ii) hold in trust for the Lender upon receipt and immediately thereafter deliver to the Lender any Instruments, Securities, Chattel Paper, Investment Property and Documents evidencing or constituting Borrower Pledged Collateral, (iii) upon the Lender’s request, deliver to the Lender (and thereafter hold in trust for the Lender upon receipt and immediately deliver to the Lender) any Document evidencing or constituting Borrower Pledged Collateral and (iv) upon the Lender’s request, deliver to the Lender a duly executed amendment in the form of Exhibit N hereto (a “Security Amendment”), pursuant to which the Borrower will confirm the pledge of such additional Borrower Pledged Collateral hereunder and, immediately upon execution of such Security Amendment, deliver the originals of all Instruments, Securities, Chattel Paper, Investment Property and Documents, constituting such additional Borrower Pledged Collateral. The Borrower hereby authorizes the Lender to attach each Security Amendment to this Agreement and agrees that all additional Borrower Pledged Collateral set forth in such Security Amendments shall be considered to be part of the Borrower Pledged Collateral hereunder.

 

(b) The Borrower shall promptly, and in any event within two (2) Business Days after the same is acquired by it, notify the Lender of any Commercial Tort Claim acquired by it and, unless the Lender otherwise consents, the Borrower shall enter into a Security Amendment, identifying, and granting to the Lender a first priority security interest in such Commercial Tort Claim.

 

(c) The Lender shall have the right, at any time in its discretion after the occurrence and during the continuance of an Event of Default and without notice to the Borrower, to transfer to or to register in the name of the Lender or any of its nominees any or all of such Borrower Pledged Collateral and the rights specified in Section 7.10 . Promptly after any such transfer or registration, the Lender shall give notice thereof to the Borrower, but the failure to give such notice shall not affect any of the rights or remedies of the Lender hereunder. The Lender shall have the right at any time to exchange instruments or certificates representing or evidencing such Borrower Pledged Collateral for instruments or certificates of smaller or larger denominations.

 

Section 7.04. Borrower Remains Liable. Anything herein to the contrary notwithstanding, (a) the Borrower shall remain liable under the contracts and agreements included in the Borrower Pledged Collateral to the extent set forth therein to perform all of its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Lender of any of the rights hereunder shall not release the Borrower from any of its duties or obligations under the contracts and agreements included in the Borrower Pledged Collateral, and (c) Lender shall have no obligation or liability under the contracts and agreements included in the Borrower Pledged Collateral by reason of this Agreement, nor shall any such Person be obligated to perform any of the obligations or duties of the Borrower thereunder or to take any action to collect or enforce any claim for payment assigned hereunder, except as otherwise provided in Section 7.08 hereof.

 

Section 7.05. Further Assurances.

 

(a) The Borrower agrees that, at any time and from time to time, at the expense of the Borrower, the Borrower will promptly execute and deliver all further instruments and documents, and take all further action that the Lender may reasonably request, in order to perfect and protect any assignment and security interest granted or purported to be granted hereby or to enable the Lender to exercise and enforce its rights and remedies hereunder with respect to any Borrower Pledged Collateral.

 

(b) The Borrower hereby authorizes the Lender to file one or more financing or continuation statements, and any amendments thereto, relating to all or any part of the Borrower Pledged Collateral, which financing or continuation statements may contain collateral descriptions which cover all assets of the Borrower, whether now owned by or owing to, or hereafter acquired by or arising in favor of, the Borrower. A photocopy or other reproduction of this Agreement or any financing statement covering the Borrower Pledged Collateral or any part thereof shall be sufficient as a financing statement where permitted by law; provided that such financing statement (or a combination of several financing statements) shall cover the Borrower Pledged Collateral in its entirety.

 

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(c) The Borrower will not, without giving the Lender not less than thirty (30) days’ prior written notice thereof and after having executed and delivered to the Lender such further instruments and documents in connection therewith as may be requested by the Lender pursuant to this Section 7.05, change its form or jurisdiction of organization or name, or move or transfer from the location specified in Section 12.02 hereof (or any subsequent location) its principal place of business or chief executive office or the location of the Borrower’s books and records with respect to the Borrower Pledged Collateral.

 

Section 7.06. Lender Appointed Attorney-in-Fact. The Borrower hereby irrevocably appoints the Lender the Borrower’s attorney-in-fact, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, to from time to time upon the occurrence and during the continuance of an Event of Default, in its sole discretion, to take any action and to execute any instrument that the Lender, in its reasonable judgment, may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation, to receive, endorse and collect all instruments made payable to the Borrower representing any payment or other distribution in respect of the Borrower Pledged Collateral or any part thereof and to give full discharge for the same, and to file any claims or take any action or institute any proceedings that the Lender, in its reasonable judgment, may deem necessary or desirable for the collection of any of the Borrower Pledged Collateral or otherwise to enforce compliance with the terms and conditions of each Assigned Contract or the rights of the Lender with respect to any of the Borrower Pledged Collateral. Without limiting the generality of the foregoing and notwithstanding anything to the contrary in any of the Transaction Documents, the parties hereto agree that at the direction of the Lender upon the occurrence and during the continuance of an Event of Default, the Lender shall have the full power and authority to enforce compliance on behalf of the Borrower with the terms and conditions of each Assigned Contract or the rights of the Lender with respect to any of the Borrower Pledged Collateral.

 

Section 7.07. Lender May Perform. If the Borrower fails to perform any agreement contained herein, the Lender may itself perform, or cause the performance of, such agreement, and the expenses of the Lender incurred in connection therewith shall be payable by the Borrower under Section 11.01 and/or Section 12.04(a) .

 

Section 7.08. Reasonable Care. The powers conferred on the Lender hereunder are solely to protect its interest in the Borrower Pledged Collateral and shall not impose any duty upon it to exercise any such powers. The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Borrower Pledged Collateral in its possession if the Borrower Pledged Collateral is accorded treatment substantially equal to that which an ordinary person accords its own property, it being understood that Lender shall have no responsibility for taking any necessary steps to preserve rights against any parties with respect to any Borrower Pledged Collateral, other than, with respect to the Lender, (a) the safe custody of any Borrower Pledged Collateral in its possession, (b) the accounting for monies actually received by it hereunder and (c) the application of monies in accordance with this Agreement.

 

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Section 7.09. [Intentionally Omitted].

 

Section 7.10. Remedies Upon Default. If any Event of Default shall have occurred and be continuing:

 

(a) The Lender may exercise in respect of the Borrower Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it under this Agreement or applicable law, all of the rights and remedies of a secured party under the UCC in effect in the State of New York at that time (whether or not the UCC applies to the Borrower Pledged Collateral at issue) to the fullest extent permitted under applicable law, and the Lender may also, without notice except as specified below, sell the Borrower Pledged Collateral or any part thereof in one or more parcels at public or private sale, or at any of the Lender’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Lender may deem commercially reasonable. The Borrower agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ notice to the Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Lender shall not be obligated to make any sale of Borrower Pledged Collateral or any part thereof regardless of notice of sale having been given. The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. At any time an Event of Default has occurred and is continuing, the Lender may (a) provide notice to each depository bank that is a party to an Account Control Agreement that an Event of Default has occurred hereunder and (b) exercise its rights under the Account Control Agreement over the Operating Account to give directions and instructions with respect to the Operating Account, and to exclude Borrower from access to the Operating Account and the ability to give directions and instructions with respect to the accounts covered thereby. All payments received by the Lender at any time after an Event of Default has occurred and is continuing shall be applied to the Obligations under the Loan Documents as set forth in Section 8.05.

 

(b) Any cash held by the Lender as Borrower Pledged Collateral and all cash proceeds received by the Lender in respect of any sale of, collection from, or other realization upon, all or any part of the Borrower Pledged Collateral shall be paid promptly after receipt thereof (and after payment of any amounts payable to the Lender pursuant to Sections 11.01 and 12.04 hereof) in whole or in part by the Lender pursuant to Section 8.05  .

 

Section 7.11. Continuing Assignment and Security Interest; Transfer of the Loan. This Agreement shall create a continuing security interest in the Borrower Pledged Collateral and shall (i) remain in full force and effect until the Payment in Full of the Secured Obligations on the Debt Collection Date, (ii) be binding upon the Borrower and its successors and assigns, and (iii) inure, together with the rights and remedies of the Lender hereunder, to the benefit of the Lender and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (iii), Lender may assign any of its interest in the Loan to any other Person to the extent permitted by Article X , and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Lenders herein or otherwise. Upon the Payment in Full of the Secured Obligations on the Debt Collection Date, the Borrower shall be entitled to the return, upon its request and at its expense, of such of the Borrower Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof and the Lender will execute and deliver such instruments, including UCC termination statements, as the Borrower may reasonably request to confirm the release and discharge of the Liens granted hereunder.

 

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Section 7.12. Quiet Enjoyment. The Lender acknowledges and agrees that the security interest granted hereunder is subject to the rights of Quiet Enjoyment (as defined below) of third Persons (which are not Affiliates of the Borrower) party to exploitation agreements, whether existing on the date hereof or hereafter executed. For the purpose hereof, “Quiet Enjoyment” shall mean in connection with the rights of a licensee, the Lender’s agreement that its rights under this Agreement and the other Transaction Documents and in the Borrower Pledged Collateral are subject to the rights of such licensee to distribute, exhibit and/or to exploit the rights licensed to them under such exploitation agreement, and to receive prints or tapes and other delivery items or have access to preprint material or master tapes and other items to which they are entitled in connection therewith and that, even if the Lender shall become the owner of the Borrower Pledged Collateral in case of an Event of Default, the Lender’s ownership rights shall be subject to the rights of said parties under such agreement; provided, however , that such licensee shall not be in default under the relevant exploitation agreement. The Lender agrees that upon the reasonable request of the Borrower it will provide written confirmation (in a form reasonably acceptable to the Lender) of such rights of Quiet Enjoyment to licensees under the exploitation agreements. None of the foregoing constitutes an agreement by the Lender to the granting of any security interest to any Person under any exploitation agreement, except as otherwise permitted by this Agreement.

 

ARTICLE VIII

[INTENTIONALLY OMITTED]

 

ARTICLE IX

RESERVES

 

Section 9.01. Remodel Reserve.

 

(a) Borrower shall deposit with Lender (or such agent as Lender may designate in writing from time to time) $1,500,000 at Closing and additional funds as set forth in Section 2.05(b) for the purposes set forth in this Section (said funds, together with any investment earnings thereon and additions thereto, the “Remodel Reserve”). Funds contained in the Remodel Reserve shall be utilized by Borrower solely for the Required Capital Expenditures described in Schedule 20 attached hereto (the “Scheduled Work”), and following completion of all the Scheduled Work, any other Required Capital Expenditures and any liquidated damages payment owed to KFC Corporation pursuant to Section 1(i)(vii) of the Remodel Agreement, and shall not be used by Borrower for purposes for which any other Reserve is established. In the event that the funds available from the Remodel Reserve are insufficient to pay for the required work, Borrower shall pay the amount of such deficiency. Upon written application of Borrower, Borrower shall be entitled to draw upon the Remodel Reserve to pay for the costs of such work after such costs shall have been incurred by Borrower and invoiced, provided that (i) the Reserve Disbursement Conditions shall have been satisfied, and (ii) where such Schedule identifies a specific dollar amount to a specific work item, no funds shall be drawn from the Reserve for such item in excess of the specified dollar amount, except only if Borrower shall demonstrate to Lender’s reasonable satisfaction that the additional funds are available from savings from another work item that has been completed.

 

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(b) Where this Agreement provides that the “Reserve Disbursement Conditions” shall apply, the same are as follows: (i) no Event of Default shall exist, and no uncured Default shall exist, other than a Default that will be cured by the payment from the Remodel Reserve that is then being requested, (ii) Borrower shall provide invoices and receipts if applicable and such other evidence as Lender may reasonably request to substantiate that the conditions for the disbursement shall have been satisfied, (iii) disbursements from the Remodel Reserve shall be requested no more frequently than once each month, (iv) funds from the Remodel shall be used only to pay (or to reimburse Borrower for payment of) costs and expenses incurred in arms’ length transactions to Persons who are not Affiliates of Borrower, (v) each draw request shall at least equal to $100,000, (vi) all documents and information provided shall be in form and substance satisfactory to Lender in its reasonable discretion, (vii) Lender shall have received evidence reasonably satisfactory to Lender that, KFC Corporation has approved any Scheduled Work for which Borrower is requesting disbursement, (viii) if applicable, Borrower shall provide Lender with lien waivers and other documentation of lawful and workmanlike progress or completion and lien-free status, all as may be reasonably requested by Lender, including, where applicable, copies of building permits and other required authorizations, inspection sign-offs, certificates of occupancy, and other regulatory acknowledgements of progress, completion, and compliance with applicable legal and regulatory requirements, and (ix) Lender shall have completed such inspections (if any) as it deems appropriate under the circumstances, and the results of the same shall be satisfactory to Lender in its reasonable discretion. Lien waivers may be conditioned on payment, in which case Lender may (but need not) disburse payment directly to the applicable contractor. Lender and KFC Corporation shall respond to Borrower’s disbursement request within 10 business days after receipt by such of all documents and other information required to be delivered to Lender pursuant to this Section 9.01(b).

 

(c) Borrower hereby grants and pledges to Lender a security interest in any and all monies now or hereafter comprising any Reserves, including all funds paid to or held by Lender for such purposes, and all earnings on and proceeds of any or all of the foregoing, in each case as security for the payment of the Loan and the payment and performance of all other Obligations. Upon the occurrence of a Default and prior to an Event of Default, Lender shall have no obligation to disburse any amount from any Reserve, other than a disbursement that will directly cure the Default, and as to which all other conditions shall have been satisfied. Upon the occurrence of an Event of Default, Lender shall have all rights and remedies under the Loan Documents and under applicable law. Without limitation, Lender shall have no obligation to disburse any amount from any Reserve, and Lender is expressly authorized to hold all or any portion of the Reserves and not apply the same to the Obligations, to apply all or any portion of the Reserves against any of the Obligations in any order that Lender determines, to apply all or any portion of the Reserves otherwise as provided herein, or to dispose of any or all of the same in accordance with applicable law.

 

(d) Lender shall invest the funds in the Reserves in Permitted Investments, except that Lender shall have no obligation to invest or pay any interest or other return on (i) other Reserves of $25,000 or less, (ii) funds held or to be held for 45 days or less, or (iii) any funds after an Event of Default. Subject to the exceptions specified above, all such investment earnings shall be taxed to Borrower, shall be added to the applicable Reserve, and shall be held, disbursed and applied in the same manner and under the same conditions as the balance of the subject Reserve. Without limitation, funds may be held in Permitted Investments that are short-term money market investments or in so-called money market or market rate accounts. Provided that Lender shall hold or invest the Reserves in accordance with standards that Lender reasonably determines to be accepted or customary among holders of similar funds in connection with rated debt or rated pools of debt, Lender shall not be responsible for any loss or failure to produce any return. Further and in any event, Lender shall not be responsible to produce any specific rate of return. Borrower shall provide to Lender or to the applicable bank, at any time upon request of Lender, IRS Forms W-8 and W-9.

 

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(e) Lender shall have the right at any time to request from Borrower written authorization in form and substance satisfactory to Lender, separate and apart from the authorizations set forth in the Loan Documents, to make (or refrain from making) any payment from or with respect to any Reserve (including payments to Lender for credit against the obligations of Borrower hereunder), or to take (or refrain from taking) any action pertaining to any Reserve. Lender shall have no obligation to request any such written authorization ever, and Lender’s not requesting any such written authorization shall not give rise to any rights in Borrower or any obligation, liability or detriment of Lender. Further, Lender’s requesting such written authorization in any case or cases shall not give rise to any obligation to request such written authorization in any subsequent case. If such written authorization is given, then Lender shall have the right to rely on the same irrevocably. If Lender requests any such written authorization for any matter which the Loan Documents or applicable law permits or requires Lender to do under the circumstances then in effect or as contemplated in such request for written authorization, then until such time as Lender receives such written authorization (including any time following denial of such written authorization) Lender is hereby irrevocably authorized to do any one or more of the following, at Lender’s option (i) hold all or any part of the applicable Reserve without making payment therefrom, (ii) make any payments from the Reserve that are then permitted or required under the Loan Documents or applicable law, or (iii) exercise or refrain from exercising any other rights or remedies pertaining to the Reserves that are then permitted under the Loan Documents or under applicable law. Lender’s rights under the foregoing sentence may be exercised simultaneously or seriatim in any combination or sequence. If Lender shall exercise any of such rights by reason of not having received any requested written authorization, and if the requested written authorization is subsequently given (or if a denial of written authorization is subsequently rescinded), Lender shall not then be required to undo the results of any such exercise of rights, and Lender shall not be bound by any obligation which Lender determines in its reasonable discretion is inconsistent with any of the rights that have been so exercised. The rights of Lender under this subsection shall govern and prevail notwithstanding anything to the contrary in the Loan Documents or elsewhere. Without limitation, the rights of Lender under this subsection shall govern and prevail over any provision of the Loan Documents which imposes on Lender any obligation whatsoever pertaining to any Reserve.

 

(f) This Article shall apply to all Reserves that are specifically identified in this Article IX and also to any other Reserves that are required pursuant to the Loan Documents.

 

(g) Borrower’s obligations to make deposits into each Reserve are separate from Borrower’s obligations to make deposits into each other Reserve, and from its obligations to pay as and when due all principal, interest, and other amounts owing under the Loan Documents. Without limitation, nothing in this Article shall excuse Borrower’s performance of any obligation set forth elsewhere in this Agreement or in the Loan Documents. The Reserves shall be held in Lender’s name at one or more financial institutions selected by Lender in its sole discretion. The Reserves are not and shall not be trust funds. Lender is authorized to commingle moneys held in the Reserves among the Reserves and with other moneys held by Lender. Lender may (but need not) disburse payment from any Reserve directly to the applicable vendor, by joint check to Borrower and the applicable contractor, or to Borrower, in each case as determined by Lender in its sole discretion. To the extent that Reserves are funded from Loan proceeds, whether at Closing or otherwise, the amount so funded shall constitute principal outstanding hereunder. Upon full and final payment of the Obligations, any funds remaining in any Reserve shall be disbursed to Borrower.

 

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ARTICLE X

ASSIGNMENTS AND PARTICIPATIONS

 

Section 10.01.Assignments and Participations.

 

(a) Borrower acknowledges that Lender may on or after the Closing Date sell and assign one or more participation interests in and to the Loan, or pledge, hypothecate or encumber, or sell and assign all or any portion of the Loan, to or with such domestic or foreign banks, insurance companies, pension funds, trusts or other institutional lenders or other Persons, parties or investors (including, without limitation, grantor trusts, owner trusts, special purpose corporations, REMICs, FASITs, real estate investment trusts or other similar or comparable investment vehicles) as may be selected by Lender in its sole and absolute discretion and on terms and conditions satisfactory to Lender in its sole and absolute discretion; provided, however, that Lender shall not be entitled to do any of the foregoing to or with a Direct Competitor. Borrower and all other Persons associated or connected with the Loan or the Property shall cooperate in all respects with Lender, in connection with the sale of participation interests in, or the pledge, hypothecation or encumbrance or sale or assignment of all or any portion of, the Loan, and shall, in connection therewith, execute and deliver such estoppels, certificates, instruments and documents as may be reasonably requested by Lender. Borrower grants to Lender the right to distribute to any Investor or any Rating Agency rating securities or the Loan all documents and information which Lender now has or may hereafter acquire relating to the Loan, Borrower, any guarantor, any indemnitor, the Pledged Collateral and/or the Property, which shall have been furnished by Borrower, any guarantor, any indemnitor, or any party to any Loan Document, or which was otherwise furnished in connection with the Loan, as Lender in its discretion determines necessary or desirable. If requested by Lender, Borrower shall execute and deliver, and shall cause each other Person associated or connected with the Loan or the Property to execute and deliver, at no cost or expense to Borrower, such documents and instruments as may be necessary to split the Loan into two or more loans evidenced by separate sets of notes and secured by separate sets of other related Loan Documents, or to terminate any cross-default provisions with respect to any other loan, to the full extent required by Lender to facilitate the sale of participation interests in the Loan or the sale of the Loan or the making of a loan to Lender secured by the Loan, it being agreed that (a) any such splitting of the Loan will not adversely affect or diminish the rights of Borrower as presently set forth herein and in the other Loan Documents and will not increase the respective obligations and liabilities of Borrower or any other Person associated or connected with the Loan, the Collateral or the Property, (b) the Loan Documents securing the Loan as so split will have such priority of lien as may be specified by Lender, and (c) the retained interest of Lender in the Loan as so split shall be allocated to or among one or more of such separate loans in a manner specified by Lender in its sole and absolute discretion.

 

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(b) Pursuant to any assignment or participation of all or any portion of the Loan as contemplated in this Section to any Person (an “Assignee”) (a) Lender may, subject to compliance with Section 12.14 , transfer its obligations hereunder and under the other Loan Documents (or may transfer the portion thereof corresponding to the transferred portion of the Obligations) and, except as otherwise specified herein, any Assignee shall succeed to the rights and obligations of Lender and a Credit Agreement Indemnified Party hereunder in respect of the transferred portion, and (b) Lender shall relinquish its rights and be released from its obligations hereunder and under the Loan Documents as to the transferred portion. The liabilities of Lender and each of the other Assignees shall be separate and not joint and several. Neither Lender nor any Assignee shall be responsible for the obligations of any other Assignee.

 

(c) Lender, each Assignee and each participant and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with the Borrower, any Affiliate of Borrower, any Subsidiary and any Person who may do business with or own interests in or securities of any Borrower or any such Affiliate or Subsidiary, without any duty to account therefor.

 

(d) This Agreement is being entered into by Lender individually and as agent for all present and future Assignees, and privity of contract is hereby created among Lender and all present and future Assignees, on the one hand, and Borrower, on the other hand.

 

(e) Lender shall have the right from time to time to sever the Note and the other Loan Documents into one or more separate notes, pledge agreements and other security documents (the “Severed Loan Documents ”) in such denominations as Lender shall determine in its sole discretion for purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall execute and deliver to Lender from time to time, promptly after the request of Lender, a severance agreement and such other documents as Lender shall request in order to effect the severance described in the preceding sentence, all in form and substance reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled with an interest, in its name and stead to make and execute all documents necessary or desirable to effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue thereof; provided, however, Lender shall not make or execute any such documents under such power until three (3) days after notice has been given to Borrower by Lender of Lender’s intent to exercise its rights under such power.

 

(f) Borrower acknowledges that Lender may incur additional costs and fees (including, without limitation, attorneys’ fees) in connection with the preparation of documentation regarding the administrative and legal relationship between the Loan Documents. In addition to all other amounts due from Borrower hereunder, Borrower hereby agrees to pay to Lender, on demand, any and all such costs and fees (including, without limitation, attorneys’ fees).

 

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ARTICLE XI

INDEMNIFICATION

 

Section 11.01. Indemnification.

 

(a) In addition to all other sums due hereunder or provided for in this Agreement or in any other Loan Document, the Borrower agrees to pay, indemnify, defend, and hold the Credit Agreement Indemnified Parties harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, damages, costs and expenses including, but not limited to, punitive, exemplary, consequential or indirect damages and liabilities of any kind (including, without limitation, any liability attributable to the breach by the Borrower of any of its representations or warranties in this Agreement or any other Loan Document), and all reasonable outside attorneys' fees and disbursements and other costs and expenses actually incurred in connection therewith, or for recovery under directors' and officers' liability insurance policies maintained by the Borrower (as and when they are incurred and irrespective of whether suit is brought) (collectively the “Claims”), at any time asserted against, imposed upon, or incurred by any Credit Agreement Indemnified Party (i) in connection with or as a result of or related to the execution, delivery, enforcement, performance, or administration of this Agreement or any of the other Loan Documents or any collateral security in connection herewith, or the transactions contemplated hereby or thereby, including, without limitation, Claims in respect of any brokerage commissions or finders fees incurred by the Borrower in connection with obtaining financing, and (ii) with respect to any claim, investigation, litigation, or proceeding related to this Agreement or any of the other Loan Documents or any transaction in connection with any of the foregoing, or the use of the proceeds provided hereunder (irrespective of whether any Credit Agreement Indemnified Party is a party thereto), or any act, omission, event, or circumstance in any manner related thereto including, but not limited to, in connection with the enforcement of the indemnification obligations set forth herein (all the foregoing, collectively, the "Indemnified Amounts"). The foregoing to the contrary notwithstanding, the Borrower shall not have any obligation to any Credit Agreement Indemnified Party under this Section 11.01(a) (x) with respect to any Indemnified Amount that a court of competent jurisdiction finally determines in a non-appealable decision to have resulted from the gross negligence or willful misconduct of such Credit Agreement Indemnified Party or, with respect to subclause (ii) above, any such Person, (y)for actions between the Borrower or a Lender, where the Borrower is the prevailing party or (z)with respect to any Indemnified Amount that is asserted against, imposed upon, or incurred by a Lender in its separate capacity as a Member of the Borrower. This provision shall survive the Payment in Full of all Obligations of the Borrower and termination of this Agreement. If any Credit Agreement Indemnified Party makes any payment to any other Credit Agreement Indemnified Party with respect to an Indemnified Amount as to which the Borrower was required to indemnify the Credit Agreement Indemnified Party receiving such payment, the Credit Agreement Indemnified Party making such payment is entitled to be indemnified and reimbursed by the Borrower with respect thereto.

 

(b) THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE XI SHALL BE ENFORCEABLE REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS, CLAIMS OR LAWS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LAW) AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION.

 

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Section 11.02. Procedure; Notification. Each Credit Agreement Indemnified Party under this Article XI will, promptly after the receipt of notice of the commencement of any claim against such Credit Agreement Indemnified Party in respect of which indemnity may be sought from the Borrower under this Article XI, notify the Borrower in writing of the commencement thereof. The failure of any Credit Agreement Indemnified Party so to notify the Borrower of any such action shall not relieve the Borrower from any liability which it may have to such Credit Agreement Indemnified Party unless, and only to the extent that, such failure results in the Borrower's forfeiture of substantive rights or defenses. In case any such Claim shall be brought against any Credit Agreement Indemnified Party and it shall notify the Borrower of the commencement thereof, the Borrower shall be entitled to assume the defense thereof at their own expense, with counsel reasonably satisfactory to the Majority Holders; provided, however , that any Credit Agreement Indemnified Party may, at its own expense, retain separate counsel to participate in such defense. Notwithstanding the foregoing, in any Claim in which Borrower, on the one hand, and an Credit Agreement Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Credit Agreement Indemnified Party shall have the right to employ separate counsel at the Borrower's expense and to control its own defense of such Claim if, in the reasonable opinion of counsel to such Credit Agreement Indemnified Party, a conflict or potential conflict exists between the Borrower, on the one hand, and such Credit Agreement Indemnified Party, on the other hand, that would make such separate representation advisable. The Borrower agrees that it will not, without the prior written consent of the Credit Agreement Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened Claim relating to the matters contemplated hereby (if any Credit Agreement Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of the Lender, and each other Credit Agreement Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding. The Borrower shall not be liable for any settlement of any claim, action or proceeding instituted against a Credit Agreement Indemnified Party without its written consent, which consent shall not be unreasonably withheld or delayed. The rights accorded the Credit Agreement Indemnified Parties hereunder shall be in addition to any rights that any Credit Agreement Indemnified Party may have at common law, in equity, by separate agreement or otherwise.

 

ARTICLE XII

MISCELLANEOUS

 

Section 12.01.Amendments, Actions Under This Agreement, etc. No amendment, waiver, modification or supplement of any provision of this Agreement, nor consent to any departure by the Borrower therefrom (collectively, an “Amendment”), shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Lender, and then such Amendment shall be effective only in the specific instance and for the specific purpose for which given.

 

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Section 12.02. Notices, etc.

 

(a) All notices and other communications provided for hereunder shall, unless otherwise stated herein, be either (i) in writing (including fax) and delivered by nationally recognized courier service, fax or otherwise or (ii) by electronic mail (if e-mail addresses are designated as provided below, provided that no notices required under the terms of Article II or Article VI of this Agreement may be sent by electronic mail), (A) as to the Borrower or Lender, at its address or fax number set forth under its name on the signature pages hereof, and (B) any other Person, at such other Person’s address or fax number as shall be designated by such Person in a written notice to the Lender.

 

(b) All such notices and communications shall (i) when faxed or sent by electronic mail, be effective when faxed or sent by electronic mail and when delivery is confirmed by the recipient verbally or in writing (including by return fax transmission or electronic mail), or (ii) when otherwise actually delivered to the recipient (as confirmed by a signed receipt); provided, however, that if sent by fax, sent by electronic mail or otherwise delivered on any day other than a Business Day, such notice or communication shall not be deemed to have been delivered until the next succeeding Business Day.

 

Section 12.03.No Waiver; Remedies. No failure on the part of the

 

Borrower, the Lender or any other Credit Agreement Indemnified Party to exercise, and no delay in exercising, any right hereunder or under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

 

Section 12.04. Costs and Expenses.

 

(a) The Borrower agrees to pay from time to time immediately upon demand all reasonable out-of-pocket costs and expenses incurred by the Lender or any of its Affiliates, including the reasonable fees, charges and disbursements of counsel, in connection with the negotiation, preparation, execution, delivery, funding and administration of this Agreement and the other Transaction Documents or any amendments, modifications or waivers of the provisions hereof and thereof and the perfection or priority of any Lien granted pursuant to any security document. Such costs and expenses shall include, without limitation, all reasonable counsel's fees and disbursements of the Lender’s and its Affiliates’, due diligence, travel, syndication or other expenses, including distribution, rating agency, messenger, audit, insurance, search, filing and recording fees.

 

(b )If the Borrower fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, but excluding scheduled principal and interest payments, such amount may be paid on behalf of the Borrower by the Lender, at its sole discretion.

 

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(c) The rights accorded the Credit Agreement Indemnified Parties hereunder shall be in addition to any rights that any Credit Agreement Indemnified Party may have at common law, in equity, by separate agreement or otherwise. This Section 12.04 shall survive the Payment in Full of the Obligations and the termination of this Agreement.

 

Section 12.05. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the acceleration of the Obligations pursuant to Section 6.01, Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set-off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lender to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document and although such obligations may be unmatured. Lender agrees promptly to notify the Borrower after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Lender under this Section 12.05  are in addition to other rights and remedies (including, without limitation, other rights of set-off) that Lender may have.

 

Section 12.06. Severability The invalidity, illegality or unenforceability in any jurisdiction of any provision in or obligation under this Agreement or any other Loan Document shall not affect or impair the validity, legality or enforceability of the remaining provisions or obligations under this Agreement or any other Loan Document or of such provision or obligation in any other jurisdiction.Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower and the Lender and thereafter shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns; provided, however, that the Borrower shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior written consent of the Lender.

 

Section 12.08.Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York.

 

Section 12.09.Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement via fax or in “.pdf” format by electronic mail shall be binding, and as effective as delivery of a manually executed counterpart, and may be used as admissible evidence that the party so transmitting intends to be bound by the terms set forth herein.

 

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Section 12.10. Consent to Jurisdiction.

 

(a) The Borrower, on behalf of itself and its successors and assigns and inrespect of its property, hereby irrevocably agrees, to the fullest extent it may do so under law, in the event it files any action, one effect of which could be to halt, enjoin, impair or hinder the enforcement of the parties’ obligations hereunder or under the other Loan Documents, or any proceedings to enforce collection on those obligations, including, but not limited to, anyproceeding under the United States Bankruptcy Code, to file such action, and hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined, in the United States District Court for the Southern District of New York sitting in New York City or in such District’s Bankruptcy Court, as applicable, assuming venue in that District would be proper, or in the courts of the State of New York, First Department sitting in New York County. The Borrower, on behalf of itself and its successors and assigns, hereby irrevocably waives, to the fullest extent it may do so under law, the defense of an inconvenient forum to such action or proceeding. To the fullest extent permitted by applicable law, the Borrower, on behalf of itself and its successors and assigns, hereby irrevocably agrees to elect in favor of filing in or transferring to the United States District Court for the Southern District of New York, assuming that venue in such district would otherwise be proper, to the extent it has any control over the choice of a district for the filing or transfer of a case under the United States Bankruptcy Code for any of its Affiliates as debtor. The execution of this Agreement is expressly conditioned on the willingness and intention of the Borrower to enforce the provisions of this Section 12.10. In addition, the Borrower warrants that it is subject to no preexisting contractual obligations that would interfere with its adherence to the foregoing provisions of this Section 12.10 and additionally warrants that it will not enter into other agreements that in any way compromise its ability to adhere to these provisions without the express written consent of the Lender.

 

(b)Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York located in the County of New York or of the United States for the Southern District of New York, and, by execution and delivery of this Agreement, the Borrower hereby irrevocably accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The Borrower hereby irrevocably appoints CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, New York 10011, as its agent for service of process in respect of any such action or proceeding and further irrevocably consents to the service of process out of any of the aforementioned courts and in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Borrower at its address for notices as set forth in Section 12.02 and to CT Corporation System, such service to become effective ten (10) days after such mailing. Nothing herein shall affect the right of the Lender to bring any legal action or proceeding with respect to this Agreement or any other Loan Document against the Borrower in the courts of any other jurisdiction. To the fullest extent permitted by applicable law, the Borrower hereby irrevocably waives any objection that it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or any other Loan Document brought in the courts referred to in subsection (a) of this Section 12.10 and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 12.11. Waiver of Jury Trial. THE BORROWER, THE AND THE LENDER EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE BORROWER, OR THE LENDER IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

 

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Section 12.12. Confidentiality. All confidential or proprietary information provided by the Borrower to the Lenders and all information included in the analysis portion of an audit report shall be maintained in confidence by the Lender, shall not be disclosed by Lender to any third Person or used for any purpose, other than in connection with the transactions contemplated by this Agreement or the other Transaction Documents and shall be disclosed only on a need to know basis (except as otherwise provided below) to and only to (a) any Assignee, provided that each such Person agrees to be bound by confidentiality provisions substantially similar to those in this Section 12.12, (b) to such Lender’s Affiliates, (c) to their respective investment advisors, managed accounts, officers, directors, employees, accountants and outside counsel, (d) to any financial institution which may from time to time provide liquidity support, enhancement support or other credit support in connection with this Agreement, including any such financial institution that may be requested by the Lender to provide such support; provided that each such Person agrees to be bound by confidentiality provisions substantially similar to those in this Section 12.12, (e) with respect to any of the Persons described in clause (a), (b) or (d), to its investment advisors, managed accounts, officers, directors, employees, accountants and outside counsel, (f) to bank examiners, examiners from securities self-regulatory organizations and similar entities, (g) to any other Person to whom the Lender is required by law, regulation, decree or order to make such disclosure, provided, however, that, to the extent legally permitted, prior written notice of such disclosure shall be furnished to the Borrower as soon as practicable in order to afford the Borrower an opportunity to seek a protective order; it being understood and agreed that if the Borrower is unable to obtain or does not seek a protective order prior to such time that disclosure of such information is due from the disclosing party, the disclosure of such information as to which legal counsel has advised is legally required to be disclosed may be made, and, to the extent legally permitted, before any confidential information is provided to any third party under law, court order or similar process, the Lender shall notify the Borrower and cooperate in the Borrower’s reasonable efforts, if any, to maintain the confidentiality of such information; provided, further, that the Lender shall not be required to give any notice to the Borrower if they disclose information to governmental, administrative or regulatory or self-regulatory bodies having or claiming authority to regulate or oversee any aspect of the Lender’s business or that of its Affiliates, (g) in any legal action in connection with the enforcement hereof or any document, instrument or agreement related hereto, (h) to any Rating Agency rating the Loan or a portion thereof and to its officers, directors, employees, accountants, auditors and outside counsel, (i) to such other Persons as may be approved by the Borrower. The foregoing provisions shall not apply to any information, documents or portions thereof that (i) were of public knowledge or literature generally available to the public at the time of such disclosure, (ii) have become part of the public domain by publication or otherwise, other than as a result of the failure of the Lender, or any of its employees, directors, officers, advisors, accountants, auditors, or legal counsel to preserve the confidentiality thereof or (iii) was or becomes known to such recipient independently of the disclosure by the Borrower. The obligations of the Lender contained in this Section 12.12 shall be continuing and shall survive the termination of this Agreement.

 

Section 12.13. Patriot Act Notice. Lender hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow it to identify the Borrower in accordance with the Patriot Act. The Borrower shall provide such information and take such actions as are reasonably requested by the Lender in order to assist the Lender in maintaining compliance with the Patriot Act.

 

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Section 12.14. Registration .

 

(a) Borrower hereby acknowledges and makes the Note a registered obligation for United States withholding tax purposes. Lender, as Borrower’s non-fiduciary agent for this purpose, shall be the registrar for the Note (the “Registrar”) with full power of substitution. In the event the Registrar becomes unable or unwilling to act as registrar under this Agreement, Lender shall reasonably designate a successor Registrar or, in the event Lender does not designate a successor Registrar, then Borrower shall become the successor Registrar

 

(b) The Registrar shall maintain, or cause to be maintained, a register (the “Register”) for the recordation of the names and addresses of Lender and any Assignees of all or any portion of Lender’s interest in the Loan, and the principal amount of the Loan (and stated interest thereon) (the “Registered Loan”) held by Lender and each Assignee from time to time. Borrower, Lender and the Assignees shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice.

 

(c) A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide), which registration the Registrar shall effect immediately upon receipt of assignment documentation. Any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, or by the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued by Borrower to the designated assignee(s) or transferee(s). Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any, evidencing the same), Borrower shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary.

 

(d) If Lender sells participations, Lender shall maintain a register on which it enters the name and the address of each participant (“Participant”) and the principal amounts of each Participant’s participation interest in the Loan (or other rights or obligations) held by it (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation interest as the owner thereof for all purposes notwithstanding any notice to the contrary. In maintaining the Participant Register, Lender shall be acting as the non-fiduciary agent of the Borrower solely for purposes of applicable United States federal income tax law and undertakes no duty, responsibility or obligation to the Borrower (without limitation, in no event shall such Lender be a fiduciary of the Borrower forany purpose, except that such Lender shall maintain the Participant Register and, upon request by the Borrower, Lender shall show the Participant Register to the Borrower).

 

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(e) The Borrower agrees that each Assignee and Participant shall be entitled to the benefits of Section 2.06 and Section 2.09 to the same extent as if it were a Lender; provided that such Assignee or Participant complies with the provisions of Section 2.06 and Section 2.09 as if it were a Lender; provided, further, that an Assignee or Participant shall not be entitled to receive any greater benefit under Section 2.06 or Section 2.09 then the applicable Lender would have been entitled to receive with respect to the portion of the Loan assigned to such Assignee or participation sold to such Participant, unless the assignment to such Assignee or sale of the participation to such Participant is made with the Borrower’s prior written consent.

 

[SIGNATURE PAGES FOLLOW ON THE NEXT PAGE]

 

Credit and Security Agreement

72

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

	 	
MORGAN'S FOODS, INC., as Borrower

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ James Liguori	 
	 	 	Name: James Liguori	 
	 	 	Title: President & Chief Operating Officer	 
	 	
Address: 

 

Morgan's Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, OH 44122

Attention: Barton J. Craig, Esq.

Facsimile: (216) 359-2103

with a copy to:

 

Morgan's Foods, Inc.

4829 Galaxy Parkway, Suite S

Cleveland, OH 44122

Attention: James Liguori

Facsimile: (216) 359-2105

 

	 

 

 

 

SIGNATURE PAGE 1 TO

CREDIT AND SECURITY AGREEMENT

  

  

  

 

	 	
FORTRESS CREDIT CORP.,

as Lender

 

	 
	 	 	 	 
	
 

	
By: 

	/s/ Constantine M. Dakolias	 
	 	 	Name: Constantine M. Dakolias	 
	 	 	Title: President	 
	 	 	  

Address:

 

Fortress Credit Corp.

do Fortress Investment Group LLC Drawbridge Special Opportunities Fund 1345 Avenue of the Americas, 46th Floor New York, NY 10105

Fax No.: (646) 224-8716

 

Attn: Constantine M. Dakolias, President

 

With a copy to:

 

Fortress Investment Group LLC 10250 Constellation Boulevard

 

23rd Floor

Los Angeles, CA 90067

Fax No.: (310) 720-3031

Attn: Joshua Pack, Managing Director

 

And with a copy to:

 

Sidley Austin LLP

555 West Fifth Street

Los Angeles, CA 90013

Fax No.: (213) 896-6600

Attention: Marc I. Hayutin, Esq.

	 

 

SIGNATURE PAGE 3 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

EXHIBIT A

 

[INTENTIONALLY OMITTED]

 

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EXHIBIT B

 

[INTENTIONALLY OMITTED]

 

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EXHIBIT C

 

FORM OF NOTE

 

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EXHIBIT D

 

FORM OF PLEDGE AGREEMENT

 

EXHIBIT D TO

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EXHIBIT E

 

[INTENTIONALLY OMITTED]

 

EXHIBIT E TO

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EXHIBIT F

 

[INTENTIONALLY DELETED]

 

EXHIBIT F TO

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EXHIBIT G

 

[INTENTIONALLY OMITTED]

 

EXHIBIT G TO

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EXHIBIT H

 

[INTENTIONALLY OMITTED]

 

EXHIBIT H TO

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EXHIBIT I

 

FORM OF SUBSIDIARIES PLEDGE AND SECURITY AGREEMENT

 

EXHIBIT I TO

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EXHIBIT J-1 

 

FORM OF SECTION 5.03(d) COMPLIANCE CERTIFICATE

 

EXHIBIT J-1 TO

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EXHIBIT K

 

[INTENTIONALLY OMITTED]

 

EXHIBIT K TO

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EXHIBIT L

 

[INTENTIONALLY OMITTED]

 

EXHIBIT L TO

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EXHIBIT M

 

[INTENTIONALLY OMITTED]

 

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EXHIBIT N

 

FORM OF SECURITY AMENDMENT

 

EXHIBIT N TO

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EXHIBIT O

 

[INTENTIONALLY OMITTED]

 

EXHIBIT O TO

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EXHIBIT P

 

FORM OF SOLVENCY CERTIFICATE

 

EXHIBIT P TO

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EXHIBIT Q

 

FORM OF BORROWER PROXY AGREEMENT

 

EXHIBIT Q TO

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EXHIBIT R

 

FORM OF ACCOUNT CONTROL AGREEMENT

 

EXHIBIT R TO

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SCHEDULE 1

 

NON-OPERATING PROPERTIES AND PROPERTIES TO BE RELOCATED

 

 

	
NON-OPERATING PROPERTIES

	  	  	  	  
	
Loc #

	
Name

	
Address

	
L#

	  	  	  	  
	
011

	
South Ave.

	
2705 South Ave., Youngstown, OH 44502

	
L125-002

	  	  	  	  
	
013

	
Campbell

	
1990 McCartney Rd., Youngstown, OH 44505

	
L125-083

	  	  	  	  
	
019

	
Rochester

	
102 Madison Ave., Rochester, PA 15074

	
L125-011

	  	  	  	  
	
037

	
Conneaut Lake

	
360 Water Street, Conneaut Lake, PA 16316

	
L125-140

	  	  	  	  
	
039

	
Warren

	
1200 Pennsylvania Ave. East, Warren, PA 16365

	
L125-145

	  	  	  	  
	
070

	
Penn Ave.

	
5501 Penn Avenue, Pittsburgh, PA 15206

	
L125-151

	  	  	  	  
	
090

	
Jamestown

	
522 E. Second St., Jamestown, NY 14701

	
L125-146

	  	  	  	  
	
 

	
Granite City Office   

	1512 Johnson Rd., Granite City, IL 62040	  
	  	  	  	  
	
010

	
West Market

	
855 West Market, Warren, OH 44481

	
L125-010

	  	  	  	  
	
022

	
New Kensington

	
745 Fourth St., New Kensington 15068

	
L125-001

	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	
PROPERTIES TO BE RELOCATED

	  	  	  	  
	
Loc #

	
Name

	
Address

	
L#

	  	  	  	  
	
012

	
Belpre

	
2500 Washington Blvd., Belpre, OH 45714

	
L125-172

	  	  	  	  
	
052

	
Bethel Park

	
1031 Paxton Dr., Bethel Park, PA 15102

	
L125-190

	  	  	  	  
	
060

	
Bridgeville

	
1098-A Washington Ave., Bridgeville, PA 15017

	
L125-152

	  	  	  	  
	
331

	
Ballwin

	
15493 Manchester Rd., Ballwin, MO 63011

	
L125-187

 

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SCHEDULE 2

 

FRANCHISE AGREEMENTS

 

SCHEDULE 2 TO

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SCHEDULE 3

 

COPYRIGHTS, TRADEMARKS AND PATENTS

NONE.

 

SCHEDULE 3 TO

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SCHEDULE 4

 

[INTENTIONALLY OMITTED]

 

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SCHEDULE 5

 

CLOSING STATEMENT

 

SCHEDULE 5 TO

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SCHEDULE 6

 

LITIGATION AND CONTINGENT OBLIGATIONS

 

1. LITIGATION:

 

The Pending Outstanding Litigation in which the Borrower is Engaged:

 

	
A.

	
Cathy Dear vs. Morgan’s Foods, Inc., Case No. GD05-019850, Common Pleas Court of Allegheny County, Pennsylvania. Employee Lawsuit.

 

	
B.

	
Michael Franklin vs. Morgan’s Foods, Inc., Case No. 11L137, Circuit Court for the Fourth Judicial Circuit, Madison, Illinois. Employee Lawsuit.

 

	
C.

	
Ford vs. Morgan’s Foods, Inc., Circuit Court of St. Louis City, Missouri, Case No. 1122- CC02254. This is an alleged slip and fall customer tort action relating to restaurant #305 which arose in July 2007. In 2007 Morgan’s Foods, Inc.’s general liability carrier Liberty Mutual – according to Liberty Mutual’s records – showed that this matter had been closed. Morgan’s Foods has no record of having been served with legal process in connection with this matter. As a customer tort claim this matter – if it were to reopen into active litigation is fully insured, without a deductible, under Morgan’s Foods, Inc.’s general liability policy.

 

SCHEDULE 6 TO

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SCHEDULE 7

 

BORROWER CORPORATE INFORMATION

 

SCHEDULE 7 TO

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SCHEDULE 8

 

BORROWER AND AFFILIATES

ORGANIZATIONAL STRUCTURE

 

SCHEDULE 8 TO

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SCHEDULE 9

 

JOINT VENTURES AND PARTNERSHIPS

 

NONE.

 

SCHEDULE 9 TO

CREDIT AND SECURITY AGREEMENT

 

 

 

 

 

SCHEDULE 10

 

INDEBTEDNESS AND LIENS

 

1. [$178,000 Equipment Lease]1

 

 

1 Subject to Borrower’s providing documentation and confirming it is secured by the equipment and no other collateral.

 

SCHEDULE 10 TO

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SCHEDULE 11

 

ENVIRONMENTAL MATTERS

 

NONE.

 

SCHEDULE 11 TO

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SCHEDULE 12

 

AFFILIATE TRANSACTIONS

 

NONE.

 

SCHEDULE 12 TO

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SCHEDULE 13

 

LABOR MATTERS

 

NONE.

 

SCHEDULE 13 TO

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SCHEDULE 14

 

[INTENTIONALLY OMITTED]

 

SCHEDULE 14 TO

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SCHEDULE 15

 

REAL PROPERTY AND LEASES

 

SCHEDULE 15 TO

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SCHEDULE 16

 

DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS

 

SCHEDULE 16 TO

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SCHEDULE 17

 

MATERIAL CONTRACTS

 

SCHEDULE 17 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

 

SCHEDULE 18

 

FINANCIAL STATEMENTS

 

SCHEDULE 18 TO

CREDIT AND SECURITY AGREEMENT

 

See attached Morgan’s Foods, Inc. Form 10-Q for the quarterly period ended August 15, 2011.

 

 

 

SCHEDULE 18 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

 

SCHEDULE 19

 

COLLATERAL LOCATIONS

 

 

SCHEDULE 19 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

SCHEDULE 20

 

SCHEDULED WORK

 

	
Store #

	
Required Capital Expenditures for Remodels

	
051

	
Remodel KFC Series 38 image facility to current KFC image (Vision or Vision 2020) which includes exterior, dining room and signage, estimated at $350,000

	
053

	
Remodel KFC Series 38 image facility to current KFC image (Vision or Vision 2020) which includes exterior, dining room and signage, estimated at $350,000

	
055

	
Remodel KFC Series 38 image facility to current KFC image (Vision or Vision 2020) which includes exterior, dining room and signage, estimated at $350,000

	
061

	
Remodel KFC Series 38 image facility to current KFC image (Vision or Vision 2020) which includes exterior, dining room and signage, estimated at $350,000

 

SCHEDULE 20 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

SCHEDULE 21

 

COMMERCIAL TORT CLAIMS

 

NONE.

 

SCHEDULE 21 TO

CREDIT AND SECURITY AGREEMENT

 

  

  

  

SCHEDULE 22

 

[INTENTIONALLY OMITTED]

 

SCHEDULE 22 TO

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SCHEDULE 23

 

LETTER-OF-CREDIT RIGHTS,

CHATTEL PAPER AND EQUIPMENT

 

NONE.

 

SCHEDULE 22 TO

CREDIT AND SECURITY AGREEMENT

 

 

  

  

  

FIRST AMENDMENT TO LOAN DOCUMENTS

 

THIS FIRST AMENDMENT TO LOAN DOCUMENTS ("Amendment"), effective as of December 14, 2011 (the "Effective Date"), is entered into by and among MORGAN'S FOODS, INC., an Ohio corporation ("Borrower"), MORGAN'S RESTAURANT PROPERTIES, INC., an Ohio corporation ("Morgan's Properties"), MORGAN'S FOODS OF MISSOURI, INC., a Missouri corporation ("Morgan's Properties"), MORGAN'S RESTAURANTS OF NEW YORK, INC., a New York corporation (the "Morgan's New York"), MORGAN'S RESTAURANTS OF OHIO, INC., an Ohio corporation (the "Morgan's Ohio"), MORGAN'S RESTAURANTS OF PENNSYLVANIA, Inc., a Pennsylvania corporation (the "Morgan's Pennsylvania"), MORGAN'S TACOS OF PENNSYLVANIA, INC., a Pennsylvania corporation (the "Morgan's Tacos"), and MORGAN'S RESTAURANTS OF WEST VIRGINIA, INC., a West Virginia corporation ("Morgan's West Virginia" and together with Morgan's Properties, Morgan's New York, Morgan's Ohio, Morgan's Pennsylvania, and Morgan's Taco's, collectively, the "Borrower Subsidiaries"; Borrower Subsidiaries together with Borrower may hereinafter be referred to collectively as the "Borrower Parties"), FORTRESS CREDIT OPPORTUNITIES I LP, a Delaware limited partnership ("FCOI") and FORTRESS CREDIT FUNDING III LP, a Delaware limited partnership ("FCFIII") together with FCOI, "Lender").

 

RECITALS

 

A. Fortress Credit Corp., a Delaware corporation ("Original Lender") and Borrower entered into that certain Credit and Security Agreement, dated December 9, 2011 (the "Original Credit Agreement"), pursuant to which Original Lender made a loan (the "Original Loan") to Borrower in the principal amount of Seven Million Five Hundred Thousand Dollars ($7,500,000). Original Lender subsequently assigned 50% of the Original Loan to FCOI and 50% of the Original Loan to FCFIII. Any capitalized term used herein but not defined herein shall have the meaning set forth in the Original Credit Agreement.

 

B. Pursuant to that certain Subsidiaries Pledge and Security Agreement (the "Original Subsidiaries Pledge"), dated as of December 9, 2011 made by Borrower Subsidiaries, in favor of Lender, Borrower Subsidiaries have made certain pledges and guarantees in favor of Lender.

 

C. Borrower has requested an increase in the Original Loan Amount, and the parties hereto wish to amend and modify certain provisions of the Loan Documents, all as more particularly described herein.

 

NOW THEREFORE, in consideration of the foregoing Recitals, the covenants and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Borrowers and Lenders hereby agree as follows:

 

Amendment to Loan Documents - Morgan's

  

  

AGREEMENT

 

1. Loan Document Amendments.

 

a. Loan. Section 2.01 of the Original Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

"Section 2.01 The Loan. Lender agrees, on the terms and conditions hereinafter set forth, to make a single, non-recurring term loan advance to the Borrower on the Closing Date in the original principal amount of $8,250,000 (the "Loan"). No repayment or prepayment of the Loan may be reborrowed by the Borrower."

 

b. Principal Payments. The third sentence of Section 2.08(b) of the Original Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

"In addition to payments of interest as required herein, Borrower shall repay principal to Lender monthly in an amount equal to $68,750 commencing on the Payment Date in the thirteenth full calendar month after the Closing Date, and continuing on each Payment Date thereafter until the Maturity Date."

 

c. Leverage Ratio. Section 5.02(g)(i) of the Original Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

"(i)            Leverage Ratio. A Funded Debt to EBITDA Ratio, measured on a Fiscal Quarter-

end basis, of less than or equal to the required applicable ratio set forth in the following table for the period of twelve (12) consecutive months ending on the date of such Fiscal Quarter end set forth opposite thereto:

 

	
Applicable Ratio

	
Applicable Fiscal Quarter End

	
2.75:1.00

	
February 26, 2012

	
2.75:1.00

	
May 20, 2012

	
2.75:1.00

	
August 12, 2012

	
2.75:1.00

	
November 4, 2012

	
2.50:1.00

	
March 3, 2013

	
2.50:1.00

	
May 26, 2013

	
2.50:1.00

	
August 18, 2013

	
2.50:1.00

	
November 10, 2013

	
2.20:1.00

	
March 2, 2014

	
2.20:1.00

	
May 25, 2014

	
2.20:1.00

	
August 17, 2014

	
2.20:1.00

	
November 9, 2014

	
1.65:1.00

	
March 1, 2015

	
1.65:1.00

	
May 24, 2015

	
1.65:1.00

	
August 16, 2015

	
1.65:1.00

	
November 8, 2015

	
1.40:1.00

	
February 28, 2016

	
1.40:1.00

	
May 22, 2016

	
1.40:1.00

	
August 14, 2016

	
1.40:1.00

	
November 6, 2016"

 

Amendment to Loan Documents - Morgan's

  

  

d. Fixed Charge Coverage Ratio. Section 5.02(g)(iii) of the Original Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

"(iii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a Fiscal Quarter-end basis, of at least the required applicable ratio set forth in the following table for the period of twelve (12) consecutive months ending on the date of such Fiscal Quarter end set forth opposite thereto:

 

	
Applicable Ratio

	
Applicable Fiscal Quarter End

	
1.15:1.00

	
February 26, 2012

	
1.35:1.00

	
May 20, 2012

	
1.60:1.00

	
August 12, 2012

	
1.60:1.00

	
November 4, 2012

	
1.80:1.00

	
March 3, 2013

	
1.80:1.00

	
May 26, 2013

	
1.80:1.00

	
August 18, 2013

	
1.80:1.00

	
November 10, 2013

	
2.25:1.00

	
March 2, 2014

	
2.25:1.00

	
May 25, 2014

	
2.25:1.00

	
August 17, 2014

	
2.25:1.00

	
November 9, 2014

	
2.75:1.00

	
March 1, 2015

	
2.75:1.00

	
May 24, 2015

	
2.75:1.00

	
August 16, 2015

	
2.75:1.00

	
November 8, 2015

	
3.20:1.00

	
February 28, 2016

	
3.20:1.00

	
May 22, 2016

	
3.20:1.00

	
August 14, 2016

	
3.20:1.00

	
November 6, 2016"

 

e. Minimum Liquidity. Section 5.02(g)(iv) of the Original Credit Agreement is hereby amended and restated to read in its entirety as follows:

 

"(iv) Minimum Liquidity. From and after sixty (60) days after the date hereof, unrestricted cash as of the end of any accounting period of at least $1,500,000."

 

f. General Provisions.

 

i. All references to the "Lender" in the Loan Documents shall mean the Lender as defined in this Amendment.

 

ii. All references to the "Loan" in the Loan Documents shall mean the Original Loan as modified by this Amendment.

 

Amendment to Loan Documents - Morgan's

  

  

iii. All references to the "Credit Agreement" in the Loan Documents shall mean the Original Credit Agreement as modified by this Amendment.

 

iv. All references to the "Loan Documents" in the Loan Documents shall mean the Loan Documents as modified by this Amendment.

 

2. Representation and Warranties. Borrower Parties hereby represent and warrant to Lenders that, as of the date hereof:

 

a. All of the representations and warranties of Borrower Parties contained in this Amendment, the Original Credit Agreement, as modified by this Amendment, and the other Loan Documents are true and correct in all material respects on and as of the date hereof, as though made on and as of such date, unless and to the extent such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date.

 

b. Each Borrower Party has the requisite corporate power and authority to execute, deliver and perform this Amendment and to perform their obligations under the Loan Documents. The execution and delivery of this Amendment by Borrower parties, the performance by Borrowers Parties of their obligations hereunder, and the consummation of the transactions contemplated hereby, have been duly approved by all necessary corporate action. This Amendment has been duly executed and delivered by Borrower Parties. This Amendment constitutes the legal, valid and binding obligation of Borrower Parties, enforceable against Borrower Parties in accordance with its terms.

 

c. All of Borrower Parties' representations and warranties contained in this Amendment shall survive the execution, delivery and acceptance of this Amendment by the parties hereto.

 

d. The Loan Documents are all in full force and effect and there are no claims, counterclaims, offsets, defenses, Events of Default, or events which, with the passage of time or the delivery of notice or both, would constitute an Event of Default, with respect to the Loan Documents.

 

3.Supremacy of this Amendment; Status of Credit Agreement, and Other Loan Documents, Mutual Acknowledgements.

 

a. Each reference in the Original Credit Agreement to "this Agreement", "hereunder", "hereof' or words of like import, shall mean and be a reference to the Original Credit Agreement as amended and supplemented by this Amendment.

 

b. Except to the extent specifically provided herein, the respective provisions of the Credit Agreement and the other Loan Documents shall not be amended, modified, waived, impaired or otherwise affected hereby, and such documents and the obligations under each of them are hereby ratified and confirmed as being in full force and effect. In the event of any inconsistency between the provisions of the Original Credit Agreement, this Amendment, and the other Loan Documents, the terms of this Amendment shall control.

 

Amendment to Loan Documents - Morgan's

  

 

4. Conditions Precedent to Effectiveness. This Amendment shall be effective as of the Effective Date on the date when the following conditions precedent have been satisfied:

 

a. This Amendment shall have been executed and delivered by Borrower Parties and Lender.

 

b. Borrower shall have delivered to Lender the amounts due to Lender pursuant to Section 5 below.

 

c. Borrower Parties shall deliver to Lender copies of all resolutions or written consents necessary to authorize and direct Borrowers' execution and delivery of this Amendment.

 

d. Lender acknowledges and agrees that all of the conditions described in the foregoing provisions of this Section 4 are deemed satisfied upon Lender's delivery to Borrower of an original or a copy of this Amendment executed by Lender.

 

5. Expenses. All costs, fees and expenses relating to or in connection with this Amendment (including, without limitation, all reasonable attorneys' fees and costs) shall be paid solely by Borrower.

 

6. Miscellaneous. This Amendment shall constitute a "Loan Document" within the meaning ascribed to such term in the Original Credit Agreement, and a default hereunder, to the extent such default remains uncured after the expiration of the longest applicable grace, notice or cure period, shall constitute an Event of Default under the Original Credit Agreement. The section and subsection titles contained in this Amendment are included for the sake of convenience only, and shall not affect the meaning or interpretation of this Amendment, the Original Credit Agreement, any other Loan Documents, or any provisions hereof or thereof.

 

7. Governing Law. This Amendment shall be interpreted and enforced according to the laws of the State of New York.

 

8. Entire Agreement. This Amendment and the other Loan Documents shall be the whole and only agreement between the parties hereto with regard to the matters set forth herein and therein.

 

9. Full Force and Effect. As amended hereby, the Loan Documents shall continue in full force and effect.

 

10. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

11.Binding on Successors. The Amendment inures to the benefit of and is binding on the parties hereto and their respective successors and assigns in accordance with the Credit Agreement.

 

[NO FURTHER TEXT ON THIS PAGE]

 

Amendment to Loan Documents - Morgan's

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