-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S1rBvwKwb4u/E45MYJ62pPrxqEhbuOMrhOxocs0N2klm89bxcehFTwFJY2ZeX5h3 15aV+Fx2qBWXnZOF8j+QZw== 0000912057-01-517841.txt : 20010530 0000912057-01-517841.hdr.sgml : 20010530 ACCESSION NUMBER: 0000912057-01-517841 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010511 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010529 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNO RESTAURANT CORP CENTRAL INDEX KEY: 0000812075 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 042953702 STATE OF INCORPORATION: DE FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09573 FILM NUMBER: 1649751 BUSINESS ADDRESS: STREET 1: 100 CHARLES PARK RD CITY: WEST ROXBURY STATE: MA ZIP: 02132 BUSINESS PHONE: 6173239200 MAIL ADDRESS: STREET 1: 100 CHARLES PARK ROAD CITY: WEST ROXBURY STATE: MA ZIP: 02132 8-K 1 a2050677z8-k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) May 11, 2001 UNO RESTAURANT CORPORATION - ------------------------------------------------------------------------------- (Exact Name Of Registrant As Specified In Its Charter) DELAWARE - ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 001-09573 04-2953702 - ----------------------------- ----------------------------------------- (Commission File Number) (I.R.S. Employer Identification No.) 100 CHARLES PARK ROAD, WEST ROXBURY, MA 02132 - ----------------------------------------------- -------------------------- (Address of Principal Executive Offices) (Zip Code) (617) 323-9200 - ------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) N/A - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On May 11, 2001 Uno Restaurant Corporation (the "Company"), closed a sale-leaseback transaction with U.S. Realty Advisors, LLC. Under a Sale-Leaseback Agreement dated as of May 11, 2001, three indirect, wholly owned subsidiaries of the Company sold to, and an indirect, wholly-owned subsidiary of the Company will leaseback from, Zuno Property LLC, an affiliate of U.S. Realty Advisors, a portfolio of 12 Pizzeria Uno Chicago Bar & Grill restaurants located in 10 states for approximately $25.1 million of gross proceeds. U.S. Realty Advisors received mortgage financing from FFCA Funding Corporation, which has been granted a first mortgage on the properties. The proceeds have been used to reduce outstanding institutional indebtedness. The leaseback of the portfolio of restaurants from U.S. Realty Advisors is pursuant to a long-term master lease. The master lease is an unconditional, bond-type, triple net lease with a term of 20 years and four five-year renewal terms at the Company's option. The Company has guaranteed all rental payments under the master lease. The financial statement effect of this transaction on a pro forma basis, had it occurred as of October 1, 2000, would be to decrease total assets by approximately $25.1 million, reduce indebtedness by approximately $24.1 million (net of legal fees and other fees and expenses related to the transaction and transfer taxes), and decrease retained earnings by approximately $1.0 million. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) PRO FORMA CONDENSED FINANCIAL STATEMENTS. See narrative description in Item 2 above. (b) EXHIBITS. 2.1 Sale-Leaseback Agreement, dated as of May 11, 2001. 2.2 Master Lease, dated as of May 11, 2001. 2.3 Unconditional Guaranty of Payment and Performance, dated as of May 11, 2001. (Annexes, Exhibits and Schedules are omitted pursuant to Item 601(b)(2) of Regulation S-K. Uno Restaurant Corporation agrees, however, to furnish supplementary a copy of such omitted items to the Commission upon request) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: May 29, 2001 UNO RESTAURANT CORPORATION By: /s/ Robert M. Vincent -------------------------------------- Robert M. Vincent, Chief Financial Officer, Executive Vice President, Treasurer and Assistant Secretary EX-2.1 2 a2050677zex-2_1.txt EXHIBIT 2.1 EXHIBIT 2.1 SALE-LEASEBACK AGREEMENT THIS SALE-LEASEBACK AGREEMENT (this "Agreement") is made as of May 11, 2001, by and between ZUNO PROPERTY LLC, a Delaware limited liability company ("Buyer"), whose address is c/o U.S. Realty Advisors, LLC, 1370 Avenue of the Americas, New York, New York 10019, and FRANKLIN MILLS PIZZERIA, INC., a Pennsylvania corporation, UNO RESTAURANTS, INC., a Massachusetts corporation, and SAXET CORPORATION, a Delaware corporation (individually, a "Seller" and collectively, the "Sellers"), whose address is 100 Charles Park Road, West Roxbury, Massachusetts 02132. PRELIMINARY STATEMENT: Unless otherwise expressly provided herein, all defined terms used in this Agreement shall have the meanings set forth in Section 1. Sellers own or have an option or right to purchase the Properties. Buyer desires to purchase the Properties pursuant to this Agreement and lease the Properties to SL Properties, Inc., a Massachusetts corporation ("SL Properties") pursuant to the Lease. AGREEMENT: In consideration of the mutual covenants and provisions of this Agreement, the parties agree as follows: 1. DEFINITIONS. The following terms shall have the following meanings for all purposes of this Agreement: "ACKNOWLEDGEMENT" means the Acknowledgement of Master Lease Assignment and Subordination, Nondisturbance and Attornment Agreement dated as of the date of this Agreement among Buyer, SL Properties, Lender and Remainderman. A duplicate original Acknowledgement will be executed and recorded in the applicable real property records for each Property. Each Acknowledgement will contain exhibits with the addresses and store identification numbers for all of the Properties and the legal description for the applicable Property. "AFFILIATE" means any person or entity which directly or indirectly controls, is under common control with, or is controlled by any other person or entity. For purposes of this definition, "controls", "under common control with" and "controlled by" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through ownership of voting securities or otherwise. "CLOSING" shall have the meaning set forth in Section 5. "CLOSING DATE" shall have the meaning set forth in Section 5. "CODE" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 ET SEQ., as amended. "COMMITMENT" means that certain commitment letter dated February 21, 2001, among U.S. Realty Advisors, LLC and Guarantor, and any amendments or supplements thereto. "COUNSEL" means one or more legal counsel to Sellers and Guarantor licensed in the states in which (i) the Properties are located, (ii) Sellers and Guarantor are incorporated or formed and (iii) Sellers and Guarantor maintain their chief executive offices, as selected by Sellers and Guarantor and approved by Buyer. "DE MINIMIS AMOUNTS" shall mean, 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 or remediation 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 Properties are located. "ENVIRONMENTAL CONDITION" means any condition with respect to soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air and any environmental medium comprising or surrounding any of the Properties, whether or not yet discovered, which could or does result in any damage, loss, cost, expense, claim, demand, order or liability to or against Sellers, Buyer or Lender by any third party (including, without limitation, any Governmental Authority), including, without limitation, any condition resulting from the operation of Seller's business and/or the operation of the business of any other property owner or operator in the vicinity of any of the Properties and/or any activity or operation formerly conducted by any person or entity on or off any of the Properties. "ENVIRONMENTAL INSURER" means American International Specialty Lines Insurance Company or such other insurer providing Environmental Policies reasonably acceptable to Buyer. "ENVIRONMENTAL LAWS" means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to Hazardous Materials and/or the protection of human health or the environment, by reason of a Release or a Threatened Release of Hazardous Materials or relating to liability for or costs of Remediation or prevention of Releases. "Environmental Laws" includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations, rulings, orders or decrees promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. "Environmental Laws" also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the property; requiring notification or disclosure of Releases or other environmental condition of any of the Properties to any 2 Governmental Authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements relating to Hazardous Materials in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to Hazardous Materials; and relating to wrongful death, personal injury, or property or other damage in connection with the physical condition or use of any of the Properties by reason of the presence of Hazardous Materials in, on, under or above any of the Properties. "ENVIRONMENTAL POLICIES" means the environmental insurance policy or policies, as applicable, issued by Environmental Insurer to Buyer with respect to the Properties, which Environmental Policies shall be in form and substance satisfactory to Buyer in its sole discretion. "EVENT OF DEFAULT" has the meaning set forth in Section 12. "FEE" means an expense deposit made by Guarantor to cover certain costs and expenses associated with the transactions contemplated hereby equal to $251,140.00, which amount has been paid prior to the execution of this Agreement. "FRANCHISE FINANCE" means Franchise Finance Corporation of America, a Maryland corporation, and its successors. "GUARANTOR" means Uno Restaurant Corporation, a Delaware corporation. "GUARANTY" means that certain Unconditional Guaranty of Payment and Performance dated as of the Closing Date to be executed by Guarantor for the benefit of Buyer with respect to the Lease, as the same may be amended from time to time. "GOVERNMENTAL AUTHORITY" means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi-governmental authority of the United States, the states in which the Properties are located or any political subdivision thereof. "HAZARDOUS MATERIALS" means (i) any toxic substance or hazardous waste, substance, solid waste or related material, or any pollutant or contaminant; (ii) radon gas, asbestos in any form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contains dielectric fluid containing levels of polychlorinated biphenyls in excess of federal, state or local safety guidelines, whichever are more stringent, or any petroleum product; (iii) any substance, gas, material or chemical which is or may be defined as or included in the definition of "hazardous substances," "toxic substances," "hazardous materials," "hazardous wastes," "regulated substances" or words of similar import under any Environmental Laws; and (iv) any other chemical, material, gas or substance the exposure to or release of which is or may be prohibited, limited or regulated by any Governmental Authority that asserts or may assert jurisdiction over any of the Properties or the operations or activity at any of the Properties, or any chemical, material, gas or substance that does or may pose a hazard to the health and/or safety of the occupants of any of the Properties or the owners and/or occupants of property adjacent to or surrounding any of the Properties. "INDEMNIFIED PARTIES" has the meaning set forth in Section 14. 3 "LEASE" means the master lease agreement dated as of the date of this Agreement to be executed by Buyer, as lessor, and SL Properties, as lessee, with respect to the Properties, as the same may be amended from time to time. "LENDER" means FFCA Funding Corporation, a Delaware corporation. "LOAN AGREEMENT" means the Loan Agreement dated as of the date of this Agreement in effect between Buyer and Lender, as such agreement may be amended from time to time and any and all replacements or substitutions thereof. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the net worth or operation of Sellers, Guarantor or any of the Properties, including, without limitation, the operation of any of the Properties as a Permitted Facility and/or the value of any of the Properties, or (ii) Sellers' or Guarantor's ability to perform their obligations under the Sale-Leaseback Documents. "MEMORANDUM" means the memorandum of master lease dated as of the date of this Agreement to be executed by Buyer, as lessor, and SL Properties, as lessee, with respect to the Properties. A duplicate original Memorandum will be executed and recorded in the applicable real property records for each Property. Each Memorandum will contain exhibits with the addresses and store identification numbers for all of the Properties and the legal description for the applicable Property. "NON-FOREIGN SELLER CERTIFICATE" means the non-foreign seller certificate to be executed and delivered by Sellers to Buyer prior to or on the Closing Date. "OTHER AGREEMENTS" means, collectively, all agreements and instruments now or hereafter entered into between, among or by (1) any of the Seller Entities, and, or for the benefit of (as intended beneficiary or third party beneficiary), (2) Buyer; provided, however, the term Other Agreements shall not include this Agreement, the other Sale-Leaseback Documents, agreements between and among institutional lenders and one or more of the Seller Entities, and the Security Deposit Letter of Credit and the FCCR Letter of Credit (both as defined in the Lease). "PERMITTED EXCEPTIONS" means those recorded easements, restrictions, liens and encumbrances set forth as exceptions in the title insurance policies issued by Title Company to Buyer and approved by Buyer in connection with this Agreement. "PERMITTED FACILITY" means a Pizzeria Uno Chicago Bar & Grill restaurant, other nationally or regionally recognized concepts owned by Guarantor or an Affiliate of Guarantor or other restaurant concept of a nationally or regionally recognized owner/operator; provided, however, that at least nine (9) of the Properties shall be operated as Pizzeria Uno Chicago Bar & Grill restaurants or another nationally or regionally recognized restaurant concept operated by Guarantor and approved by Buyer and Lender. "PERMITTED SUBLEASES" means, collectively, the Master Subleases dated as of the date of this Agreement to be executed by SL Properties, as lessor and the Permitted Sublessees, as lessees, with respect to the Properties. 4 "PERMITTED SUBLESSEES" means Franklin Mills Pizzeria, Inc., a Pennsylvania corporation, Uno Restaurants, Inc., a Massachusetts corporation, Uno of Smithtown, Inc., a New York corporation, Uno of Smoketown, Inc., a Virginia corporation, Uno of Gurnee Mills, Inc., an Illinois corporation, Plizzettas of Burlington, Inc., a Vermont corporation, and Uno of Tennessee, Inc., a Tennessee corporation, or their successors or assigns. "PERSONALTY" means all machinery, appliances, furniture, equipment, trade fixtures and other personal property of Sellers (excluding inventory) from time to time situated on or used in connection with the Properties; provided, however, the term "Personalty" shall not include the HVAC, walk-in coolers, walk-in freezers, supply fans, exhaust fans, air ducts, hoods, vents, built-in sinks, built-in countertops, plumbing and electrical fixtures, merchandise shelving, sign poles and lighting poles, all of which items are intended to be fixtures as such term is used within the definition of "Properties". "PROPERTIES" means, collectively, the parcels of real estate described by address, Buyer Number and Unit Number in EXHIBIT A attached hereto and legally described in EXHIBIT A-1 attached hereto, all rights, privileges and appurtenances associated therewith, and all buildings, structures, fixtures and other improvements now or hereafter located on such real estate (excluding Personalty and inventory). "PURCHASE PRICE" means the amount specified in Section 3. "QUESTIONNAIRES" means the environmental questionnaires completed by Sellers with respect to each of the Properties and submitted to Environmental Insurer in connection with the issuance of the Environmental Policies. "RELEASE" means any presence, release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials, except for De Minimis Amounts. "REMAINDERMAN" shall have the meaning set forth in Section 15. "REMEDIATION" means any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Materials, any actions to prevent, cure or mitigate any Release, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or any evaluation relating to any Hazardous Materials. "SALE-LEASEBACK DOCUMENTS" means this Agreement, the Lease, the Permitted Subleases, the Guaranty, the Memorandum, the Acknowledgement and all other documents executed in connection therewith or contemplated thereby. "SELLER ENTITIES" means, collectively, Sellers and Guarantor and all Affiliates of Sellers and Guarantor. "SL PROPERTIES" shall have the meaning set forth in the Preliminary Statement. 5 "THREATENED RELEASE" means a substantial likelihood of a Release which requires action pursuant to Environmental Law to prevent or mitigate damage to the soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air or any other environmental medium comprising or surrounding any of the Properties which may result from such Release. "TITLE COMPANY" means the title insurance company described in Section 6. "UCC-1 FINANCING STATEMENTS" means such UCC-1 Financing Statements as Buyer shall require to be executed and delivered by Sellers with respect to the transactions contemplated by this Agreement. 2. TRANSACTION. On the terms and subject to the conditions set forth herein: (i) Sellers shall sell, or cause to be conveyed, and Buyer shall purchase all of the Properties; (ii) Buyer shall lease all of the Properties to SL Properties pursuant to the Lease; and (iii) SL Properties shall sublease certain of the Properties to the Permitted Sublessees pursuant to the Permitted Subleases. The sale and purchase of all of the Properties pursuant to this Agreement and the lease of all of the Properties to SL Properties pursuant to the Lease and the sublease of certain of the Properties to the Sellers are not severable and shall be considered a single integrated transaction. 3. PURCHASE PRICE. The aggregate purchase price for all of the Properties shall be $25,140,000.00 (the "Purchase Price"). The Purchase Price has been allocated among the Properties as set forth on EXHIBIT A attached hereto. The Purchase Price shall be paid at the Closing in cash or its equivalent subject to any prorations and adjustments required by this Agreement. The Purchase Price shall be remitted at Closing to Sellers or at Sellers' direction. In addition to payment of the Purchase Price, Buyer shall be responsible to pay at Closing the following fees and costs: (i) any underwriting, site assessment, valuation, processing and commitment fee payable to Lender, (ii) any costs related to the procurement of residual value insurance policies by Buyer, (iii) attorneys' fees of Lewis and Roca LLP, counsel to Lender, (iv) attorneys' fees of Proskauer Rose LLP, counsel to Buyer, and (v) Buyer's reasonable out-of-pocket costs. 4. EXPENSE DEPOSIT. At Closing, the Fee shall be applied to the costs to be paid by Sellers as contemplated by Section 6 and the balance, if any, shall be refunded to Sellers. In the event the transaction set forth in this Agreement fails to close, the Fee shall be applied as contemplated by the Commitment. 5. CLOSING DATE. The purchase and sale of the Properties shall be closed (the "Closing") within 30 days following the satisfaction of all of the terms and conditions contained herein, but in no event shall the date of the Closing be extended beyond May 9, 2001, unless 6 such extension shall be approved by Buyer in its sole discretion (the date on which the Closing shall occur is referred to herein as the "Closing Date"). 6. CLOSING. Buyer has ordered a title insurance commitment for each of the Properties from LandAmerica Financial Group ("Title Company"). Prior to the Closing Date, the parties hereto shall deposit with Title Company all documents and moneys necessary to comply with their obligations under this Agreement. Title Company shall not cause the transaction to close unless and until it has received written instructions from Buyer to do so. Except for the fees and costs to be paid by Buyer pursuant to Section 3, all costs of such transaction shall be borne by Sellers, including, without limitation, the cost of title insurance and endorsements, the attorneys' fees of Sellers, local counsel attorneys' fees of Buyer and Lender, the cost of the Environmental Policies to be delivered pursuant to Section 11.E, the cost of the surveys, stamp taxes, transfer fees and escrow and recording fees. All real and personal property and other applicable taxes and assessments and other charges relating to any of the Properties which are due and payable on or prior to the Closing Date, as well as such taxes and assessments due and payable subsequent to the Closing Date but which Title Company requires to be paid at Closing as a condition to the issuance of the title insurance policies described in Section 11.C, shall be paid by Sellers at or prior to the Closing, and all other taxes and assessments shall be paid by SL Properties in its capacity as lessee under the Lease in accordance with the terms of the Lease. The Closing documents shall be dated as of the Closing Date. Sellers and Buyer hereby employ Title Company to act as escrow agent in connection with this transaction. Sellers and Buyer will deliver to Title Company all documents, pay to Title Company all sums and do or cause to be done all other things necessary or required by this Agreement, in the reasonable judgment of Title Company, to enable Title Company to comply herewith and to enable any title insurance policy provided for herein to be issued. Title Company is authorized to pay, from any funds held by it for Buyer's or Seller's respective credit all amounts necessary to procure the delivery of such documents and to pay, on behalf of Buyer and Sellers, all charges and obligations payable by them, respectively. Sellers will pay all charges payable by it to Title Company. Title Company is authorized, in the event any conflicting demand is made upon it concerning these instructions or the escrow, at its election, to hold any documents and/or funds deposited hereunder until an action shall be brought in a court of competent jurisdiction to determine the rights of Sellers and Buyer or to interplead such documents and/or funds in an action brought in any such court. Deposit by Title Company of such documents and funds, after deducting therefrom its charges and its expenses and attorneys' fees incurred in connection with any such court action, shall relieve Title Company of all further liability and responsibility for such documents and funds. Title Company's receipt of this Agreement and opening of an escrow pursuant to this Agreement shall be deemed to constitute conclusive evidence of Title Company's agreement to be bound by the terms and conditions of this Agreement pertaining to Title Company. Disbursement of any funds shall be made by check, certified check or wire transfer, as directed by Buyer. Title Company shall be under no obligation to disburse any funds represented by check or draft, and no check or draft shall be payment to Title Company in compliance with any of the requirements hereof, until it is advised by the bank in which such check or draft is deposited that such check or draft has been honored. Title Company is authorized to act upon any statement furnished by the holder or payee, or a collection agent for the holder or payee, of any lien on or charge or assessment in connection with any of the Properties, concerning the amount of such charge or assessment or the amount 7 secured by such lien without liability or responsibility for the accuracy of such statement. The employment of Title Company as escrow agent shall not affect any rights of subrogation under the terms of any title insurance policy issued pursuant to the provisions thereof. 7. REPRESENTATIONS AND WARRANTIES OF BUYER. The representations and warranties of Buyer contained in this Section are being made by Buyer as of the date of this Agreement and the Closing Date to induce Sellers to enter into this Agreement and consummate the transactions contemplated herein, and Sellers have relied, and will continue to rely, upon such representations and warranties from and after the execution of this Agreement and the Closing. Buyer represents and warrants to Sellers as follows: A. ORGANIZATION OF BUYER. Buyer has been duly formed, is validly existing and has taken all necessary action to authorize the execution, delivery and performance by Buyer of this Agreement. B. AUTHORITY OF BUYER. The person who has executed this Agreement on behalf of Buyer is duly authorized so to do. C. ENFORCEABILITY. Upon execution by Buyer, this Agreement shall constitute the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms. All representations and warranties of Buyer made in this Agreement shall survive the Closing. 8. REPRESENTATIONS AND WARRANTIES OF SELLERS. The representations and warranties of Sellers contained in this Section are being made as of the date of this Agreement and the Closing Date to induce Buyer to enter into this Agreement and consummate the transactions contemplated herein, and Buyer has relied, and will continue to rely, upon such representations and warranties from and after the execution of this Agreement and the Closing. Sellers represent and warrant to Buyer as follows: A. INFORMATION AND FINANCIAL STATEMENTS. Sellers have delivered to Buyer financial statements (either audited financial statements or, if Sellers do not have audited financial statements, certified financial statements) and certain other information concerning themselves and Guarantor, which financial statements and other information are true, correct and complete in all material respects; and no material adverse change has occurred with respect to any such financial statements and other information provided to Buyer since the date such financial statements and other information were prepared or delivered to Buyer. Sellers understand that Buyer is relying upon such financial statements and information and Sellers represent that such reliance is reasonable. All such financial statements were prepared in accordance with generally accepted accounting principles consistently applied and accurately reflect, as of the date of this Agreement and the Closing Date, the financial condition of each individual or entity to which they pertain. B. ORGANIZATION AND AUTHORITY. (i) Sellers and Guarantor are duly organized or formed corporations, validly existing and in good standing under the laws of their state of incorporation, and qualified to do business in any jurisdiction where such qualification 8 is required. All necessary corporate action has been taken to authorize the execution, delivery and performance of this Agreement and of the other documents, instruments and agreements provided for herein. (ii) The person who has executed this Agreement on behalf of Sellers is duly authorized so to do. C. ENFORCEABILITY OF DOCUMENTS. Upon execution by Sellers and Guarantor, this Agreement and the other documents, instruments and agreements to be executed in connection with this Agreement, shall constitute the legal, valid and binding obligations of Sellers and Guarantor, enforceable against Sellers and Guarantor in accordance with their respective terms. D. LITIGATION. There are no suits, actions, proceedings or investigations pending or, to the best of its knowledge, threatened against or involving Sellers or Guarantor or any of the Properties before any Governmental Authority which might reasonably result in any material adverse change in the contemplated business, condition, worth or operations of Sellers, Guarantor or any of the Properties. E. ABSENCE OF BREACHES OR DEFAULTS. Neither Sellers nor Guarantor are in default under any other document, instrument or agreement to which Sellers or Guarantor are a party or by which Sellers, Guarantor, any of the Properties or any of Sellers' or Guarantor's property is subject or bound, except where such default would not have a Material Adverse Effect. The authorization, execution, delivery and performance of this Agreement and the documents, instruments and agreements provided for herein will not result in any breach or default under any other document, instrument or agreement to which Sellers or Guarantor are a party or by which Sellers, Guarantor, any of the Properties or any of Sellers' or Guarantor's property is subject or bound, except where such breach or default would not have a Material Adverse Effect. The authorization, execution, delivery and performance of this Agreement and the documents, instruments and agreements provided for herein will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order, except where such violation would not have a Material Adverse Effect. F. UTILITIES. At the Closing Date, each of the Properties will be served by ample public utilities to permit full utilization of each of the Properties for their intended purposes and all utility connection fees and use charges will have been paid in full. G. INTENDED USE AND ZONING; COMPLIANCE WITH LAWS. Sellers intend to use each of the Properties solely for the operation of a Permitted Facility in accordance with the standards of operations then in effect on a system-wide basis, and related ingress, egress and parking, and for no other purposes. Each of the Properties is in compliance with all applicable zoning requirements and the use of each of the Properties as a Permitted Facility does not constitute an unlawful nonconforming use under applicable zoning requirements. Each of the Properties complies in all material respects with all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders and approvals of any governmental agencies, departments, commissions, bureaus, boards or 9 instrumentalities of the United States, the states in which the Properties are located and all political subdivisions thereof, including, without limitation, all health, building, fire, safety and other codes, ordinances and requirements, all applicable standards of the National Board of Fire Underwriters and all policies or rules of common law, in each case, as amended, and any judicial or administrative interpretation thereof, including any judicial order, consent, decree or judgment applicable to Sellers. H. AREA DEVELOPMENT; WETLANDS. No condemnation or eminent domain proceedings affecting any of the Properties have been commenced or, to the best of Sellers' knowledge, are contemplated. To the best of Sellers' knowledge, the area where any of the Properties is located has not been declared blighted by any Governmental Authority. Each of the Properties is not designated by any Governmental Authority as wetlands. I. LICENSES AND PERMITS; ACCESS. Prior to the Closing Date, Sellers shall have all required licenses and permits, both governmental and private, to use and operate each of the Properties in the intended manner. There are adequate rights of access to public roads and ways available to each of the Properties to permit full utilization of each of the Properties for its intended purpose and all such public roads and ways have been completed and dedicated to public use. J. CONDITION OF PROPERTIES. As of the Closing Date, each of the Properties will be of good workmanship and materials, fully equipped and operational, in good condition and repair, free from structural defects, clean, orderly and sanitary, safe, well lit, landscaped, decorated, attractive and well maintained. K. ENVIRONMENTAL. Sellers are fully familiar with the present use of each of the Properties, and, after due inquiry, Sellers have become generally familiar with the prior uses of each of the Properties. Except as set forth in the Questionnaires, to the best of Sellers' knowledge, no Hazardous Materials have been used, handled, manufactured, generated, produced, stored, treated, processed, transferred or disposed of at or on any of the Properties, except in De Minimis Amounts or in compliance with all applicable Environmental Laws, and no Release or Threatened Release has occurred at or on any of the Properties. To the best of Sellers' knowledge, the activities, operations and business undertaken on, at or about each of the Properties, including, but not limited to, any past or ongoing alterations or improvements at each of the Properties, are and have been at all times, in compliance with all Environmental Laws. To the best of Sellers' knowledge, no further action is required to remedy any Environmental Condition or violation of, or to be in compliance in all material respects with, any Environmental Laws, and no lien has been imposed on any of the Properties by any Governmental Authority in connection with any Environmental Condition, the violation or threatened violation of any Environmental Laws or the presence of any Hazardous Materials on or off any of the Properties. There is no pending or, to the best of Sellers' knowledge, threatened litigation or proceeding before any Governmental Authority in which any person or entity alleges the violation or threatened violation of any Environmental Laws or the presence, Release, 10 Threatened Release or placement on or at any of the Properties of any Hazardous Materials, or of any facts which would give rise to any such action, nor have Sellers (a) received any notice (and Sellers have no actual knowledge) that any Governmental Authority or any employee or agent thereof has determined, threatens to determine or requires an investigation to determine that there has been a violation of any Environmental Laws at, on or in connection with any of the Properties or that there exists a presence, Release, Threatened Release or placement of any Hazardous Materials on or at any of the Properties, or the use, handling, manufacturing, generation, production, storage, treatment, processing, transportation or disposal of any Hazardous Materials at or on any of the Properties; (b) received any notice under the citizen suit provision of any Environmental Law in connection with any of the Properties or any facilities, operations or activities conducted thereon, or any business conducted in connection therewith; or (c) received any request for inspection, request for information, notice, demand, administrative inquiry or any formal or informal complaint or claim with respect to or in connection with the violation or threatened violation of any Environmental Laws or existence of Hazardous Materials relating to any of the Properties or any facilities, operations or activities conducted thereon or any business conducted in connection therewith. The information and disclosures in the Questionnaires are, to the best of Sellers' knowledge, true, correct and complete in all material respects, Buyer and Environmental Insurer may rely on such information and disclosures, and the person or persons executing the Questionnaires were duly authorized to do so. L. TITLE TO PROPERTIES. Title to each of the Properties is vested in Sellers. Upon Closing, title to each of the Properties shall be vested in Buyer and Remainderman, free and clear of all liens, encumbrances, charges and security interests of any nature whatsoever, except the Permitted Exceptions. M. NO OTHER AGREEMENTS AND OPTIONS. Neither Sellers nor Guarantor nor, to the best of Sellers' knowledge, any of the Properties is subject to any commitment, obligation, or agreement, including, without limitation, any right of first refusal, option to purchase or lease granted to a third party, which could or would prevent Sellers from completing or impair Sellers' ability to complete the sale of any of the Properties under this Agreement or which would bind Buyer subsequent to consummation of the transaction contemplated by this Agreement. N. NO MECHANICS' LIENS. There are no outstanding accounts payable, mechanics' liens, or rights to claim a mechanics' lien in favor of any materialman, laborer, or any other person or entity in connection with labor or materials furnished to or performed on any portion of any of the Properties that will not have been fully paid for on or before the Closing Date; no work has been performed or is in progress nor have materials been supplied to any of the Properties or agreements entered into for work to be performed or materials to be supplied to any of the Properties prior to the date hereof, which will not have been fully paid for on or before the Closing Date or which might provide the basis for the filing of such liens against any of the Properties or any portion thereof; Sellers shall be responsible for any and all claims for mechanics' liens and 11 accounts payable that have arisen or may subsequently arise due to agreements entered into for and/or any work performed on, or materials supplied to any of the Properties prior to the Closing Date; Sellers have made no contract or arrangement of any kind the performance of which by the other party thereto would give rise to a lien on any of the Properties; and Sellers shall and does hereby agree to defend, indemnify and forever hold Buyer and Buyer's designees harmless for, from and against any and all such mechanics' lien claims, accounts payable or other commitments relating to any of the Properties. O. NO RELIANCE. Sellers acknowledge that Buyer did not prepare or assist in the preparation of any of the projected financial information used by Sellers in analyzing the economic viability and feasibility of the transaction contemplated by this Agreement, and that Sellers have not relied on any report or statement by Buyer in entering into this Agreement. Furthermore, Sellers acknowledge that they have not relied upon, nor may they hereafter rely upon, the analysis undertaken by Buyer in determining the Purchase Price, and such analysis will not be made available to Sellers. P. PURCHASE PRICE. The Purchase Price is the fair market value of the Properties and was agreed to by Sellers and Buyer solely on that basis. All representations and warranties of Sellers made in this Section 8 shall survive the Closing. Sellers acknowledge and agree that Environmental Insurer may rely on the environmental representations and warranties set forth in the preceding subsection K, that Environmental Insurer is an intended third-party beneficiary of such representations and warranties and that Environmental Insurer shall have all rights and remedies available at law or in equity as a result of a breach of such representations and warranties, including, to the extent applicable, the right of subrogation. 9. COVENANT AND AGREEMENTS OF SELLERS. Prior to the Closing Date, Sellers shall, at all reasonable times, upon reasonable advance notice from Buyer (i) provide Buyer and Buyer's officers, employees, agents, advisors, attorneys, accountants, architects, and engineers with access to each of the Properties, all drawings, plans, and specifications for each of the Properties in possession of Sellers, all engineering reports relating to each of the Properties in the possession of Sellers, the files and correspondence relating to each of the Properties, and the financial books and records, including lists of delinquencies, relating to the ownership, operation, and maintenance of each of the Properties, and (ii) allow such persons to make such inspections, tests, copies, and verifications as Buyer considers necessary. All such persons shall use reasonable efforts not to unduly interfere with the conduct of Sellers' business. 10. TRANSACTION CHARACTERIZATION. A. It is the intent of the parties that the conveyance of each of the Properties to Buyer be an absolute conveyance in effect as well as form, and the instruments of conveyance to be delivered at Closing are not intended to serve or operate as a mortgage, equitable mortgage, deed of trust, security agreement, trust conveyance or financing or trust arrangement of any kind, nor as a preference or fraudulent conveyance against any creditors of Sellers. After the execution and delivery of the deeds described in Section 11.A, Sellers will have no legal or equitable interest or any other claim or interest in any of the Properties other than as set forth in the Lease and Permitted Subleases. Furthermore, the parties intend: 12 (i) for the Lease to be a true lease and not a transaction creating a financing lease, capital lease, equitable mortgage, mortgage, deed of trust, security interest or other financing arrangement, and the economic realities of the Lease are those of a true lease; and (ii) for the Lease to constitute a single master lease of all, but not less than all, of the Properties, and to be a unitary, unseverable instrument pertaining to all, but not less than all, of the Properties and that neither the Lease nor the duties, obligations or rights of SL Properties may be allocated or otherwise divided by SL Properties among the Properties. Notwithstanding the existence of the Lease, none of the parties shall contest the validity, enforceability or characterization of the sale and purchase of any of the Properties by Buyer pursuant to this Agreement as an absolute conveyance, and both parties shall support the intent expressed herein that the purchase of all of the Properties by Buyer pursuant to this Agreement provides for an absolute conveyance and does not create a joint venture, partnership, equitable mortgage, trust, financing device or arrangement, security interest or the like, if, and to the extent that, any challenge occurs. B. This Agreement is a contract to extend a financial accommodation (as such term is used in the Code) for the benefit of Sellers and may not be assumed over the objection of Buyer in the event Sellers become a debtor or debtor in possession in any bankruptcy proceeding. The financial accommodation made through this Agreement is Buyer's acquisition of all of the Properties for the purpose of leasing all of the Properties to SL Properties pursuant to a true lease. 11. CONDITIONS OF CLOSING. The obligation of Buyer to consummate the purchase of the Properties pursuant to this Agreement is subject to the fulfillment or waiver of each of the following conditions: A. TITLE. Sellers shall convey each of the Properties to Buyer and Remainderman by deeds containing covenants and warranties as are customary in the applicable jurisdiction (collectively, the "Deeds"), free of all liens, encumbrances, restrictions, encroachments and easements, except the Permitted Exceptions. B. CONDITION OF PROPERTIES. Buyer shall have inspected and approved each of the Properties, and each of the Properties shall be in good condition and repair, of good workmanship and materials, fully equipped and operational, clean, orderly, sanitary, safe, well-lit, landscaped, decorated, attractive and with a suitable layout, physical plant, traffic pattern and location all as determined by Buyer in its sole discretion. C. EVIDENCE OF TITLE. Buyer shall have received a preliminary title report and irrevocable commitment to insure title by means of an ALTA extended coverage owner's policy of title insurance (or its equivalent, in the event such form is not issued in the jurisdiction where any of the Properties is located) issued by Title Company showing good and marketable fee title in Sellers, committing to insure Buyer's fee simple 13 ownership in each of the Properties subject only to Permitted Exceptions and containing such endorsements as Buyer may reasonably require. D. SURVEY; FLOOD HAZARD. Buyer shall have received a current ALTA survey of each of the Properties, the form and substance of which shall be satisfactory to Buyer in its sole discretion. Sellers shall have provided Buyer with evidence satisfactory to Buyer that the location of each of the Properties is not within the 100-year flood plain or identified as a Special Flood Hazard Area by the Federal Emergency Management Agency, or if any of the Properties is in such a Special Flood Hazard Area, Sellers shall provide Buyer with evidence of flood insurance maintained on such Properties in amounts and on terms and conditions satisfactory to Buyer. E. ENVIRONMENTAL. Buyer shall have received the Environmental Policies with respect to the Properties. F. ZONING. If requested by Buyer, Sellers shall have provided Buyer with evidence satisfactory to Buyer to confirm that each of the Properties is properly zoned for its use as a Permitted Facility and that such use constitutes a legal use under applicable zoning requirements. G. UTILITIES. Buyer shall have received evidence satisfactory to Buyer in its sole discretion that all utilities and roads necessary for the operation of each of the Properties as a Permitted Facility are available and that all necessary consents to the use of such utilities and roads have been obtained. H. COMPLIANCE WITH REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) All obligations of Sellers under this Agreement shall have been fully performed and complied with, and no event shall have occurred or condition shall exist which would, upon the Closing Date, or, upon the giving of notice and/or passage of time, constitute a breach or default by Sellers hereunder or under the Lease or any other agreement between or among Buyer or Sellers pertaining to the subject matter hereof, and no event shall have occurred or condition shall exist or information shall have been disclosed by Sellers or discovered by Buyer which has had or would have a material adverse effect on any of the Properties, Sellers or Buyer's willingness to consummate the transaction contemplated by this Agreement, as determined by Buyer in its sole and absolute discretion. (ii) Buyer shall have received such evidence satisfactory to Buyer in its reasonable discretion that the representations and warranties of Sellers under this Agreement are true, correct and complete as of the Closing Date. I. PROOF OF INSURANCE. Sellers shall have delivered to Buyer copies of insurance policies, showing that all insurance required by the Lease and providing coverage and limits satisfactory to Buyer is in full force and effect. J. OPINIONS OF COUNSEL TO SELLERS. Sellers shall have caused Counsel to prepare and deliver opinions in form and substance reasonably satisfactory to Buyer and its counsel. 14 K. CLOSING OF LOAN AGREEMENT. All of the transactions described in the Loan Agreement shall have closed prior to or simultaneously with the Closing of the transaction described in this Agreement. L. GUARANTY. Sellers shall have caused Guarantor to execute and deliver the Guaranty to Buyer. M. PERMITTED SUBLEASES. SL Properties and the Permitted Sublessees shall have executed and delivered the Permitted Subleases to Buyer. N. CLOSING DOCUMENTS. On or prior to the Closing Date, Buyer, Sellers and/or Guarantor, as may be appropriate, shall execute and deliver or cause to be executed and delivered to Title Company or Buyer, as may be appropriate, all documents required to be delivered by this Agreement, and such other documents, payments, instruments and certificates, as Buyer may require in form acceptable to Buyer, including, without limitation, the following: (i) Deeds; (ii) Lease and Permitted Subleases; (iii) Memorandum; (iv) Acknowledgement; (v) Proof of Insurance; (vi) Opinions of Counsel to Sellers and SL Properties; (vii) Non-Foreign Seller Certificate; (viii) UCC-1 Financing Statements; (ix) Closing settlement statement prepared by Title Company; and (x) Guaranty. Upon fulfillment or waiver of all of the above conditions, Buyer shall deposit funds necessary to close this transaction with the Title Company and this transaction shall close in accordance with the terms and conditions of this Agreement. 12. DEFAULT AND REMEDIES. A. Each of the following shall be deemed an event of default by Sellers (each, an "Event of Default"): (i) If any representation or warranty of Sellers set forth in any of the Sale-Leaseback Documents is false in any material respect or if Sellers render any statement or account which is false in any material respect; (ii) If any Seller fails to keep or perform any of the terms or provisions of this Agreement; (iii) If any Seller or Guarantor is or becomes insolvent within the meaning of the Code, files or notifies Buyer that it intends to file a petition under the Code, initiates a proceeding under any similar law or statute relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts (collectively, an "Action"), becomes the subject of either a petition under the Code or an Action which is not dissolved within 90 days after filing, or is not generally paying its debts as the same become due; 15 (iv) If there is an "Event of Default" under the Lease or any Permitted Sublease; or (v) If there is an "Event of Default" or a breach or default, after the passage of all applicable notice and cure or grace periods, under any other Sale-Leaseback Document or any of the Other Agreements. B. In the event of any Event of Default, Buyer shall be entitled to exercise, at its option, concurrently, successively or in any combination, all remedies available under the Lease or at law or in equity, including without limitation any one or more of the following: (i) To terminate this Agreement by giving written notice to Sellers in which case neither party shall have any further obligation or liability, except such liabilities as Sellers may have for such breach or default; (ii) To proceed with the Closing and direct Title Company to apply such portion of the Purchase Price as Buyer may deem reasonably necessary to cure any such breach or default; (iii) To bring an action for damages against Sellers, which, in the event Buyer proceeds to close, may include an amount equal to the difference between the value of the Properties as conveyed to Buyer and the value such Properties would have had if all representations and warranties of Sellers were true and Sellers have complied with all of their obligations; (iv) To bring an action to require Sellers specifically to perform their obligations hereunder; and/or (v) To recover from Sellers all costs and expenses, including reasonable attorneys' fees, paid or incurred by Buyer in connection with the transaction contemplated by this Agreement and all costs and expenses incurred or paid by Buyer as a result of such breach or default. The liabilities, obligations and duties of Sellers under this Agreement are joint and several between and among the Sellers. 13. ASSIGNMENTS. A. Buyer may assign in whole or in part its rights under this Agreement. In the event of any unconditional assignment of Buyer's entire right and interest hereunder and provided Buyer's assignee shall have assumed in writing all of the duties and obligations of Buyer hereunder, Buyer shall automatically be relieved, from and after the date of such assignment, of liability for the performance of any obligation of Buyer contained herein. B. Sellers shall not, without the prior written consent of Buyer, which consent may be withheld in Buyer's sole discretion, sell, assign, transfer, mortgage, convey, encumber or grant any easements or other rights or interests of any kind in any of the Properties, any of Sellers' rights under this Agreement or any interest in Sellers, whether voluntarily, involuntarily or by 16 operation of law or otherwise, including, without limitation, by merger, consolidation, dissolution or otherwise, except, subsequent to the Closing, as expressly permitted by the Lease. C. Notwithstanding anything herein to the contrary, upon any of the Sellers assigning their interests as Sublessee under any Permitted Sublease pursuant to and in accordance with Section 12 of their respective Permitted Sublease, the assigning Seller shall be released and discharged from any right, liability, obligation or duty arising under this Agreement before and after the date of such assignment. 14. INDEMNITY. Sellers agree, jointly and severally, to indemnify, protect, hold harmless and defend Buyer, Lender and their respective directors, officers, shareholders, members, employees, successors, assigns, agents, lenders, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees and invitees, as applicable (collectively, the "Indemnified Parties"), for, from and against any and all losses, costs, claims, liabilities, damages and expenses (collectively, "Losses") (including, without limitation, Buyer's reasonable attorneys' fees and consequential damages but excluding Losses suffered by an Indemnified Party arising out of such Indemnified Party's gross negligence or willful misconduct; provided, however, that the term "gross negligence" shall not include gross negligence imputed as a matter of law to any of the Indemnified Parties solely by reason of the Buyer's interest in any of the Properties or Sellers' failure to act in respect of matters which are the obligation of SL Properties under the Lease) arising as the result of an Environmental Condition and/or a breach of any of the representations, warranties, covenants, agreements or obligations of Sellers set forth in this Agreement. Without limiting the generality of the foregoing, such indemnity shall include, without limitation, any damages incurred with respect to any engineering, governmental inspection and reasonable attorneys' fees and expenses that the Indemnified Parties may incur by reason of any Environmental Condition and/or any representation or warranty set forth in Section 8.K being false, or by reason of any investigation or claim of any Governmental Authority in connection therewith. The provisions of this Section 14 shall survive the Closing. 15. REMAINDERMAN. Notwithstanding anything to the contrary contained herein, Sellers acknowledge that Buyer may only obtain title to an estate for years in each of the Properties, and that Buyer may arrange for a remainderman ("Remainderman") to obtain title to the remainder of the estate of the Properties (the "Remainder Interest"). Sellers agree to cooperate in such event, which cooperation shall include, without limitation (1) the granting of deeds for the estate for years in each of the Properties to Buyer and separate deeds for the Remainder Interest to the Remainderman (or its designee), (2) the execution of a tripartite agreement among SL Properties, Buyer and the Remainderman relating to, inter alia, the extension terms under the Lease, (3) delivering appropriate title insurance policies to the Remainderman, and (4) delivery of such other documents as may be reasonably required. Sellers acknowledge that Remainderman is an approved assignee of this Agreement to the extent of the Remainder Interest. 16. MISCELLANEOUS PROVISIONS. A. NOTICES. All notices, consents, approvals or other instruments required or permitted to be given by either party pursuant to this Agreement shall be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery service or 17 (iv) certified or registered mail, return receipt requested, and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by facsimile, (c) the next business day, if delivered by express overnight delivery service, or (d) the third business day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested. Notices shall be provided to the parties and addresses (or facsimile numbers, as applicable) specified below: If to Sellers: c/o Uno Restaurant Corporation 100 Charles Park Road West Roxbury, Massachusetts 02132 Attention: Robert M. Vincent Telephone: (617) 218-5215 Telecopy: (617) 218-5375 With a copy to: Brown Rudick Freed & Gesmer One Financial Center Boston, Massachusetts 02111 Attention: Joel M. Reck, Esq. Telephone: (617) 856-8558 Telecopy: (617) 856-8201 If to Buyer: Zuno Property, LLC c/o U.S. Realty Advisors, LLC 1370 Avenue of the Americas New York, NY 10019 Attention: Mr. David M. Ledy Telephone: (212) 581-4540 Telecopy: (212) 581-4950 With a copy to: Proskauer Rose LLP 1585 Broadway New York, NY 10036 Attention: Kenneth S. Hilton, Esq. Telephone: (212) 969-3000 Telecopy: (212) 969-2900 B. RISK OF LOSS. As between Buyer and Sellers, Sellers shall be responsible for the risk of loss, damage or destruction of any of the Properties or any part thereof prior to the Closing Date. C. CONDEMNATION. In the event of a taking of all or any part of any of the Properties prior to the Closing, Buyer at its sole option shall have the right to either (i) receive the proceeds of any condemnation award and, proceed to close this transaction or (ii) terminate this Agreement with respect to any Property which is subject to such taking. Buyer and Sellers agree to execute such amendments to this Agreement as may be reasonably required by Buyer to evidence any such termination. 18 D. REAL ESTATE COMMISSION. Buyer and Sellers represent and warrant to each other that they have dealt with no real estate broker, agent, finder or other intermediary in connection with the transactions contemplated by this Agreement. Buyer and Sellers shall indemnify and hold each other harmless for, from and against any costs, claims or expenses, including attorneys' fees, arising out of the breach of their respective representations and warranties contained within this Section. E. WAIVER AND AMENDMENT. No provisions of this Agreement shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion. F. CAPTIONS. Captions are used throughout this Agreement for convenience of reference only and shall not be considered in any manner in the construction or interpretation hereof. G. BUYER'S LIABILITY. Notwithstanding anything to the contrary provided in this Agreement, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Agreement by Buyer, that (i) there shall be absolutely no personal liability on the part of Buyer, its successors or assigns and the trustees, members, partners, shareholders, officers, directors, employees and agents of Buyer and its successors and assigns, to Sellers with respect to any of the terms, covenants and conditions of this Agreement or the other Sale-Leaseback Documents, as applicable, (ii) Sellers waive all claims, demands and causes of action against the trustees, members, partners, shareholders, officers, directors, employees and agents of Buyer and its successors or assigns in the event of any breach by Buyer of any of the terms, covenants and conditions of this Agreement or the other Sale-Leaseback Documents, as applicable, to be performed by Buyer, and (iii) Sellers shall look solely to the Properties for the satisfaction of each and every remedy of Sellers in the event of any breach by Buyer of any of the terms, covenants and conditions of this Agreement or the other Sale-Leaseback Documents, as applicable, to be performed by Buyer, or any other matter in connection with this Agreement, the other Sale-Leaseback Documents or any of the Properties, such exculpation of liability to be absolute and without any exception whatsoever. H. SEVERABILITY. The provisions of this Agreement shall be deemed severable. If any part of this Agreement shall be held unenforceable, the remainder shall remain in full force and effect, and such unenforceable provision shall be reformed by such court so as to give maximum legal effect to the intention of the parties as expressed therein. I. CONSTRUCTION GENERALLY. This is an agreement between parties who are experienced in sophisticated and complex matters similar to the transaction contemplated by this Agreement and is entered into by both parties in reliance upon the economic and legal bargains contained herein and shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, the relative bargaining powers of the parties or the domicile of any party. 19 Sellers and Buyer were each represented by legal counsel competent in advising them of their obligations and liabilities hereunder. J. OTHER DOCUMENTS. Each of the parties agrees to sign such other and further documents as may be necessary or reasonably requested by the other party in order to carry out the intentions expressed in this Agreement. K. ATTORNEYS' FEES. In the event of any judicial or other adversarial proceeding between the parties concerning this Agreement, the prevailing party shall be entitled to recover all of its attorneys' fees and other costs in addition to any other relief to which it may be entitled. References in this Agreement to Buyer's attorneys' fees and/or costs shall mean both the fees and costs of independent counsel retained by Buyer with respect to this transaction. L. ENTIRE AGREEMENT. This Agreement, together with any other certificates, instruments or agreements to be delivered hereunder, constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no other representations, warranties or agreements, written or oral, between Sellers and Buyer with respect to the subject matter of this Agreement. Notwithstanding anything in this Agreement to the contrary, upon the execution and delivery of this Agreement by Sellers and Buyer, the Commitment shall be deemed null and void and of no further force and effect and the terms and conditions of this Agreement shall control notwithstanding that such terms and conditions are inconsistent with or vary from those set forth in the Commitment. M. RECORDING. At the election of Buyer, this Agreement may be recorded in the appropriate governmental office so as to impart constructive notice of the terms and provisions hereof. N. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Sellers acknowledge that this Agreement was partially negotiated in the State of Arizona, the Agreement was delivered by Sellers and Buyer in the State of Arizona, all payments under the Lease will be delivered in the State of Arizona (unless otherwise directed by Buyer or its successors) and there are substantial contacts between the parties and the transactions contemplated herein and the State of Arizona. For purposes of any action or proceeding arising out of this Agreement, the parties hereto hereby expressly submit to the jurisdiction of all federal and state courts located in the State of Arizona and Sellers consent that they may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, Sellers waive and agree not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. It is the intent of the parties hereto that all provisions of this Agreement shall be governed by and construed under the laws of the State of Arizona. To the extent that a court of competent jurisdiction finds Arizona law inapplicable with respect to any provisions hereof, then, as to those provisions only, the law of the states in which the Properties are located, as applicable, shall be deemed to 20 apply. Nothing in this Section shall limit or restrict the right of Buyer to commence any proceeding in the federal or state courts located in the states in which the Properties are located, as applicable, to the extent Buyer deems such proceeding necessary or advisable to exercise remedies available under this Agreement. O. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original. P. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of Sellers and Buyer and their respective successors and permitted assigns, including, without limitation, any United States trustee, any debtor-in-possession or any trustee appointed from a private panel. Q. SURVIVAL. Except for the conditions of Closing set forth in Section 11, which shall be satisfied or waived as of the Closing Date, all representations, warranties, agreements, obligations and indemnities of Sellers and Buyer set forth in this Agreement (including, without limitation, the provisions of Sections 7, 8 and 14) shall survive the Closing. R. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES. BUYER AND SELLERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, SELLERS AND BUYER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM EACH OTHER AND THEIR AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY PARTY OR ITS AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY EACH OF THE PARTIES OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. S. RELIANCE BY LENDER. Sellers acknowledge and agree that Lender may rely on all of the representations, warranties and covenants set forth in this Agreement, that 21 Lender is an intended third-party beneficiary of such representations, warranties and covenants and that Lender shall have all rights and remedies available at law or in equity as a result of a breach of such representations, warranties and covenants, including to the extent applicable, the right of subrogation. IN WITNESS WHEREOF, Sellers and Buyer have entered into this Agreement as of the date first above written. BUYER: ZUNO PROPERTY LLC, a Delaware limited liability company By: Zuno Equity LLC, a Delaware limited liability company, its member By:/s/ Laurie A. Hawkes -------------------- Laurie A. Hawkes Vice President SELLERS: FRANKLIN MILLS PIZZERIA, INC., a Pennsylvania corporation By: :/s/ Robert M. Vincent --------------------- Robert M. Vincent Executive Vice President, Treasurer and Assistant Secretary UNO RESTAURANTS, INC., a Massachusetts corporation By:/s/ Robert M. Vincent --------------------- Robert M. Vincent Executive Vice President, Treasurer and Assistant Secretary 22 SAXET CORPORATION, a Delaware corporation By: :/s/ Robert M. Vincent --------------------- Robert M. Vincent Executive Vice President, Treasurer and Assistant Secretary 23 EXHIBIT 2.1 EXHIBIT A PROPERTIES
- -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- FFCA NO. STORE NO. ADDRESS CITY STATE PURCHASE PRICE - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2438 830 280 Maine Mall Road South Portland ME $1,928,934.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2439 222 574 Iyanough Road, Route 132 Hyannis MA $1,928,934.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2440 841 786 Franklin Mills Circle Philadelphia PA $2,131,980.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2441 712 2680 Prince William Parkway Woodbridge VA $2,333,503.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2442 810 1330 Shelburne Road South Burlington VT $1,928,934.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2443 768 6593 Grand Avenue Gurnee IL $1,928,934.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2444 720 4470 Long Gate Center Ellicott City MD $2,182,741.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2445 721 5449 Urbana Pike Frederick MD $2,182,741.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2446 969 11633 University Boulevard Orlando FL $2,195,838.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2447 843 205 E. Waterfront Drive Homestead PA $2,233,503.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2448 851 743 Watkins Road Maryville TN $2,131,980.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- ------------------- 8001-2449 324 300 Center Place Drive Rochester NY $2,131,980.00 - -------------------- ---------------- ---------------------------------------- --------------------- ---------- -------------------
EX-2.2 3 a2050677zex-2_2.txt EXHIBIT 2.2 EXHIBIT 2.2 MASTER LEASE THIS MASTER LEASE (this "Lease") is made as of May 11, 2001 (the "Effective Date"), by and between ZUNO PROPERTY LLC, a Delaware limited liability company ("Lessor"), whose address is c/o U.S. Realty Advisors, LLC, 1370 Avenue of the Americas, New York, New York 10019, and SL PROPERTIES, INC., a Massachusetts corporation ("Lessee"), whose address is 100 Charles Park Road, West Roxbury, Massachusetts 02132. W I T N E S S E T H : THAT, in consideration of the mutual covenants and agreements herein contained, Lessor and Lessee hereby covenant and agree as follows: 1. CERTAIN DEFINED TERMS. The following terms shall have the following meanings for all purposes of this Lease: "ACKNOWLEDGEMENT" means the Acknowledgement of Master Lease Assignment and Subordination, Nondisturbance and Attornment Agreement dated as of the date of this Lease among Lessor, Lessee, Lender and Remainderman. A duplicate original Acknowledgement will be executed and recorded in the applicable real property records for each Property. "ADA" has the meaning set forth in Section 16.C. "ADDITIONAL RENTAL" has the meaning set forth in Section 5.C. "AFFILIATE" means any Person which directly or indirectly controls, is under common control with, or is controlled by any other Person. For purposes of this definition, "controls", "under common control with" and "controlled by" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or otherwise. "AGGREGATE FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in Section 8.A. "APPLICABLE REGULATIONS" means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders and approvals of each Governmental Authority having jurisdiction over Lessee and/or any of the Properties, including, without limitation, all health, building, fire, safety and other codes, ordinances and requirements and all applicable standards of the National Board of Fire Underwriters and the ADA, in each case, as amended, and any judicial or administrative interpretation thereof, including any judicial order, consent, decree or judgment applicable to Lessee. "APPLICABLE RENT REDUCTION PERCENTAGE" means, with respect to any Property, a fraction, the numerator of which shall be the Purchase Price for such Property, and the denominator of which shall be the sum of the Purchase Price for all of the Properties then subject to this Lease, including such Property. "APPROVED INSTITUTION" means either (i) Fleet National Bank or (ii) any other domestic federal or state charted commercial bank located in any of the cities listed on the attached SCHEDULE III and having, at the time of selection, (i) a long-term deposit or long-term unsecured debt rating of at least AA or its equivalent issued by Standard & Poors Rating Group, Moody's Investors Service, Inc., any successor to such agencies or any other nationally recognized credit rating agency, and (ii) combined capital and surplus in excess of $100,000,000.00. "BASE ANNUAL RENTAL" means $2,741,633.40. "BASE MONTHLY RENTAL" means an amount equal to 1/12 of the applicable Base Annual Rental. "BUSINESS DAY" means a day on which banks located in Phoenix, Arizona are not required or authorized to remain closed (other than a Saturday and Sunday). "CODE" means the United States Bankruptcy Code, 11 U.S.C. Sec. 101 ET SEQ., as amended. "DE MINIMIS AMOUNTS" shall mean, 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 or remediation 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 Properties are located. "DEFAULT RATE" means 18% per annum or the highest rate permitted by law, whichever is less. "DISCLOSURES" has the meaning set forth in Section 8.C. "EFFECTIVE DATE" has the meaning set forth in the Preamble. "ENVIRONMENTAL INSURER" means American International Specialty Lines Insurance Company or such other insurer providing Environmental Policies reasonably acceptable to Lessor. "ENVIRONMENTAL LAWS" means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to Hazardous Materials and/or the protection of human health or the environment, by reason of a Release or a Threatened Release of Hazardous Materials or relating to liability for or costs of Remediation or prevention of Releases. "Environmental Laws" includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations, rulings, orders or decrees promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. 2 "Environmental Laws" also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the property; requiring notification or disclosure of Releases or other environmental condition of any of the Properties to any Governmental Authority or other person or entity, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements relating to Hazardous Materials in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to Hazardous Materials; and relating to wrongful death, personal injury, or property or other damage in connection with the physical condition or use of any of the Properties by reason of the presence of Hazardous Materials in, on, under or above any of the Properties. "ENVIRONMENTAL LIENS" has the meaning set forth in Section 16.D(ix). "ENVIRONMENTAL POLICIES" means the environmental insurance policy or policies, as applicable, issued by Environmental Insurer to Lessor with respect to the Properties, which Environmental Policies shall be in form and substance satisfactory to Lessor in its sole discretion. "EVENT OF DEFAULT" has the meaning set forth in Section 23. "EXTENDED TERM" means the period subsequent to the expiration of the Primary Term which this Lease is actually in effect. "FCCR LETTER OF CREDIT" shall have the meaning set forth in Section 23.A(ix) of this Lease. "FCCR PERIOD" means the twelve month period of time immediately preceding the date on which Lessee gives written notice to Lessor that Lessee is proposing to substitute a Substitute Property as permitted by Section 57.A. "FIXED CHARGE COVERAGE RATIO" has the meaning set forth in Section 57.B(i)(2). "FRANCHISE FINANCE" means Franchise Finance Corporation of America, a Maryland corporation, and its successors and assigns. "GAAP" means generally accepted accounting principles consistently applied. "GOVERNMENTAL AUTHORITY" means any governmental authority, agency, department, commission, bureau, board, instrumentality, court or quasi-governmental authority of the United States, the states in which the Properties are located or any political subdivision thereof. "GUARANTOR" means Uno Restaurant Corporation, a Delaware corporation. "GUARANTY" means that certain Unconditional Guaranty of Payment and Performance dated as of the date of this Lease to be executed by Guarantor with respect to the obligations of Lessee under this Lease, as the same may be amended from time to time. "HAZARDOUS MATERIALS" means (i) any toxic substance or hazardous waste, substance, solid waste, or related material, or any pollutant or contaminant; (ii) radon gas, asbestos in any 3 form which is or could become friable, urea formaldehyde foam insulation, transformers or other equipment which contains dielectric fluid containing levels of polychlorinated biphenyls in excess of federal, state or local safety guidelines, whichever are more stringent, or any petroleum product; (iii) any substance, gas, material or chemical which is or may be defined as or included in the definition of "hazardous substances," "toxic substances," "hazardous materials," "hazardous wastes," "regulated substances" or words of similar import under any Environmental Laws; and (iv) any other chemical, material, gas or substance the exposure to or release of which is or may be prohibited, limited or regulated by any Governmental Authority that asserts or may assert jurisdiction over any of the Properties or the operations or activity at any of the Properties, or any chemical, material, gas or substance that does or may pose a hazard to the health and/or safety of the occupants of any of the Properties or the owners and/or occupants of property adjacent to or surrounding any of the Properties. "INDEMNIFIED PARTIES" means Lessor, Environmental Insurer, Remainderman, and Lender and their directors, officers, shareholders, trustees, beneficial owners, partners, members, and any directors, officers, shareholders, trustees, beneficial owners, partners, members of any beneficial owners, partners or members of Lessor, Environmental Insurer, Remainderman or Lender, and all employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any of the foregoing, including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of the assets and business of Lessor, Environmental Insurer, Remainderman or Lender, as applicable. "LEASE TERM" shall have the meaning described in Section 4. "LENDER" means FFCA Funding Corporation, a Delaware corporation, its successors and assigns, any successor lender in connection with any loan secured by Lessor's interest in any of the Properties, and any servicer of any loan secured by Lessor's interest in any of the Properties, including, without limitation, Franchise Finance Corporation of America, a Maryland corporation. "LESSEE ENTITIES" means, collectively, Lessee and Permitted Lessees and all Affiliates of Lessee and Permitted Lessees. "LOAN AGREEMENT" means the Loan Agreement dated as of the date of this Lease in effect between Lessor and Lender, as such agreement may be amended from time to time and any and all replacements or substitutions thereof. "LOAN DOCUMENTS" means, collectively, the Loan Agreement, the Notes, the Mortgages and all other documents, instruments and agreements executed in connection therewith or contemplated thereby, all as amended and supplemented and any and all replacements or substitutions thereof. "LOSSES" means any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement and damages of whatever kind or nature (including, without limitation, attorneys' fees, court costs and other costs of defense). 4 "MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the net worth or operation of Lessee, Guarantor or any of the Properties, including, without limitation, the operations of any of the Properties as a Permitted Facility and/or the value of any of the Properties, or (ii) Lessee's ability to perform its obligations under this Lease and the other Sale-Leaseback Documents. "MATURITY DATE" means June 1, 2021. "MEMORANDUM" means the memorandum of master lease dated as of the date of this Lease between Lessor and Lessee with respect to the Properties. A duplicate original Memorandum will be executed and recorded in the applicable real property records for each Property. Each Memorandum will contain exhibits with the addresses and store identification numbers for all of the Properties and the legal description for the applicable Property. "MORTGAGES" means, collectively, the mortgages, deeds of trust or deeds to secure debt, assignments of rents and leases, security agreements and fixture filings dated as of even date herewith executed by Lessor for the benefit of Lender with respect to the Properties, as such instruments may be amended, restated and/or supplemented from time to time and any and all replacements or substitutions thereof. "NOTES" means, collectively, the promissory notes dated as of the date of this Lease executed by Lessor and payable to Lender with respect to the Properties, as such notes may be amended, restated and/or substituted from time to time. "NOTICES" means, when used herein, written notice. "OTHER AGREEMENTS" means, collectively, all agreements and instruments now or hereafter entered into between, among or by (1) any of the Lessee Entities, and, or for the benefit (as intended beneficiary or intended third party beneficiary) of, (2) Lessor; provided, however, the term Other Agreements shall not include this Lease, the other Sale-Leaseback Documents, agreements between and among institutional lenders and one or more of the Lessee Entities, the Security Deposit Letter of Credit and FCCR Letter of Credit. "PARTICIPATION" means the granting of any participations in any document evidencing loan obligations or any or all servicing rights with respect thereto. "PERMITTED FACILITY" means a Pizzeria Uno Chicago Bar & Grill restaurant, other nationally or regionally recognized concepts owned by Lessee or other restaurant concept of a nationally or regionally recognized owner/operator; provided, however, that at least 9 of the Properties shall be operated as Pizzeria Uno Chicago Bar & Grill restaurants or another nationally or regionally recognized restaurant concept operated by Lessee and approved by Lessor and Lender. "PERMITTED SUBLEASES" means the master subleases of even date herewith of all the Properties by Lessee, as sublessor, to the Permitted Sublessees, as sublessees. "PERMITTED SUBLESSEE" or "PERMITTED SUBLESSEES" means, individually or collectively, as the context may require, Franklin Mills Pizzeria, Inc., a Pennsylvania corporation, Uno Restaurants, Inc., a Massachusetts corporation, Uno of Smithtown, Inc., a New York corporation, Uno of Smoketown, Inc., a Virginia corporation, Uno of Gurnee Mills, Inc., an Illinois 5 corporation, Plizzettas of Burlington, Inc., a Vermont corporation, and Uno of Tennessee, Inc., a Tennessee corporation, or their successors or assigns. "PERSON" means any individual, corporation, partnership, limited liability company, trust, unincorporated organization, Governmental Authority or any other form of entity. "PERSONALTY" means all machinery, appliances, furniture, equipment, trade fixtures and other personal property of Lessee (excluding inventory) from time to time situated on or used in connection with the Properties; provided, however, the term "Personalty" shall not include the HVAC, walk-in coolers, walk-in freezers, supply fans, exhaust fans, air ducts, hoods, vents, built-in sinks, built-in countertops, plumbing and electrical fixtures, merchandise shelving, sign poles and lighting poles, all of which items are intended to be fixtures as such term is used within the definition of "Properties". "PREPAYMENT CHARGES" means, for purposes of this Lease, an amount equal to any prepayment premium or charge, yield maintenance payment, or other cost or expense imposed on Lessor by the applicable Lender in connection with the payment of the applicable Note(s) or promissory note(s) prior to the Maturity Date. "PRIMARY TERM" means the period commencing on the Effective Date and expiring on May 31, 2021. "PROPERTIES" means, collectively, the parcels of real estate described by address, Lessor Number and Unit Number in EXHIBIT A attached hereto as the same may be modified from time to time to reflect removed and substituted Properties and legally described in EXHIBIT A-1 attached hereto as the same may be modified from time to time to reflect removed and substituted Properties, all rights, privileges and appurtenances associated therewith, and all buildings, structures, fixtures and other improvements now or hereafter located on such real estate (excluding Personalty and inventory). "PROPERTY" means any one of the Properties. "PURCHASE PRICE" means, with respect to any Property, the amount of the purchase price corresponding to such Property as set forth on EXHIBIT A to the Sale-Leaseback Agreement. "QUESTIONNAIRES" means the environmental questionnaires completed by Lessee with respect to each of the Properties and submitted to Environmental Insurer in connection with the issuance of the Environmental Policies. "REJECTABLE OFFER" has the meaning set forth in Section 21.B. "REJECTABLE PURCHASE OFFER" has the meaning set forth in Section 58.A. "REJECTABLE SUBSTITUTION OFFER" has the meaning set forth in Section 57.A. "RELEASE" means any presence, release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Materials, except for De Minimis Amounts. 6 "REMAINDERMAN" means PiOne Remainder LLC, a Delaware limited liability company, which owns a remainder interest in the parcels of real estate described by address, Lessor Number and Unit Number in EXHIBIT A attached hereto and legally described in EXHIBIT A-1 attached hereto and all rights, privileges and appurtenances associated therewith, together with its successors and assigns. "REMEDIATION" means any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Materials, any actions to prevent, cure or mitigate any Release, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or any evaluation relating to any Hazardous Materials. "SALE-LEASEBACK AGREEMENT" means that certain Sale-Leaseback Agreement dated as of the date hereof between Lessor and Sublessees with respect to the Properties. "SALE-LEASEBACK DOCUMENTS" means the Sale-Leaseback Agreement, this Lease, the Memorandum, the Guaranty, Security Deposit Letter of Credit, FCCR Letter of Credit, the Acknowledgement and all other documents executed in connection therewith or contemplated thereby. "SECURITIZATION" means one or more sales, dispositions, transfers or assignments by Lender or any Affiliate of Lender to a special purpose corporation, trust or other entity identified by Lender or any Affiliate of Lender of notes evidencing obligations to repay secured or unsecured loans owned by Lender or any Affiliate of Lender (and, to the extent applicable, the subsequent sale, transfer or assignment of such notes to another special purpose corporation, trust or other entity identified by Lender or any Affiliate of Lender), and the issuance of bonds, certificates, notes or other instruments evidencing interests in pools of such loans, whether in connection with a permanent asset securitization or a sale of loans in anticipation of a permanent asset securitization. Each Securitization shall be undertaken in accordance with all requirements which may be imposed by the investors or the rating agencies involved in each such sale, disposition, transfer or assignment or which may be imposed by applicable securities, tax or other laws or regulations, including, without limitation, laws relating to Lender's status as a real estate investment trust. "SUBSTITUTE PROPERTY" means one or more parcels of real estate substituted for any of the Properties in accordance with the requirements of Section 57, together with all rights, privileges and appurtenances associated therewith, and all buildings, structures, fixtures and other improvements located thereon. For purposes of clarity, where two or more parcels of real property comprise a Substitute Property, such parcels shall be aggregated and deemed to constitute the Substitute Property for all purposes of this Lease. "THREATENED RELEASE" means a substantial likelihood of a Release which requires action pursuant to Environmental Law to prevent or mitigate damage to the soil, surface waters, groundwaters, land, stream sediments, surface or subsurface strata, ambient air or any other environmental medium comprising or surrounding any of the Properties which may result from such Release. 7 "TITLE COMPANY" means Lawyers Title Insurance Corporation, or such other nationally recognized title insurance company reasonably acceptable to Lessor. "TRANSFER" means any sale, transfer or assignment of any document evidencing loan obligations, or any or all servicing rights with respect thereto. 2. DEMISE OF PROPERTIES. In consideration of the rentals and other sums to be paid by Lessee and of the other terms, covenants and conditions on Lessee's part to be kept and performed, Lessor hereby leases to Lessee, and Lessee hereby takes and hires, the Properties. The Properties are leased to Lessee "AS IS" and "WHERE IS" without representation or warranty by Lessor and subject to the rights of parties in possession, to the existing state of title, any state of facts which an accurate survey or physical inspection might reveal, and all Applicable Regulations now or hereafter in effect. Lessee has examined each of the Properties and title to each of the Properties and has found all of the same satisfactory for all of Lessee's purposes. 3. CHARACTERIZATION OF LEASE. A. Lessor and Lessee intend that: (i) this Lease constitutes a single master lease of all, but not less than all, of the Properties and that Lessor and Lessee have executed and delivered this Lease with the understanding that this Lease constitutes a unitary, unseverable instrument pertaining to all, but not less than all, of the Properties, and that neither this Lease nor the duties, obligations or rights of Lessee may be allocated or otherwise divided among the Properties by Lessee; (ii) this Lease is a "true lease" and not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of this Lease are those of a true lease; and (iii) the business relationship created by this Lease and any related documents is solely that of a long-term commercial lease between landlord and tenant and has been entered into by both parties in reliance upon the economic and legal bargains contained herein. B. Lessor and Lessee acknowledge and agree that the Lease Term, including any term extensions provided for in this Lease, is less than the remaining economic life of each of the Properties. C. Lessee 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 which asserts that this Lease is anything other than a true lease. Lessee covenants and agrees that it will not assert that this Lease is anything but a true lease. Lessee stipulates and agrees not to challenge the validity, enforceability or characterization of the lease of the Properties as a true lease and further stipulates and agrees 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. Lessee shall support the intent of the parties that the lease of the 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. 8 D. Lessee waives any claim or defense based upon the characterization of this Lease as anything other than a master lease of all of the Properties and irrevocably waives any claim or defense which asserts that this Lease is anything other than a master lease. Lessee 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 Properties. Lessee stipulates and agrees not to challenge the validity, enforceability or characterization of the lease of the Properties as a unitary, unseverable instrument pertaining to the lease of all, but not less than all, of the Properties. Lessee 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 Properties, if, and to the extent that, any challenge occurs. E. Lessee represents and warrants to Lessor that (i) the Base Annual Rental is the fair market value for the use of the Properties and was agreed to by Lessor and Lessee on that basis, and (ii) the execution, delivery and performance by Lessee of this Lease does not constitute a transfer of all or any part of the Properties. F. The expressions of intent, the waivers, the representations and warranties, the covenants, the agreements and the stipulations set forth in this Section are a material inducement to Lessor entering into this Lease. 4. LEASE TERM. The Lease Term for all of the Properties shall commence as of the Effective Date and shall expire on May 31, 2021, unless terminated sooner as provided in this Lease and as may be extended for four additional successive periods of five years each as set forth in Section 27 below. The time period during which this Lease shall actually be in effect is referred to herein as the "Lease Term." 5. RENTAL, OTHER PAYMENTS AND SECURITY DEPOSIT. A. If the Effective Date is a date other than the first day of the month, Lessee shall pay Lessor on the Effective Date the Base Monthly Rental prorated on the basis of the ratio that the number of days from the Effective Date through the last day in the month containing the Effective Date bears to the number of days in such month. Thereafter, on or before the first day of each succeeding calendar month, Lessee shall pay Lessor in advance the Base Monthly Rental. B. All sums of money required to be paid by Lessee under this Lease which are not specifically referred to as rent ("Additional Rental") shall be considered rent although not specifically designated as such. Lessor shall have the same remedies for nonpayment of Additional Rental as those provided herein for the nonpayment of Base Annual Rental. C. On the Effective Date, Lessee shall deliver to Lessor a letter of credit in the amount of $1,000,000.00 (the "Security Deposit") naming Lessor, or at Lessor's direction, Lender, as beneficiary, issued by an Approved Institution, permitting partial draws thereon, and otherwise in the form of Exhibit B, attached hereto (the "Security Deposit Letter of Credit"). The Security Deposit Letter of Credit shall be held by Lessor as security for the performance of Lessee's obligations under this Lease. The Security Deposit Letter of Credit is not an advance rental deposit or a measure of Lessor's damages in the case of Lessee's default. Upon each occurrence of an Event of Default, Lessor may draw on the Security Deposit Letter of Credit and use all or a part of the proceeds to pay delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability caused by such Event of Default, without prejudice to any other remedy provided in this Lease. If the Security Deposit Letter of Credit is ever drawn 9 upon by Lessor, Lessee, at Lessor's option, shall either pay to Lessor on demand in immediately available funds the amount so drawn to be held as part of the Security Deposit or within 5 days after such draw, cause the Security Deposit Letter of Credit to be restored to its original amount. The Security Deposit Letter of Credit shall be renewed annually by Lessee at least 30 days prior to its scheduled expiration. If Lessee fails to renew the Security Deposit Letter of Credit, timely, and such failure continues for 5 days after written notice from Lessor, then an Event of Default shall be deemed to have occurred and, in addition to any other remedies available to Lessor under this Lease, Lessor may draw upon the Security Deposit Letter of Credit, and retain amounts drawn as the Security Deposit. Provided an Event of Default shall not have previously occurred, the Security Deposit Letter of Credit shall be returned to Lessee within 30 days after Lessee makes the Base Monthly Rental payment scheduled to be paid on January 1, 2007. Lessor shall be released from any obligation with respect to the Security Deposit and the Security Deposit Letter of Credit upon the transfer of this Lease, the Properties and the Letter of Credit to a person or entity assuming Lessor's obligations under this Lease. 6. REPRESENTATIONS AND WARRANTIES OF LESSOR. The representations and warranties of Lessor contained in this Section are being made to induce Lessee to enter into this Lease and Lessee has relied and will continue to rely upon such representations and warranties. Lessor represents and warrants to Lessee as of the Effective Date as follows: A. ORGANIZATION, AUTHORITY AND STATUS OF LESSOR. (i) Lessor has been duly organized and is validly existing and in good standing under the laws of the State of Delaware. All necessary corporate action has been taken to authorize the execution, delivery and performance by Lessor of this Lease and the other documents, instruments and agreements provided for herein. (ii) The person who has executed this Lease on behalf of Lessor is duly authorized so to do. B. ENFORCEABILITY. This Lease constitutes the legal, valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms. 7. REPRESENTATIONS AND WARRANTIES OF LESSEE. The representations and warranties of Lessee contained in this Section are being made to induce Lessor to enter into this Lease and Lessor has relied, and will continue to rely, upon such representations and warranties. Lessee represents and warrants to Lessor as of the Effective Date as follows: A. ORGANIZATION, AUTHORITY AND STATUS OF LESSEE. (i) Lessee has been duly organized or formed, is validly existing and in good standing under the laws of its state of incorporation or formation and is qualified to do business in any jurisdiction where such qualification is required. All necessary corporate action has been taken to authorize the execution, delivery and performance by Lessee of this Lease and of the other documents, instruments and agreements provided for herein. Lessee is not a "foreign corporation", "foreign partnership", "foreign trust", "foreign limited liability company" or "foreign estate", as those terms are defined in the Internal Revenue Code and the regulations promulgated thereunder. Lessee's United States tax identification number is correctly set forth on the signature page of this Lease. 10 (ii) The person who has executed this Lease on behalf of Lessee is duly authorized to do so. B. ENFORCEABILITY. This Lease constitutes the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms. C. LITIGATION. There are no suits, actions, proceedings or investigations pending, or, to the best of its knowledge, threatened against or involving Lessee, Guarantor, any Permitted Sublessee or any of the Properties before any arbitrator or Governmental Authority which might reasonably result in any Material Adverse Effect. D. ABSENCE OF BREACHES OR DEFAULTS. Neither Lessee, Guarantor nor any of the Permitted Sublessees is in default under any document, instrument or agreement to which Lessee, Guarantor or any Permitted Sublessee is a party or by which Lessee or any Permitted Sublessee, any of the Properties or any of Lessee's, Guarantor's or any Permitted Sublessee's property is subject or bound, which default could reasonably be expected to result in a Material Adverse Effect. The authorization, execution, delivery and performance of this Lease, the Guaranty and the other documents, instruments and agreements provided for herein will not result in any breach of or default under any document, instrument or agreement to which Lessee or Guarantor is a party or by which Lessee, Guarantor, any of the Properties or any of Lessee's or Guarantor's property is subject or bound. The authorization, execution, delivery and performance of this Lease and the documents, instruments and agreements provided for herein will not violate any applicable law, statute, regulation, rule, ordinance, code, rule or order. E. LIABILITIES OF LESSOR. Lessee is not liable for any indebtedness for money borrowed by Lessor and has not guaranteed any of the debts or obligations of Lessor. 8. COVENANTS. Lessee covenants to Lessor for so long as this Lease is in effect as follows: A. AGGREGATE FIXED CHARGE COVERAGE RATIO. Lessee shall cause to be maintained an Aggregate Fixed Charge Coverage Ratio at all of the Properties of at least 1.25:1, determined as of the last day of each fiscal year of Lessee. For purposes of this Lease, the term "Aggregate Fixed Charge Coverage Ratio" shall mean with respect to the twelve month period of time immediately preceding the date of determination, the ratio calculated for such period of time, each as determined in accordance with GAAP, of (a) the sum of Net Income, Depreciation and Amortization, Interest Expense and Operating Lease Expense, less a corporate overhead allocation in an amount equal to 5.00% of Gross Sales, to (b) the sum of the Operating Lease Expense and the Equipment Payment Amount. For purposes of this Section 8.A, the following terms shall be defined as set forth below: "CAPITAL LEASE" shall mean any lease of any property (whether real, personal or mixed) by Lessee and any Permitted Sublessee with respect to one or more of the Properties which lease would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of Lessee. The term "Capital Lease" shall not include any operating lease or this Lease. 11 "DEBT" shall mean as directly related to all of the Properties and the period of determination (i) indebtedness of Lessee and the Permitted Sublessees for borrowed money, (ii) obligations of Lessee and the Permitted Sublessees evidenced by bonds, indentures, notes or similar instruments, (iii) obligations of Lessee and any Permitted Sublessee to pay the deferred purchase price of property or services, (iv) obligations of Lessee and the Permitted Sublessees under leases which should be, in accordance with GAAP, recorded as Capital Leases, and (v) obligations of Lessee and the Permitted Sublessees under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. The term "Debt" shall not include Lessor's debt with respect to the Properties or otherwise. "DEPRECIATION AND AMORTIZATION" shall mean with respect to all of the Properties the depreciation and amortization accruing during any period of determination with respect to Lessee and the Permitted Sublessees as determined in accordance with GAAP. The term "Depreciation and Amortization" shall not include Lessor's depreciation and amortization with respect to the Properties or otherwise. "EQUIPMENT PAYMENT AMOUNT" shall mean for any period of determination the sum of all amounts payable during such period of determination under all (i) leases entered into by Lessee and any Permitted Sublessee for equipment located at one or more of the Properties and (ii) all loans made to Lessee and any Permitted Sublessee secured by Lessee's and Permitted Sublessee's interests in the equipment located at one or more of the Properties. "GROSS SALES" means the sales or other income arising from all business conducted at all of the Properties by Lessee and any Permitted Sublessee during the period of determination, less sales tax paid by Lessee in connection with the business conducted at each of the Properties during such period. "INTEREST EXPENSE" shall mean for any period of determination, the sum of all interest accrued or which should be accrued in respect of all Debt of Lessee and Permitted Sublessees allocable to one or more of the Properties and all business operations thereon during such period (including interest attributable to Capital Leases), as determined in accordance with GAAP. "NET INCOME" shall mean with respect to the period of determination, the net income or net loss of Lessee and the Permitted Sublessees allocable to all of the Properties. In determining the amount of Net Income, (i) adjustments shall be made for nonrecurring gains and losses allocable to the period of determination, (ii) deductions shall be made for, among other things, Depreciation and Amortization, Interest Expense and Operating Lease Expense allocable to the period of determination, and (iii) no deductions shall be made for (x) income taxes or charges equivalent to income taxes allocable to the period of determination, as determined in accordance with GAAP, or (y) corporate overhead expense allocable to the period of determination. 12 "OPERATING LEASE EXPENSE" shall mean the expenses incurred by Lessee and Permitted Sublessees under any operating leases with respect to one or more of the Properties (including this Lease) and the business operations thereon during the period of determination, as determined in accordance with GAAP. B. NONCONSOLIDATION COVENANTS. (i) Lessee will not assume liability for any indebtedness for money borrowed by Lessor and does not, and will not, guarantee any of the debts or obligations of Lessor. Lessee will not hold itself out as being liable for any obligations or indebtedness of Lessor. (ii) Lessee shall not and shall use its best efforts to cause its affiliates not to hold Lessor out to the public or to any individual creditors as being a unified entity with assets and liabilities in common with Lessee. (iii) Lessee shall conduct its business so as not to mislead others as to the separate identity of Lessor, and particularly will avoid the appearance of conducting business on behalf of Lessor. Without limiting the generality of the foregoing, no oral and written communications of Lessee, including, without limitation, letters, invoices, purchase orders, contracts, statements and loan applications, will be made in the name of Lessor which to the extent that to do otherwise would materially bear upon the maintenance of Lessor's separate identity. (iv) Lessee will not act in Lessor's name. (v) Where necessary and appropriate, Lessee shall disclose the independent business status of Lessor to creditors of Lessee, if any. (vi) The resolutions, agreements and other instruments of Lessee, if any, underlying the transactions described in this Lease will be maintained by Lessee. (vii) All transactions between Lessee and Lessor will be no less fair to each party than they could obtain on an arm's-length basis. (viii) The books, records and accounts of Lessee shall at all times be maintained in a manner permitting the assets and liabilities of Lessor to be easily separated and readily ascertained from those of Lessee. (ix) Lessee will not direct, or otherwise control, the ongoing business decisions of Lessor. (x) Lessee will not file or cause to be filed a voluntary or involuntary petition in bankruptcy on behalf of or against Lessor. C. TRANSFER, PARTICIPATION AND SECURITIZATION COVENANTS. (i) Lessee agrees to cooperate and to cause the Permitted Sublessees to cooperate, in good faith with Lessor and Lender in connection with any Transfer, Participation and/or Securitization of any of the Notes, Mortgages and/or any of the Loan Documents, or any or all servicing rights with respect thereto, including, without limitation, (x) providing such documents, financial and other data, and other information and materials (the "Disclosures") which would typically be required with respect to Lessee and Permitted Sublessees by a purchaser, transferee, 13 assignee, servicer, participant, investor or rating agency involved with respect to such Transfer, Participation and/or Securitization, as applicable; provided, however, Lessee shall not be required to make Disclosures of any confidential information or any information which has not previously been made public unless required by applicable federal or state securities laws; and (y) amending the terms of this Lease to the extent necessary so as to satisfy the requirements of purchasers, transferees, assignees, servicers, participants, investors or selected rating agencies involved in any such Transfer, Participation or Securitization, so long as such amendments would not increase the Base Annual Rental or Additional Rental required to be paid under this Lease or have a material adverse effect upon Lessee or the transactions contemplated by this Lease. (ii) Lessee consents to Lessor and Lender providing the Disclosures, as well as any other information which Lessor and Lender may now have or hereafter acquire with respect to the Properties or the financial condition of Lessee to each purchaser, transferee, assignee, servicer, participant, investor or rating agency involved with respect to such Transfer, Participation and/or Securitization, as applicable. Lessee shall pay its own attorney fees and other out-of-pocket expenses incurred in connection with the performance of its obligations under this Section 8.C in an amount not to exceed $7,500.00. D. LIMITATION ON CORPORATE DEBT. If a tender offer for or other acquisition of any of the outstanding common shares of Guarantor for the purposes of taking the Guarantor private occurs prior to the third anniversary of the Effective Date, then Guarantor, prior to the third anniversary of the Effective Date, shall not incur total funded indebtedness of more than $75,000,000, excluding the then remaining balance of Guarantor's current existing indebtedness to Metropolitan Life Insurance Company, which as of December 31, 2000, was $4,320,039. E. COMPLIANCE CERTIFICATE. Within 60 days after the end of each fiscal year of Lessee, Lessee and Permitted Sublessees shall deliver to Lessor such compliance certificates as Lessor may reasonably require in order to establish that Lessee and Permitted Sublessees are in compliance in all material respects with all of the obligations, duties and covenants imposed pursuant to Section 8. 9. RENTALS TO BE NET TO LESSOR. The Base Annual Rental payable hereunder shall be net to Lessor, so that this Lease shall yield to Lessor the rentals specified during the Lease Term, and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Properties shall be performed and paid by Lessee. 10. TAXES AND ASSESSMENTS. Lessee shall pay, or shall cause the Permitted Sublessees to pay, prior to the earlier of delinquency or the accrual of interest on the unpaid balance, all taxes and assessments of every type or nature assessed against, imposed upon or arising with respect to Lessor, any of the Properties, this Lease, the rental or other payments due under this Lease or Lessee during the Lease Term which affect in any manner the net return realized by Lessor under this Lease, including, without limitation, the following: A. All taxes and assessments upon any of the Properties or any part thereof and upon any Personalty, whether belonging to Lessor, Lessee or any Permitted Sublessee, or any tax or charge levied in lieu of such taxes and assessments; 14 B. All taxes, charges, license fees and or similar fees imposed by reason of the use of any of the Properties by Lessee and the Permitted Sublessees; and C. All excise, transaction, privilege, license, sales, use and other taxes upon the rental or other payments due under this Lease, the leasehold estate of either party or the activities of either party pursuant to this Lease. Notwithstanding the foregoing, but without limiting the preceding obligation of Lessee to pay and cause to be paid all taxes which are imposed on the rental or other payments due under this Lease, in no event will Lessee be required to pay any net income taxes (i.e., taxes which are determined taking into account deductions for depreciation, interest, taxes and ordinary and necessary business expenses) or franchise taxes of Lessor (unless imposed in lieu of other taxes that would otherwise be the obligation of Lessee under this Lease, including, without limitation, any "gross receipts tax" or any similar tax based upon gross income or receipts of Lessor with respect to this Lease which does not take into account deductions from depreciation, interest, taxes and/or ordinary or necessary business expenses), any transfer taxes of Lessor, or any tax imposed with respect to the sale, exchange or other disposition by Lessor, in whole or in part, of any of the Properties or Lessor's interest in this Lease (other than transfer or recordation taxes imposed in connection with the transfer of any of the Properties to Lessee, the substitution of a Substitute Property or the termination of this Lease pursuant to the provisions of this Lease). All taxing authorities shall be instructed to send all tax and assessment invoices to Lessee and Lessee shall promptly provide Lessor and Lender with copies of all tax and assessment invoices received by Lessee. Upon request, Lessee shall also provide Lessor and Lender with evidence that such invoices were paid in a timely fashion. Lessee may, at its own expense, contest or cause to be contested (in the case of any item involving more than $1,000.00, after prior written notice to Lessor), by appropriate legal proceedings conducted in good faith and with due diligence, the amount or validity or application, in whole or in part, of any item specified in this Section or lien therefor, provided that (i) such proceeding shall suspend the collection thereof from the applicable Properties or any interest therein, (ii) none of such Properties nor any interest therein would be in any danger of being sold, forfeited or lost by reason of such proceedings, (iii) no Event of Default has occurred, and (iv) Lessee shall have deposited with Lessor adequate reserves for the payment of the taxes, together with all interest and penalties thereon, unless paid in full under protest, or Lessee shall have furnished the security as may be required in the proceeding or as may be required by Lessor to ensure payment of any contested taxes. 11. UTILITIES. Lessee and the applicable Permitted Sublessee shall contract, in their own name, for and pay when due all charges for the connection and use of water, gas, electricity, telephone, garbage collection, sewer use and other utility services supplied to the Properties during the Lease Term. Under no circumstances shall Lessor be responsible for any interruption of any utility service. 12. INSURANCE. Throughout the Lease Term, Lessee shall maintain and cause the Permitted Sublessees to maintain with respect to each of the Properties, at their sole expense, the following types and amounts of insurance (which may be included under a blanket insurance policy if all the other terms hereof are satisfied): A. Insurance against loss, damage or destruction by fire and other casualty, including theft, vandalism and malicious mischief, flood (for each of the Properties which is 15 in a location designated by the Federal Emergency Management Administration as a Special Flood Hazard Area), earthquake (for each of the Properties which is in an area subject to destructive earthquakes within recorded history), boiler explosion (for each of the Properties with a boiler), plate glass breakage, sprinkler damage (for each of the Properties which has a sprinkler system), all matters covered by a standard extended coverage endorsement, all matters covered by a special coverage endorsement commonly known as an "all-risk" endorsement and such other risks as Lessor may reasonably require, insuring each of the Properties for not less than 100% of their full insurable replacement cost. B. Commercial general liability and property damage insurance, including a products liability clause, covering Lessor, Remainderman, Lessee and Permitted Sublessees against bodily injury liability, property damage liability and automobile bodily injury and property damage liability, including without limitation any liability arising out of the ownership, maintenance, repair, condition or operation of the Properties or adjoining ways, streets or sidewalks and, if applicable, insurance covering Lessor, Remainderman, Lessee and Permitted Sublessees against liability arising from the sale of liquor, beer or wine on the Properties. Such insurance policy or policies shall contain a broad form contractual liability endorsement under which the insurer agrees to insure Lessee's obligations under Section 19 hereof to the extent insurable, and a "severability of interest" clause or endorsement which precludes the insurer from denying the claim of Lessee, Permitted Sublessees, Remainderman or Lessor because of the negligence or other acts of the other, shall be in amounts of not less than $1,000,000.00 per injury and occurrence with respect to any insured liability, whether for personal injury or property damage, or such higher limits as Lessor or Remainderman may reasonably require from time to time, and shall be of form and substance satisfactory to Lessor and Remainderman. C. Business income insurance or rental interruption insurance, as requested by Lessor, equal to 100% of the Base Annual Rental for a period of not less than 12 months. D. State Worker's compensation insurance in the statutorily mandated limits, employer's liability insurance with limits not less than $500,000 or such greater amount as Lessor or Remainderman may from time to time require and such other insurance as may be necessary to comply with applicable laws. E. Such other insurance as may from time to time be reasonably required by Lessor, Remainderman or Lender in order to protect their respective interests with respect to the Properties. All insurance policies shall: (i) Provide for a waiver of subrogation by the insurer as to claims against Lessor, Remainderman, Lender and their respective employees and agents; (ii) Provide that any "no other insurance" clause in the insurance policy shall exclude any policies of insurance maintained by Lessor, Remainderman or Lender and that the insurance policy shall not be brought into contribution with insurance maintained by Lessor, Remainderman or Lender; 16 (iii) Contain a standard without contribution mortgage clause endorsement in favor of Lender and any other party designated by Lessor; (iv) Provide that the policy of insurance shall not be terminated, cancelled or substantially modified without at least thirty (30) days' prior written notice to Lessor, Remainderman, Lender and to any other party covered by any standard mortgage clause endorsement; (v) Provide that the insurer shall not have the option to restore the applicable Properties if Lessor or Lessee elects to terminate this Lease in accordance with the terms hereof; (vi) Be issued by insurance companies licensed to do business in the states in which the Properties are located and which are rated A:VI or better by A.M. Best's Insurance Guide or are otherwise approved by Lessor and Remainderman; and (vii) Provide that the insurer shall not deny a claim nor shall the insurance be cancelled, invalidated or suspended by (1) any action, inaction, conduct or negligence of Lessor, Remainderman, Lender or any other party covered by any standard mortgage clause endorsement, Lessee, anyone acting for Lessee or any subtenant or other occupant of any of the Properties, (2) occupancy or use of any of the Properties for purposes more hazardous than permitted by such policies, (3) any foreclosure or other proceedings relating to any of the Properties or change in title to or ownership of any of the Properties, or (4) any breach or violation by Lessee or any other person of any warranties, declarations or conditions contained in such policies or the applications for such policies. It is expressly understood and agreed that the foregoing minimum limits of insurance coverage shall not limit the liability of Lessee for its acts or omissions as provided in this Lease. All insurance policies (with the exception of worker's compensation insurance to the extent not available under statutory law), shall designate Lessor, Remainderman and Lender as additional named insureds as their interests may appear and shall be payable as set forth in Section 21 hereof. All such policies shall be written as primary policies, with deductibles not to exceed 10% of the amount of coverage. Any other policies, including any policy now or hereafter carried by Lessor, Remainderman or Lender, shall serve as excess coverage. Lessee shall procure and cause Permitted Sublessees to procure policies for all insurance for periods of not less than one year and shall provide to Lessor, Remainderman and Lender certificates of insurance or, upon the request of Lessor, Remainderman or Lender, duplicate originals of insurance policies evidencing that insurance satisfying the requirements of this Lease is in effect at all times. In the event of any transfer by Lessor of Lessor's interest in any of the Properties or any financing or refinancing of Lessor's interest in any of the Properties, or by Remainderman of Remainderman's interest in any of the Properties, Lessee shall, upon not less than ten (10) days' prior written notice, deliver to Lessor and Remainderman or any Lender providing such financing or refinancing, as the case may be, certificates of all insurance required to be maintained and caused to be maintained by Lessee and the Permitted Sublessees hereunder naming such transferee or such 17 Lender, as the case may be, as an additional named insured to the extent required herein effective as of the date of such transfer, financing or refinancing. 13. TAX AND INSURANCE IMPOUND. Upon the occurrence of an Event of Default, Lessor may require Lessee to pay to Lessor sums which will provide an impound account (which shall not be deemed a trust fund) for paying up to the next one year of taxes, assessments and/or insurance premiums for each of the Properties. Upon such requirement, Lessor will estimate the amounts needed for such purposes and will notify Lessee to pay the same to Lessor in equal monthly installments, as nearly as practicable, in addition to all other sums due under this Lease. Should additional funds be required at any time, Lessee shall pay the same to Lessor on demand. Lessee shall advise Lessor of all taxes and insurance bills which are due and shall cooperate fully with Lessor in assuring that the same are paid timely. Lessor may deposit all impounded funds in accounts insured by any federal or state agency and may commingle such funds with other funds and accounts of Lessor. Interest or other gains from such funds, if any, shall be the sole property of Lessor. In the event of any default by Lessee, Lessor may apply all impounded funds against any sums due from Lessee to Lessor. Lessor shall give to Lessee an annual accounting showing all credits and debits to and from such impounded funds received from Lessee. 14. PAYMENT OF RENTAL AND OTHER SUMS. All rental and other sums which Lessee is required to pay hereunder shall be the unconditional obligation of Lessee and shall be payable in full when due without any setoff, abatement, deferment, deduction or counterclaim whatsoever. Upon execution of this Lease, Lessee shall establish arrangements whereby payments of the Base Monthly Rental and impound payments, if any, are transferred by Automated Clearing House Debit directly from Lessee's bank account to such account as Lessor may designate. Any delinquent payment (that is, any payment not made within five calendar days after the date when due) shall, in addition to any other remedy of Lessor, incur a late charge of 5% (which late charge is intended to compensate Lessor for the cost of handling and processing such delinquent payment and should not be considered interest) and bear interest at the Default Rate, such interest to be computed from and including the date such payment was due through and including the date of the payment; provided, however, in no event shall Lessee be obligated to pay a sum of late charge and interest higher than the maximum legal rate then in effect. 15. USE. Except as set forth below, each of the Properties shall be used solely for the operation of a Permitted Facility in accordance with the standards of operations then in effect on a system-wide basis, and for no other purpose. Lessee and the Permitted Sublessees shall occupy the Properties promptly following the Effective Date and, except as set forth below and except during periods when any of the Properties is untenantable by reason of fire or other casualty or condemnation (provided, however, during all such periods while any of the Properties is untenantable, Lessee shall strictly comply with the terms and conditions of Section 21 of this Lease), Lessee and the Permitted Sublessees shall at all times during the Lease Term occupy each of the Properties and shall diligently conduct their business on each of the Properties as a Permitted Facility. Lessee may cease or permit a Permitted Sublessee to cease diligent operation of business at any of the Properties for a period not to exceed 180 days; provided, however, Lessee may not cease or permit a Permitted Sublessee to cease diligent operation at more than two Properties at any one time and Lessee may cease or permit a Permitted Sublessee to cease operation only once with respect to each Property within any five-year period during the Lease Term. If Lessee or a Permitted Sublessee does discontinue operation as permitted by this Section, Lessee shall (i) give written notice to Lessor within 10 days after Lessee or a Permitted Sublessee elects to cease operation, (ii) provide adequate protection and maintenance of any such 18 Properties during any period of vacancy, (iii) comply with all Applicable Regulations and otherwise comply with the terms and conditions of this Lease other than the continuous use covenant set forth in this Section, and (iv) pay all costs necessary to restore such Properties to their condition on the day operation of the business ceased at such time as such Properties are reopened for business operations or other substituted use approved by Lessor as contemplated below. Notwithstanding anything herein to the contrary, Lessee shall pay the Base Monthly Rental on the first day of each month during any period in which Lessee discontinues operation. Lessee shall not, by itself or through any assignment, sublease or other type of transfer, convert any of the Properties to a use other than a Permitted Facility during the Lease Term without Lessor's consent, which consent shall not be unreasonably withheld or delayed. Lessor may consider any or all of the following in determining whether to grant its consent, without being deemed to be unreasonable: (i) whether the rental paid to Lessor would be equal to or greater than the anticipated rental assuming continued existing use, (ii) whether the proposed rental to be paid to Lessor is reasonable considering the converted use of the Properties and the customary rental prevailing in the community for such use, (iii) whether the converted use will be consistent with the highest and best use of the Properties, and (iv) whether the converted use will increase Lessor's risks or decrease the value of the Properties. 16. COMPLIANCE WITH LAWS, RESTRICTIONS, COVENANTS AND ENCUMBRANCES. A. Lessee's and the Permitted Sublessees' use and occupation of each of the Properties, and the condition thereof, shall, at Lessee's and the Permitted Sublessees' sole cost and expense, comply fully with all Applicable Regulations and all restrictions, covenants and encumbrances of record with respect to each of the Properties. In addition to the other requirements of this Section, Lessee shall, at all times throughout the Lease Term, comply with and cause the Permitted Sublessees to comply with all Applicable Regulations, including, without limitation, in connection with any maintenance, repairs and replacements of the Properties undertaken by Lessee as required by Section 17 of this Lease. B. Lessee will not permit any act or condition to exist on or about any of the Properties which will increase any insurance rate thereon, except when such acts are required in the normal course of business and Lessee shall pay for such increase. C. Without limiting the generality of the other provisions of this Section, Lessee agrees that it shall be responsible for complying in all respects with and causing compliance in all respects with the Americans with Disabilities Act of 1990, as such act may be amended from time to time, and all regulations promulgated thereunder (collectively, the "ADA"), as it affects the Properties, including, but not limited to, making required "readily achievable" changes to remove any architectural or communications barriers, and providing auxiliary aides and services within the Properties. Lessee further agrees that any and all alterations made to the Properties during the Lease Term will comply with the requirements of the ADA. All plans for alterations which must be submitted to Lessor under the provisions of Section 18 must include a statement from a licensed architect or engineer certifying that they have reviewed the plans, and that the plans substantially comply with all applicable provisions of the ADA. Any subsequent approval or consent to the plans by Lessor shall not be deemed to be a representation of Lessor's part that the plans comply with the ADA, which obligation shall remain with Lessee. Lessee agrees that it will defend, indemnify and hold harmless the Indemnified Parties from and against any and all Losses caused by, incurred or resulting from Lessee's failure to comply with its obligations under this Section. 19 D. Lessee represents and warrants to Lessor and Environmental Insurer, as of the Effective Date, to Lessee's knowledge and except as disclosed in the Questionnaires: (i) None of the Properties nor Lessee are in violation of, or subject to, any pending or threatened investigation or inquiry by any Governmental Authority or to any remedial obligations under any Environmental Laws, and this representation and warranty would continue to be true and correct following disclosure to the applicable Governmental Authorities of all relevant facts, conditions and circumstances, if any, pertaining to the Properties. (ii) No permits, licenses or similar authorizations to construct, occupy, operate or use any buildings, improvements, fixtures and equipment forming a part of any of the Properties by reason of any Environmental Laws have been obtained or are required to be obtained, except for such permits, licenses or authorizations the failure of which to obtain could reasonably be expected to have a Material Adverse Effect. (iii) No Hazardous Materials have been used, handled, manufactured, generated, produced, stored, treated, processed, transferred, disposed of or otherwise Released in, on, under, from or about any of the Properties, except in De Minimis Amounts. (iv) The Properties do not contain Hazardous Materials, other than in De Minimis Amounts, or underground storage tanks. (v) There is no threat of any Release migrating to any of the Properties. (vi) There is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with any of the Properties. (vii) Lessee has not received any written or oral notice or other communication from any person or entity (including but not limited to a Governmental Authority) relating to Hazardous Materials or Remediation thereof, of possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with any of the Properties, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing, in each case with respect to a condition or event that could reasonably be expected to have a Material Adverse Effect. (viii) Lessee has truthfully and fully provided to Lessor, in writing, any and all information relating to environmental conditions in, on, under or from the Properties that is known to Lessee and that is contained in Lessee's files and records, including but not limited to any reports relating to Hazardous Materials in, on, under or from any of the Properties. (ix) All uses and operations on or of the Properties, whether by Lessee or any other person or entity, have been in compliance with all Environmental Laws and permits issued pursuant thereto, except for such non-compliance which could not reasonably be expected to have a Material Adverse Effect; there have been no Releases in, on, under or from any of the Properties, except in De Minimis Amounts; there are no Hazardous Materials in, on, or under any of the Properties, except in De Minimis Amounts; and the Properties have been kept free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law (the "Environmental Liens"). Lessee has not 20 allowed any tenant or other user of any of the Properties to do any act that materially increased the dangers to human health or the environment, posed an unreasonable risk of harm to any person or entity (whether on or off the Properties), impaired the value of any of the Properties, is contrary to any requirement of any insurer, constituted a public or private nuisance, constituted waste, or violated any covenant, condition, agreement or easement applicable to any of the Properties. E. Lessee covenants to Lessor and Environmental Insurer during the Lease Term that: (i) the Properties shall not be in violation of or subject to any investigation or inquiry by any Governmental Authority or to any remedial obligations under any Environmental Laws, except for such violations or investigations or inquiries which relate to Hazardous Materials in De Minimis Amounts. If any such investigation or inquiry is initiated, Lessee shall promptly notify Lessor; (ii) all uses and operations on or of each of the Properties, whether by Lessee, a Permitted Sublessee or any other person or entity, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (iii) there shall be no Releases in, on, under or from any of the Properties, except in De Minimis Amounts; (iv) there shall be no Hazardous Materials in, on, or under any of the Properties, except in De Minimis Amounts; (v) Lessee shall keep each of the Properties free and clear of all Environmental Liens, whether due to any act or omission of Lessee or any other person or entity; (vi) Lessee shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to subsection F below, including but not limited to providing all relevant information and making knowledgeable persons available for interviews; (vii) Lessee shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with any of the Properties as may be reasonably requested by Lessor (including but not limited to sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Lessor and Environmental Insurer the reports and other results thereof, and Lessor, Environmental Insurer and the other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (viii) Lessee shall, at its sole cost and expense, comply with all reasonable written requests of Lessor to (1) reasonably effectuate Remediation of any condition (including but not limited to a Release) in, on, under or from any of the Properties; (2) comply with any Environmental Law; (3) comply with any directive from any Governmental Authority; and (4) take any other reasonable action necessary or appropriate for protection of human health or the environment; (ix) Lessee shall not do or allow any Permitted Sublessee or any other tenant or other user of any of the Properties to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any person or entity (whether on or off any of the Properties), impairs or may impair the value of any of the Properties, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to any of the Properties; and (x) Lessee shall immediately notify Lessor in writing of (A) any presence of Releases or Threatened Releases in, on, under, from or migrating towards any of the Properties; (B) any non-compliance with any Environmental Laws related in any way to any of the Properties; (C) any actual Environmental Lien; (D) any required or proposed Remediation of environmental conditions relating to any of the Properties; and (E) any written or oral notice or other communication of which Lessee becomes aware from any source whatsoever (including but not limited to a Governmental Authority) relating in any way to Hazardous Materials or Remediation thereof, possible liability of any person or entity pursuant to any Environmental Law, other environmental conditions in connection with any of the Properties, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Section. 21 F. Lessor, Lender, Environmental Insurer and any other person or entity designated by Lessor, including but not limited to any receiver, any representative of a Governmental Authority, and any environmental consultant, shall have the right, after five Business Days' prior written notice to Lessee (except that in the event of an emergency no such prior notice shall be required) but not the obligation, to enter upon the Properties at all reasonable times (including, without limitation, in connection with any Securitization, Participation or Transfer or in connection with a proposed sale or conveyance of any of the Properties or a proposed financing or refinancing secured by any of the Properties or in connection with the exercise of any remedies set forth in this Lease, the Mortgages or the other Loan Documents, as applicable) to assess any and all aspects of the environmental condition of the Properties and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in the sole and absolute discretion of the party conducting the assessment) and taking samples of soil, groundwater or other water, air, or building materials, and conducting other invasive testing; provided, however, that any such persons (except in emergencies) shall use reasonable efforts to undertake any such assessments or investigations so as to minimize the impact on business operations at the Properties. Lessee shall cooperate with and provide access to Lessor, Lender, Environmental Insurer and any other person or entity designated by Lessor. Any such assessment and investigation shall be at Lessee's sole cost and expense. G. Lessee shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless each of the Indemnified Parties for, from and against any and all Losses (excluding Losses suffered by an Indemnified Party directly arising out of such Indemnified Party's gross negligence or willful misconduct; provided, however, that the term "gross negligence" shall not include gross negligence imputed as a matter of law to any of the Indemnified Parties solely by reason of the Lessor's interest in any of the Properties or Lessor's failure to act in respect of matters which are or were the obligation of Lessee under this Lease) and costs of Remediation (whether or not performed voluntarily), engineers' fees, environmental consultants' fees, and costs of investigation (including but not limited to sampling, testing, and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas) imposed upon or incurred by or asserted against any Indemnified Parties, and directly or indirectly arising out of or in any way relating to any one or more of the following: (i) any presence of any Hazardous Materials in, on, above, or under any of the Properties; (ii) any past or present Release or Threatened Release in, on, above, under or from any of the Properties; (iii) any activity by Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or other user of any of the Properties in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from any of the Properties of any Hazardous Materials at any time located in, under, on or above any of the Properties; (iv) any activity by Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or other user of any of the Properties in connection with any actual or proposed Remediation of any Hazardous Materials at any time located in, under, on or above any of the Properties, whether or not such Remediation is voluntary or pursuant to court or administrative order, including but not limited to any removal, remedial or corrective action; (v) any non-compliance or violations of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with any of the Properties or operations thereon, including but not limited to any failure by Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or other user of any of the Properties to comply with any order of any Governmental Authority in connection with any Environmental Laws; (vi) the imposition, recording or filing of any Environmental Lien 22 encumbering any of the Properties; (vii) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in this Section; (viii) any injury to, destruction of or loss of natural resources in any way connected with any of the Properties, including but not limited to costs to investigate and assess such injury, destruction or loss; (ix) any acts of Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or user of any of the Properties in arranging for disposal or treatment, or arranging with a transporter for transport for disposal or treatment, of Hazardous Materials owned or possessed by Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or user of any of the Properties, at any facility or incineration vessel owned or operated by another person or entity and containing such or similar Hazardous Materials; (x) any acts of Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or user of any of the Properties, in accepting any Hazardous Materials for transport to disposal or treatment facilities, incineration vessels or sites selected by Lessee, a Permitted Sublessee, any person or entity affiliated with Lessee or a Permitted Sublessee or any other tenant or user of any of the Properties, from which there is a Release, or a Threatened Release of any Hazardous Materials which causes the incurrence of costs for Remediation; (xi) any personal injury, wrongful death, or property damage arising under any statutory or common law or tort law theory, including but not limited to damages assessed for the maintenance of a private or public nuisance or for the conducting of an abnormally dangerous activity on or near any of the Properties; and (xii) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations pursuant to this Section. H. The obligations of Lessee and the rights and remedies of the Indemnified Parties under the foregoing subsections D through G shall survive the termination, expiration and/or release of this Lease. 17. CONDITION OF PROPERTIES; MAINTENANCE. Lessee, at its own expense, will maintain and cause the Permitted Sublessees to maintain all parts of each of the Properties in good repair and sound condition, except for ordinary wear and tear, and will take all action and will make all structural and non-structural, foreseen and unforeseen and ordinary and extraordinary changes and repairs or replacements which may be required to keep all parts of each of the Properties in good repair and sound condition. Lessee waives any right to (i) require Lessor to maintain, repair or rebuild all or any part of any of the Properties or (ii) make repairs at the expense of Lessor, pursuant to any Applicable Regulations at any time in effect. 18. WASTE; ALTERATIONS AND IMPROVEMENTS. Neither Lessee nor any Permitted Sublessee shall commit actual or constructive waste upon any of the Properties. Neither Lessee nor any Permitted Sublessee shall alter the exterior, structural, plumbing or electrical elements of any of the Properties in any manner without the consent of Lessor, which consent shall not be unreasonably withheld, conditioned or delayed (it being understood and agreed that to the extent Lessor is required to obtain the approval of Lender with respect to any such alterations, Lessor shall in no event be deemed to have unreasonably withheld Lessor's approval thereof if Lender shall not have given its approval if required); provided, however, Lessee or a Permitted Sublessee may undertake nonstructural alterations to any of the Properties costing less than $50,000.00 without Lessor's consent. If Lessor's consent is required hereunder and Lessor consents to the making of any such alterations, the same shall be made according to plans and 23 specifications approved by Lessor and subject to such other conditions as Lessor shall require. All alterations shall be made by Lessee or a Permitted Sublessee shall be at their sole expense by licensed contractors and in accordance with all applicable laws governing such alterations. Any work at any time commenced by Lessee or a Permitted Sublessee on any of the Properties shall be prosecuted diligently to completion, shall be of good workmanship and materials and shall comply fully with all the terms of this Lease. Upon completion of any alterations, Lessee shall promptly provide Lessor with (i) evidence of full payment to all laborers and materialmen contributing to the alterations, (ii) to the extent Lessor is required to preapprove plans and specifications for such alterations, an architect's certificate certifying the alterations to have been completed in conformity with the plans and specifications, (iii) a certificate of occupancy (if the alterations are of such a nature as would require the issuance of a certificate of occupancy), and (iv) any other documents or information reasonably requested by Lessor. Any addition to or alteration of any of the Properties shall automatically be deemed a part of the Properties and belong to Lessor, and Lessee and the applicable Permitted Sublessee shall execute and deliver to Lessor such instruments as Lessor may require to evidence the ownership by Lessor of such addition or alteration. Lessee and the applicable Permitted Sublessee shall execute and file or record, as appropriate, a "Notice of Non-Responsibility," or any equivalent notice permitted under applicable law in the states where the applicable Properties are located. 19. INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold harmless each of the Indemnified Parties from and against any and all Losses (excluding Losses suffered by an Indemnified Party arising out of the gross negligence or willful misconduct of such Indemnified Party; provided, however, that the term "gross negligence" shall not include gross negligence imputed as a matter of law to any of the Indemnified Parties solely by reason of the Lessor's interest in any of the Properties or Lessor's failure to act in respect of matters which are or were the obligation of Lessee under this Lease) caused by, incurred or resulting from Lessee's or any Permitted Sublessee's operations of or relating in any manner to any of the Properties, whether relating to their original design or construction, latent defects, alteration, maintenance, use by Lessee, any Permitted Sublessee or any person thereon, supervision or otherwise, or from any breach of, default under, or failure to perform, any term or provision of this Lease by Lessee, its officers, employees, agents or other persons, or to which any Indemnified Party is subject because of Lessor's or Remainderman's interest in any of the Properties, including, without limitation, Losses arising from (1) any accident, injury to or death of any person or loss of or damage to property occurring in, on or about any of the Properties or portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways, (2) any use, non-use or condition in, on or about, or possession, alteration, repair, operation, maintenance or management of, any of the Properties or any portion thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways, (3) any representation or warranty made herein by Lessee, in any certificate delivered in connection herewith or in any other agreement to which Lessee is a party or pursuant thereto being false or misleading in any material respect as of the date of such representation or warranty was made, (4) performance of any labor or services or the furnishing of any materials or other property in respect to any of the Properties or any portion thereof, (5) any taxes, assessments or other charges which Lessee is required to pay or cause to be paid under Section 10, (6) any lien, encumbrance or claim arising on or against any of the Properties or any portion thereof under any Applicable Regulation or otherwise which Lessee is obligated hereunder to remove and discharge or cause to be removed or discharged, or the failure to comply with any Applicable Regulation, (7) the claims of any invitees, patrons, licensees or subtenants of all or any portion of any of the Properties or any Person acting through or under Lessee or any Permitted Sublessee or otherwise acting under or as a consequence of this Lease or any sublease, (8) any act or omission 24 of Lessee or any Permitted Sublessee or their agents, contractors, licensees, subtenants or invitees, (9) any contest referred to in Section 10, and (10) the sale of liquor, beer or wine on any of the Properties. It is expressly understood and agreed that Lessee's obligations under this Section shall survive the expiration or earlier termination of this Lease for any reason. 20. QUIET ENJOYMENT. So long as Lessee shall pay the rental and other sums herein provided and shall keep and perform all of the terms, covenants and conditions on its part herein contained, Lessee shall have, subject and subordinate to Lessor's rights herein, the right to the peaceful and quiet occupancy of the Properties. Notwithstanding the foregoing, however, in no event shall Lessee be entitled to bring any action against Lessor to enforce its rights hereunder if an Event of Default shall have occurred and be continuing. 21. CONDEMNATION OR DESTRUCTION. A. In the event of a taking of all or any part of any of the Properties for any public or quasi-public purpose by any lawful power or authority by exercise of the right of condemnation or eminent domain or by agreement between Lessor, Lessee and those authorized to exercise such right ("Taking") or the commencement of any proceedings or negotiations which might result in a Taking or any damage to or destruction of any of the Properties or any part thereof (a "Casualty"), Lessee will promptly give written notice thereof to Lessor, generally describing the nature and extent of such Taking, proceedings, negotiations or Casualty and including copies of any documents or notices received in connection therewith. Thereafter, Lessee shall promptly send Lessor copies of all correspondence and pleadings relating to any such Taking, proceedings, negotiations or Casualty. During all periods of time following a Casualty, Lessee shall ensure that the subject Property is secure and does not pose any risk of harm to adjoining property owners or occupants or third-parties. B. In the event of (i) a Taking of the whole of any of the Properties, other than for temporary use, (ii) a Taking of substantially all of any of the Properties (other than for temporary use) that results in Lessee making a good faith determination that the restoration and continued use of the remainder of such Property as a Permitted Facility would be uneconomic (each of (i) and (ii), a "Total Taking"), or (iii) a Casualty of substantially all of any of the Properties that results in Lessee making a good faith determination that the restoration and continued use of such Property as a Permitted Facility would be uneconomic (a "Total Casualty"), Lessor shall be entitled to receive the entire award, insurance proceeds or payment in connection therewith without deduction for any estate vested in Lessee by this Lease or any Permitted Sublessee by the Permitted Subleases. Lessee hereby expressly assigns to Lessor all of its right, title and interest in and to every such award, insurance proceeds or payment and agrees that neither Lessee nor any Permitted Sublessee shall be entitled to any award, insurance proceeds or payment for the value of Lessee's leasehold interest in this Lease. Lessee shall be entitled to claim and receive any award or payment from the condemning authority expressly granted for the taking of Personalty, the interruption of its business and moving expenses, but only if such claim or award does not adversely affect or interfere with the prosecution of Lessor's claim for the Total Taking or otherwise reduce the amount recoverable by Lessor for the Total Taking. Lessee shall be entitled to claim and receive any insurance proceeds with respect to the Personalty, the interruption of its business and moving expenses, but only if such claim or proceeds does not adversely affect or interfere with the prosecution of Lessor's claim for the Total Casualty or otherwise reduce the amount recoverable by Lessor for the Total Casualty. 25 In the event of a Total Taking or Total Casualty, Lessee shall have the right to terminate this Lease with respect to the applicable Property by notice (the "Termination Notice") given to Lessor not later than 30 days after the Total Taking or Total Casualty, as applicable. The Termination Notice must: (i) specify a date on which this Lease with respect to such Property shall terminate, which date shall be the last day of a calendar month occurring not earlier than 120 days and not later than 150 days after the delivery of such notice (the "Early Termination Date"); (ii) contain a certificate executed by the president, chief financial officer or treasurer of Lessee which (X) describes the Total Taking or Total Casualty, (Y) represents and warrants that either the whole of such Property has been taken, or that substantially all of such Property has been taken and Lessee has determined in good faith that the restoration and continued use of the remainder of such Property as a Permitted Facility would be uneconomic, or that substantially all of such Property has been damaged or destroyed and Lessee has determined in good faith that the restoration and continued use of such Property as a Permitted Facility would be uneconomic, and (Z) contains a covenant by Lessee that neither Lessee or any Affiliate of Lessee will use such Property for a period of 2 years following the Early Termination Date; and (iii) if the Early Termination Date shall occur prior to the commencement of any extension options which may be exercised pursuant to Section 27, contain either (X) an irrevocable rejectable written offer (the "Rejectable Offer") of Lessee to purchase Lessor's interest in such Property and in the net award for such Total Taking or net insurance proceeds for such Total Casualty, as applicable, after deducting all costs, fees and expenses incident to the collection thereof, including all costs and expenses incurred by Lessor and Lender in connection therewith (the "Net Award") on the Early Termination Date for a purchase price equal to the Stipulated Loss Value (as defined below) for such Property, or (Y) a Rejectable Substitution Offer to substitute a Substitute Property satisfying the applicable requirements of Section 57.A for such Property and Lessor's interest in the Net Award. As used herein, the term "Stipulated Loss Value" shall mean the sum of (a) the product of the percentage specified on SCHEDULE I attached hereto which corresponds to the Early Termination Date multiplied by the Purchase Price for such Property, plus (b) all Base Annual Rental, Additional Rental and other sums and obligations then due and payable under this Lease, plus (c) in the event of a Total Casualty only, the Prepayment Charge corresponding to such Property. In the event of a termination of this Lease with respect to a Property pursuant to this Section 21.B which does not involve the acceptance (or deemed acceptance) of a Rejectable Substitution Offer, the Base Annual Rental then in effect shall be reduced by an amount equal to the product of (x) the Applicable Rent Reduction Percentage for such Property, and (y) the Base Annual Rental then in effect. If the Early Termination Date shall occur prior to the commencement of any extension options which may be exercised pursuant to Section 27, Lessor shall have 90 days from the delivery of the Termination Notice to deliver to Lessee written notice of its election to either accept or reject any Rejectable Offer or Rejectable Substitution Offer contained in the Termination Notice. Lessor's failure to deliver such notice within such time period shall be deemed to constitute Lessor's acceptance of the applicable Rejectable Offer or Rejectable Substitution Offer. If the Mortgage corresponding to such Property is still outstanding, any rejection of the Rejectable Offer or Rejectable Substitution Offer by Lessor shall not be effective unless it is consented to in writing by the Lender and such written consent is delivered to Lessee within such 90-day period. If Lessor accepts the Rejectable Offer or is deemed to have accepted the Rejectable Offer or if, while the Mortgage corresponding to such Property is still outstanding, any rejection of the Rejectable Offer by Lessor is not consented to in writing by the Lender, then, on the Early 26 Termination Date, Lessor shall sell and convey, and Lessee shall purchase for the Stipulated Loss Value, Lessor's interest in such Property and the Net Award. Lessee's obligations under this Lease with respect to such Property shall not be terminated until the applicable Stipulated Loss Value is paid in full. Upon such payment, (i) Lessor shall convey such Property to Lessee "as-is" by quit-claim deed, subject to all matters of record (except for the Mortgage corresponding to such Property and any other consensual liens granted by Lessor other than those granted by Lessor at the request of Lessee), and without representation or warranty, and (ii) all obligations of either party hereunder with respect to such Property shall cease as of the Early Termination Date, provided, however, Lessee's obligations to the Indemnified Parties under any indemnification provisions of this Lease with respect to such Property (including, without limitation, Sections 16 and 19) and Lessee's obligations to pay any sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Early Termination Date shall survive the termination of this Lease with respect to such Property. This Lease shall, however, continue in full force and effect with respect to all other Properties. If Lessor accepts the Rejectable Substitution Offer or is deemed to have accepted the Rejectable Substitution Offer or if, while the Mortgage corresponding to such Property is still outstanding, any rejection of the Rejectable Substitution Offer by Lessor is not consented to in writing by the Lender, then, on the Early Termination Date, Lessee shall complete such substitution, subject, however, to the satisfaction of each of the applicable terms and conditions set forth in Section 57. Upon such substitution (i) Lessee shall be entitled to claim and receive the Net Award and (ii) all obligations of either party hereunder with respect to the Property being replaced shall cease as of the Early Termination Date, provided, however, Lessee's obligations to the Indemnified Parties under any indemnification provisions of this Lease with respect to such Property (including, without limitation, Sections 16 and 19) and Lessee's obligations to pay any sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Early Termination Date shall survive the termination of this Lease with respect to such Property. This Lease shall, however, continue in full force and effect with respect to all other Properties. Lessee shall be solely responsible for the payment of all costs and expenses incurred in connection with the conveyance of a Property to Lessee pursuant to this Section 21, including, without limitation, to the extent applicable, the cost of title insurance, survey charges, stamp taxes, mortgage taxes, transfer fees, escrow and recording fees, taxes imposed on Lessor as a result of such conveyance, taxes imposed in connection with the transfer of a Property to Lessee or the termination of this Lease with respect to a Property pursuant to the provisions of this Section 21, Lessee's attorneys' fees and the reasonable attorneys' fees and expenses of counsel to Lessor and Lender. If Lessor rejects the Rejectable Offer or Rejectable Substitution Offer and, as long as the Mortgage corresponding to the Property subject to such Rejectable Offer or Rejectable Substitution Offer is still outstanding, such rejection is consented to in writing by Lender (and such written consent delivered to Lessee within the applicable 90-day period), or if the Early Termination Date shall occur after the commencement of any extension options exercised pursuant to Section 27, then (i) the Net Award shall be paid to and belong to Lessor, (ii) on the Early Termination Date, Lessee shall pay to Lessor all Base Annual Rental, Additional Rental and other sums and obligations then due and payable under this Lease, and (iii) all obligations of either party hereunder shall cease as of the Early Termination Date with respect to the applicable Property, provided, however, Lessee's obligations to the Indemnified Parties with respect to such 27 Property under any indemnification provisions of this Lease with respect to such Property (including, without limitation, Sections 16 and 19) and Lessee's obligations to pay any sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Early Termination Date shall survive the termination of this Lease. This Lease shall, however, continue in full force and effect with respect to all other Properties. C. In the event of a Taking of all or any part of any of the Properties for a temporary use ("Temporary Taking"), this Lease shall remain in full force and effect without any reduction of Base Annual Rental, Additional Rental or any other sum payable hereunder. Except as provided below, Lessee shall be entitled to the entire award for a Temporary Taking, whether paid by damages, rent or otherwise, unless the period of occupation and use by the condemning authorities shall extend beyond the date of expiration of this Lease, in which case the award made for such Taking shall be apportioned between Lessor and Lessee as of the date of such expiration. At the termination of any such Temporary Taking, Lessee will, at its own cost and expense and pursuant to the terms of Section 18 above, promptly commence and complete the restoration of the Property affected by such Temporary Taking; provided, however, Lessee shall not be required to restore such Property if the Lease Term shall expire prior to, or within one year after, the date of termination of such Temporary Taking, and in such event Lessor shall be entitled to recover the entire award relating to the Temporary Taking. D. In the event of a Taking which is not a Total Taking or a Temporary Taking ("Partial Taking") or of a Casualty which is not a Total Casualty (a "Partial Casualty"), all awards, compensation or damages shall be paid to Lessor, and Lessor shall have the option to (i) terminate this Lease with respect to the Property affected, provided that, as long as the Mortgage corresponding to the applicable Property is still outstanding, Lessor shall have obtained Lender's prior written consent, by notifying Lessee within 60 days after Lessee gives Lessor notice of such Partial Casualty or that title has vested in the taking authority or (ii) continue this Lease in effect, which election may be evidenced by either a notice from Lessor to Lessee or Lessor's failure to notify Lessee that Lessor has elected to terminate this Lease with respect to such Property within such 60-day period. Lessee shall have a period of 60 days after Lessor's notice that it has elected to terminate this Lease with respect to such Property during which to elect to continue this Lease with respect to such Property on the terms herein provided. If Lessor elects to terminate this Lease with respect to such Property and Lessee does not elect to continue this Lease with respect to such Property or shall fail during such 60-day period to notify Lessor of Lessee's intent to continue this Lease with respect to such Property, then this Lease shall terminate with respect to such Property as of the last day of the month during which such period expired. Lessee shall then immediately vacate and surrender such Property, all obligations of either party hereunder with respect to such Property shall cease as of the date of termination (provided, however, Lessee's obligations to the Indemnified Parties under any indemnification provisions of this Lease with respect to such Property (including, without limitation, Sections 16 and 19) and Lessee's obligations to pay Base Annual Rental, Additional Rental and all other sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the date of termination shall survive such termination) and Lessor may retain all such awards, compensation or damages. The Lease shall continue in full force and effect with respect to all other Properties. If Lessor elects not to terminate this Lease with respect to such Property, or if Lessor elects to terminate this Lease with respect to such Property but Lessee elects to continue this Lease with respect to such Property, then this Lease shall continue in full force and effect on the following terms: (i) all Base Annual Rental, Additional Rental and other sums and obligations due under this Lease shall continue unabated, 28 and (ii) Lessee shall promptly commence and diligently prosecute restoration of such Property to the same condition, as nearly as practicable, as prior to such Partial Taking or Partial Casualty as approved by Lessor. Subject to reasonable conditions for disbursement imposed by Lessor, Lessor shall promptly make available in installments as restoration progresses an amount up to but not exceeding the amount of any award, compensation or damages received by Lessor after deducting all costs, fees and expenses incident to the collection thereof, including all costs and expenses incurred by Lessor and Lender in connection therewith (the "Net Restoration Amount"), upon request of Lessee accompanied by evidence reasonably satisfactory to Lessor that such amount has been paid or is due and payable and is properly a part of such costs and that Lessee has complied with the terms of Section 18 above in connection with the restoration. Prior to the disbursement of any portion of the Net Restoration Amount with respect to a Partial Casualty, Lessee shall provide evidence reasonably satisfactory to Lessor of the payment of restoration expenses by Lessee up to the amount of the insurance deductible applicable to such Partial Casualty. Lessor shall be entitled to keep any portion of the Net Restoration Amount which may be in excess of the cost of restoration, subject to the rights of Lender under the Loan Documents, and Lessee shall bear all additional costs, fees and expenses of such restoration in excess of the Net Restoration Amount. If this Lease is terminated with respect to any Property as a result of a Partial Casualty, simultaneously with such termination Lessee shall pay Lessor an amount equal to the insurance deductible applicable to such Partial Casualty. E. Any loss under any property damage insurance required to be maintained by Lessee or any Permitted Sublessee shall be adjusted by Lessor and Lessee. Any award relating to a Total Taking or a Partial Taking shall be adjusted by Lessor or, at Lessor's election, Lessee. Notwithstanding the foregoing or any other provisions of this Section to the contrary, if at the time of any Taking or any Casualty or at any time thereafter Lessee shall be in default under this Lease and such default shall be continuing, Lessor is hereby authorized and empowered but shall not be obligated, in the name and on behalf of Lessee and otherwise, to file and prosecute Lessee's claim, if any, for an award on account of such Taking or for insurance proceeds on account of such Casualty and to collect such award or proceeds and apply the same, after deducting all costs, fees and expenses incident to the collection thereof, to the curing of such default and any other then existing default under this Lease and/or to the payment of any amounts owed by Lessee to Lessor under this Lease, in such order, priority and proportions as Lessor in its discretion shall deem proper. F. Notwithstanding the foregoing, nothing in this Section 21 shall be construed as limiting or otherwise adversely affecting the representations, warranties, covenants and characterizations set forth in Lease, including, without limitation, those provisions set forth in Section 3 of this Lease. 22. INSPECTION. Lessor and its authorized representatives shall have the right, upon giving reasonable advance notice, to enter any of the Properties or any part thereof at reasonable times in order to inspect the same and make photographic or other evidence concerning Lessee's compliance with the terms of this Lease or in order to show the Properties to prospective purchasers and lenders. Lessee hereby waives any claim for damages for any injury or inconvenience to or interference with Lessee's business, any loss of occupancy or quiet enjoyment of any of the Properties and any other loss occasioned by such entry so long as Lessor shall have used reasonable efforts not to unreasonably interrupt Lessee's normal business operations. Lessee shall keep and maintain and cause the Permitted Sublessees to keep and maintain at the Properties or Lessee's corporate headquarters full, complete and appropriate 29 books of account and records of Lessee's business relating to the Properties in accordance with GAAP. Lessee's and Permitted Sublessees' books and records shall be open for inspection at reasonable times and upon reasonable notice by Lessor, Lender and their respective auditors or other authorized representatives and shall show such information as is reasonably necessary to determine compliance with Lessor's obligations under the Loan Documents. 23. DEFAULT, REMEDIES AND MEASURE OF DAMAGES. A. Each of the following shall be an event of default under this Lease (each, an "Event of Default"): (i) If any representation or warranty of Lessee set forth in this Lease is false as and when made in any material respect, or if Lessee renders any statement or account which is false as and when made in any material respect; (ii) If any rent or other monetary sum due under this Lease is not paid within five days from the date when due; provided, however, notwithstanding the occurrence of such an Event of Default, Lessor shall not be entitled to exercise its remedies set forth below unless and until Lessor shall have given Lessee written notice thereof and a period of five days from the delivery of such written notice shall have elapsed without such Event of Default being cured; (iii) If Lessee fails to pay, prior to delinquency, any taxes, assessments or other charges, the failure of which to pay will result in the imposition of a lien against any of the Properties or the rental or other payments due under this Lease or a claim against Lessor, unless Lessee is contesting such taxes, assessments or other charges in accordance with the provisions of Section 10 of this Lease; provided, however, notwithstanding the occurrence of such an Event of Default, Lessor shall not be entitled to exercise its remedies set forth below unless and until Lessor shall have given Lessee written notice thereof and a period of 5 days from the delivery of such written notice shall have elapsed without such Event of Default being cured; (iv) If Lessee becomes insolvent within the meaning of the Code, files or notifies Lessor that it intends to file a petition under the Code, initiates a proceeding under any similar law or statute relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts (collectively, hereinafter, an "Action"), becomes the subject of either a petition under the Code or an Action which is not dissolved within 90 days after filing, or is not generally paying its debts as the same become due; (v) If Lessee vacates or abandons any of the Properties other than in accordance with the provisions of Section 15 of this Lease; (vi) If Lessee fails to observe or perform any of the other covenants (except with respect to a breach of the Aggregate Fixed Charge Coverage Ratio, which breach is addressed in subitem (ix) below), conditions or obligations of this Lease; provided, however, if any such failure does not involve the payment of any monetary sum, is not willful or intentional, does not place any rights or property of Lessor in immediate jeopardy, and is within the reasonable power of Lessee to promptly cure after receipt of notice thereof, all as determined by Lessor in its reasonable discretion, then such failure shall not constitute an Event of Default hereunder, unless otherwise expressly provided herein, unless and until Lessor shall have given Lessee notice thereof and a period of 30 days shall have elapsed, 30 during which period Lessee may correct or cure such failure, upon failure of which an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required. If such failure cannot reasonably be cured within such 30 day period, as determined by Lessor in its reasonable discretion, and Lessee is diligently pursuing a cure of such failure, then Lessee shall have a reasonable period to cure such failure beyond such 30 day period, which shall in no event exceed 90 days after receiving notice of such failure from Lessor. If Lessee shall fail to correct or cure such failure within such 90-day period, an Event of Default shall be deemed to have occurred hereunder without further notice or demand of any kind being required; (vii) If there is an "Event of Default" or a breach or default, after the passage of all applicable notice and cure or grace periods, under any other Sale-Leaseback Document, any of the Other Agreements or any of the Permitted Subleases; (viii) If a final, nonappealable judgment is rendered by a court against Lessee which has a material adverse effect on either the ability to conduct business at any of the Properties for its intended use or Lessee's ability to perform its obligations under this Lease, or is in the amount of $500,000.00 or more that is not covered by insurance, and in either event is not discharged or provision made for such discharge within 60 days from the date of entry thereof; (ix) If there is a breach of the Aggregate Fixed Charge Coverage Ratio requirement and Lessor shall have given Lessee notice thereof and Lessee shall have failed within a period of 15 days from the delivery of such notice to either: (1) deliver a Rejectable Substitution Offer to Lessor for the substitution of such Substitute Properties satisfying the applicable requirements of Section 57.A for the Properties (starting with the Property with the lowest "Fixed Charge Coverage Ratio" (determined as contemplated in the following sentence) and proceeding in ascending order to the Property with the next lowest Fixed Charge Coverage Ratio) as is necessary to cure the breach of the Aggregate Fixed Charge Coverage Ratio requirement; (2) deliver a Rejectable Purchase Offer to Lessor to purchase such of the Properties (starting with the Property with the lowest Fixed Charge Coverage Ratio and proceeding in ascending order to the Property with the next lowest Fixed Charge Coverage Ratio) as is necessary to cure the breach of the Aggregate Fixed Charge Coverage Ratio requirement; (3) deliver notice to Lessor that it has elected to pay the FCCR Rent Prepayment Amount (as hereinafter defined) on the first day of the calendar month immediately following the date such notice is delivered; or (4) deliver to Lessor a letter of credit in favor of Lessor (or, at Lessor's written direction, in favor of Lender) in the form attached to this Lease as EXHIBIT B issued by an Approved Institution (the "FCCR Letter of Credit") in the amount of the FCCR Rent Prepayment Amount. Notwithstanding the foregoing, Lessee may not provide a FCCR Letter of Credit to cure a breach of the Aggregate Fixed Charge Coverage Ratio requirement if the amount of the FCCR Letter of Credit, when 31 added to the aggregate amount of all FCCR Letters of Credit and the Security Deposit Letter of Credit, previously delivered to Lessor, would exceed the Base Annual Rental. For purposes of the preceding subitems (1) and (2), the definitions set forth in Section 8.A of this Lease with respect to the calculation of the Aggregate Fixed Charge Coverage Ratio shall be deemed modified as applicable to provide for the calculation of a Fixed Charge Coverage Ratio for each Property on an individual basis rather than on an aggregate basis with the other Properties. For purposes of such calculation, the Operating Lease Expense with respect to this Lease for each such Property shall equal the product of (x) the Applicable Rent Reduction Percentage for such Property, and (y) the Base Annual Rental then in effect. If Lessor makes a Rejectable Substitution Offer or Rejectable Purchase Offer as contemplated by subitems (1) and (2) above, unless Lessor rejects such Rejectable Substitution Offer or Rejectable Purchase Offer as contemplated by Section 57 or 58, as applicable, the failure of Lessee to complete such substitutions or purchases within the time period contemplated by Section 57 or 58, as applicable, shall be deemed an Event of Default without further notice or demand of any kind being required. If Lessee delivers notice to Lessor that it has elected to pay the FCCR Rent Prepayment Amount as provided in subitem (3) above, the failure of Lessee to pay Lessor the FCCR Rent Prepayment Amount on the first day of the calendar month immediately following the date such notice is delivered shall be deemed an Event of Default without further notice or demand of any kind being required. In the event Lessee elects to pay Lessor the FCCR Rent Prepayment Amount as provided in subitem (3) above, Base Monthly Rental beginning with the calendar month in which such payment is made shall be equal to the Base Monthly Rental then in effect reduced by the FCCR Rent Reduction Amount (as hereinafter defined). For purposes of this Section 23.A(ix), the following terms shall be defined as set forth below: "FCCR RENT PREPAYMENT AMOUNT" means the present value, discounted on a monthly basis at 9.44%, of the FCCR Rent Reduction Amount for each month beginning with the calendar month in which the FCCR Rent Prepayment Amount is paid and ending with the calendar month of May, 2021, inclusive. "FCCR RENT REDUCTION AMOUNT" the product of (x) the Base Monthly Rental for the last month of the fiscal year for which the breach of the Aggregate Fixed Charge Coverage Ratio requirement occurred and (y) the Fixed Charge Coverage Shortfall Percentage. For purposes of illustration and not limitation, if (i) Lessee's Aggregate Fixed Charge Coverage Ratio for the Fiscal Year ending May 27, 2010 was 1.0 (which results in a Fixed Charge Coverage Shortfall Percentage of 20%), (ii) Lessee paid the FCCR Rent Prepayment Amount on September 1, 2010, and (iii) the Base Monthly Rental for August, 2010 was $100, then the Base Monthly Rental payment beginning on September 1, 2010 shall be equal to the Base Monthly Rental for August, 2010 reduced by the sum of $20. 32 "FIXED CHARGE COVERAGE SHORTFALL PERCENTAGE" means the percentage represented by (x) 1 minus (y) a fraction, the numerator of which shall be the Aggregate Fixed Charge Coverage Ratio for the fiscal year for which the breach of the Aggregate Fixed Charge Coverage Ratio requirement occurred, and the denominator of which shall be 1.25. Any FCCR Letter of Credit delivered pursuant to this Section 23.A(ix) shall be maintained in effect until the next fiscal year of Lessee for which Lessee complies with the Aggregate Fixed Charge Coverage Ratio requirement without taking such FCCR Letter of Credit into account. If an Event of Default shall have occurred and be continuing, Lessor shall have the right to present such FCCR Letter of Credit for payment and apply such proceeds towards any amounts due under this Lease (including, without limitation, any amounts owed by Lessee under Section 23.B as a result of such Event of Default), provided that (x) such application of proceeds shall not be deemed to cure such Event of Default if the amount of the FCCR Letter of Credit is less than the amounts due under this Lease (including, without limitation, the amounts owed by Lessee under Section 23.B as a result of such Event of Default), and (y) if the amount of the FCCR Letter of Credit is more than the amounts due under this Lease (including, without limitation, the amounts owed by Lessee under Section 23.B as a result of such Event of Default), the excess shall be retained by Lessor to be applied towards amounts due under this Lease as a result of any subsequent Event of Default or returned to Lessee as required by the last sentence of this grammatical paragraph. Also, if a substitute or replacement FCCR Letter of Credit issued by an Approved Institution for such FCCR Letter of Credit in the amount of such FCCR Letter of Credit is not provided to Lessor at least 30 days prior to the scheduled expiration date of such FCCR Letter of Credit, Lessor shall have the right to present such FCCR Letter of Credit for payment at any time within such 30 day period and the proceeds of such FCCR Letter of Credit shall be retained by Lessor to be applied towards amounts due under this Lease as a result of any subsequent Event of Default or returned to Lessee as required by the last sentence of this grammatical paragraph. Once there occurs a fiscal year of Lessee for which Lessee complies with the Aggregate Fixed Charge Coverage Ratio requirement without taking such FCCR Letter of Credit into account and no Event of Default shall have occurred and be continuing, Lessor shall either: (i) release such FCCR Letter of Credit to the Approved Institution if the FCCR Letter of Credit has not been presented for payment; or (ii) pay to Lessee any proceeds from any drawn FCCR Letter of Credit if such proceeds were not previously applied as contemplated above. Notwithstanding the foregoing, if, within a 30 day period after the delivery of Lessor's notice to Lessee of Lessee's breach of the Aggregate Fixed Charge Coverage Ratio requirement, Lessee provides evidence satisfactory to Lessor that the Aggregate Fixed Charge Coverage Ratio is at least 1.25:1 for the twelve calendar month period immediately preceding the delivery to Lessor of such evidence, no Event of Default shall be deemed to have occurred as a result of such breach of the Aggregate Fixed Charge Coverage Ratio requirement; (x) If Lessee shall fail to maintain or cause to be maintained insurance in accordance with the requirements of Section 12 of this Lease; or (xi) There shall be a breach of Section 26.D or Section 26.E. 32 B. Upon the occurrence of an Event of Default, with or without notice or demand, except the notice prior to default required under certain circumstances by subsection A. above or such other notice as may be required by statute and cannot be waived by Lessee (all other notices being hereby waived), Lessor shall be entitled to exercise, at its option, concurrently, successively, or in any combination, all remedies available at law or in equity, including without limitation, any one or more of the following: (i) To terminate this Lease, whereupon Lessee's and Permitted Sublessees' right to possession of the Properties shall cease and this Lease, except as to Lessee's liability, and the Permitted Subleases shall be terminated. (ii) To reenter and take possession of any or all of the Properties, any or all Personalty and, to the extent permissible, all franchises, licenses, area development agreements, permits and other rights or privileges of Lessee pertaining to the use and operation of any or all of the Properties and to expel Lessee and those claiming under or through Lessee, without being deemed guilty in any manner of trespass or becoming liable for any loss or damage resulting therefrom, without resort to legal or judicial process, procedure or action. No notice from Lessor hereunder or under a forcible entry and detainer statute or similar law shall constitute an election by Lessor to terminate this Lease unless such notice specifically so states. If Lessee shall, after default, voluntarily give up possession of any of the Properties to Lessor, deliver to Lessor or its agents the keys to any of the Properties, or both, such actions shall be deemed to be in compliance with Lessor's rights and the acceptance thereof by Lessor or its agents shall not be deemed to constitute a termination of this Lease. Lessor reserves the right following any reentry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate as specified in said notice. (iii) To seize all Personalty located on or at any or all of the Properties and to dispose thereof in accordance with the laws prevailing at the time and place of such seizure or to remove all or any portion of such Personalty and cause the same to be stored in a public warehouse or elsewhere at Lessee's sole expense, without becoming liable for any loss or damage resulting therefrom and without resorting to legal or judicial process, procedure or action. (iv) To bring an action against Lessee for any damages sustained by Lessor or any equitable relief available to Lessor. (v) To relet any or all of the Properties or any part thereof for such term or terms (including a term which extends beyond the original Lease Term), at such rentals and upon such other terms as Lessor, in its sole discretion, may determine, with all proceeds received from such reletting being applied to the rental and other sums due from Lessee in such order as Lessor may, in it sole discretion, determine, which other sums include, without limitation, all repossession costs, brokerage commissions, attorneys' fees and expenses, employee expenses, alteration, remodeling and repair costs and expenses of preparing for such reletting. Except to the extent required by applicable law, Lessor shall have no obligation to relet any of the Properties or any part thereof and shall in no event be liable for refusal or failure to relet any of the Properties or any part thereof, or, in the event of any such reletting, for refusal or failure to collect any rent due upon such reletting, and no such refusal or failure shall operate to relieve Lessee of any liability under this Lease or otherwise to affect 34 any such liability. Lessor reserves the right following any reentry and/or reletting to exercise its right to terminate this Lease by giving Lessee written notice thereof, in which event this Lease will terminate as specified in said notice. (vi) (x) To recover from Lessee all rent and other monetary sums then due and owing under this Lease; and (y) to accelerate and recover from Lessee the present value (discounted at the rate of 6% per annum) of all rent and other monetary sums scheduled to become due and owing under this Lease after the date of such breach for the entire original scheduled Lease Term, provided, however, in no event shall such recovery be less than the sum of (i) the product of the percentage specified on Schedule I attached hereto which corresponds to the month in which such Event of Default first occurred multiplied by the sum of the Purchase Price for all of the Properties which are then subject to the Lease plus (ii) the sum of the Prepayment Charges corresponding to all of the Properties which are then subject to this Lease. (vii) To recover from Lessee all costs and expenses, including reasonable attorneys' fees, court costs, expert witness fees, costs of tests and analyses, travel and accommodation expenses, deposition and trial transcripts, copies and other similar costs and fees, paid or incurred by Lessor as a result of such breach, regardless of whether or not legal proceedings are actually commenced. (viii) To immediately or at any time thereafter, and with or without notice, at Lessor's sole option but without any obligation to do so, correct such breach or default and charge Lessee all costs and expenses incurred by Lessor therein. Any sum or sums so paid by Lessor, together with interest at the Default Rate, shall be deemed to be Additional Rental hereunder and shall be immediately due from Lessee to Lessor. Any such acts by Lessor in correcting Lessee's breaches or defaults hereunder shall not be deemed to cure said breaches or defaults or constitute any waiver of Lessor's right to exercise any or all remedies set forth herein. (ix) To immediately or at any time thereafter, and with or without notice, except as required herein, set off any money of Lessee held by Lessor under this Lease against any sum owing by Lessee or Guarantor hereunder. (x) To seek any equitable relief available to Lessor, including, without limitation, the right of specific performance. (xi) To present for payment all FCCR Letters of Credit and Security Deposit Letter of Credit previously delivered to Lessor and still outstanding and apply such proceeds toward any amounts due under this Lease (including, without limitation, any amounts owed by Lessee under this Section 23.B as a result of such Event of Default), provided that (x) such application of proceeds shall not be deemed to cure such Event of Default if the amount of the FCCR Letters of Credit and the Security Deposit Letter of Credit is less than the amounts due under this Lease (including, without limitation, the amounts owed by Lessee under this Section 23.B as a result of such Event of Default), and (y) if the amount of the FCCR Letters of Credit and the Security Deposit Letter of Credit is more than the amounts due under this Lease (including, without limitation, the amounts owed by Lessee under this Section 23.B as a result of such Event of Default), the excess shall be kept, 35 applied by Lessor and returned as provided in either Section 5.C or Section 23.A(ix), as applicable. All powers and remedies given by this Section to Lessor, subject to applicable law, shall be cumulative and not exclusive of one another or of any other right or remedy or of any other powers and remedies available to Lessor under this Lease, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements of Lessee contained in this Lease, and no delay or omission of Lessor to exercise any right or power accruing upon the occurrence of any Event of Default shall impair any other or subsequent Event of Default or impair any rights or remedies consequent thereto. Every power and remedy given by this Section or by law to Lessor may be exercised from time to time, and as often as may be deemed expedient, by Lessor, subject at all times to Lessor's right in its sole judgment to discontinue any work commenced by Lessor or change any course of action undertaken by Lessor. If Lessee shall fail to observe or perform any of its obligations under this Lease or in the event of an emergency, then, without waiving any Event of Default which may result from such failure or emergency, Lessor may, but without any obligation to do so, take all actions, including, without limitation, entry upon any or all of the Properties to perform Lessee's obligations, immediately and without notice in the case of an emergency and upon five days written notice to Lessee in all other cases. All expenses incurred by Lessor in connection with performing such obligations, including, without limitation, reasonable attorneys' fees and expenses, together with interest at the Default Rate from the date any such expenses were incurred by Lessor until the date of payment by Lessee, shall constitute Additional Rental and shall be paid by Lessee to Lessor upon demand. 24. LIENS; MORTGAGES, SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. Lessor's interest in this Lease and/or any of the Properties shall not be subordinate to any liens or encumbrances placed upon any of the Properties by or resulting from any act of Lessee, and nothing herein contained shall be construed to require such subordination by Lessor. Lessee shall keep the Properties free from any liens for work performed, materials furnished or obligations incurred by Lessee. NOTICE IS HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST, SECURITY INTEREST OR ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF ANY OF THE PROPERTIES OR LESSEE'S LEASEHOLD INTEREST THEREIN OR THE PERSONALTY, AND ANY SUCH PURPORTED TRANSACTION WHICH IS NOT APPROVED BY LESSOR SHALL BE VOID. FURTHERMORE, ANY SUCH PURPORTED TRANSACTION SHALL BE DEEMED A TORTIOUS INTERFERENCE WITH LESSOR'S RELATIONSHIP WITH LESSEE AND LESSOR'S OWNERSHIP OF THE PROPERTIES. This Lease at all times shall automatically be subordinate to the Mortgages and to the lien of any and all ground leases, mortgages, trust deeds and deeds to secure debt now or hereafter placed upon any of the Properties by Lessor, and Lessee covenants and agrees to execute and deliver, upon demand, such further instruments subordinating this Lease to the lien of the Mortgages and any or all such ground leases, mortgages, trust deeds or deeds to secure debt as shall be desired by Lessor, or any present or proposed mortgagees or lenders under trust deeds or deeds to secure debt, upon the condition that Lessee shall have the right to remain in possession of the Properties under the terms of this Lease, notwithstanding any default in the Mortgages or any or all such ground leases, mortgages, trust deeds or deeds to secure debt or after foreclosure 36 of any or all such Mortgages, mortgages, trust deeds or deeds to secure debt or termination of any or all such ground leases, so long as Lessee is not in default under any of the covenants, conditions and agreements contained in this Lease. If any landlord, mortgagee, receiver, Lender or other secured party elects to have this Lease and the interest of Lessee hereunder be superior to any of the Mortgages or any such ground lease, mortgage, trust deed or deed to secure debt and evidences such election by notice given to Lessee, then this Lease and the interest of Lessee hereunder shall be deemed superior to any such Mortgage, ground lease, mortgage, trust deed or deed to secure debt, whether this Lease was executed before or after such Mortgage, ground lease, mortgage, trust deed or deed to secure debt and in that event such landlord, mortgagee, receiver, Lender or other secured party shall have the same rights with respect to this Lease as if it had been executed and delivered prior to the execution and delivery of such Mortgage, ground lease, mortgage, trust deed or deed to secure debt and had been assigned to such landlord, mortgagee, receiver, Lender or other secured party. Although the foregoing provisions shall be self-operative and no future instrument of subordination shall be required, upon request by Lessor, Lessee shall execute and deliver whatever instruments may be required for such purposes, and in the event Lessee fails so to do within 10 days after demand, Lessee does hereby make, constitute and irrevocably appoint Lessor as its agent and attorney-in-fact and in its name, place and stead so to do, which appointment shall be deemed coupled with an interest. In the event any purchaser or assignee of Lender at a foreclosure sale acquires title to any of the Properties, or in the event Lender or any assignee otherwise succeeds to the rights of Lessor as landlord under this Lease, Lessee shall attorn to Lender or such purchaser or assignee, as the case may be (a "Successor Lessor"), and recognize the Successor Lessor as lessor under this Lease, and this Lease shall continue in full force and effect as a direct lease between the Successor Lessor and Lessee, provided that the Successor Lessor shall only be liable for any obligations of the lessor under this Lease which accrue after the date that such Successor Lessor acquires title. The foregoing provision shall be self operative and effective without the execution of any further instruments. The Permitted Subleases at all times shall automatically be subordinate to this Lease and the Mortgages. 25. ESTOPPEL CERTIFICATE. A. At any time, but not more often than twice every 12 months, and from time to time, Lessee shall, promptly and in no event later than 10 days after a request from Lessor or Lender, execute, acknowledge and deliver to Lessor or Lender a certificate in the form supplied by Lessor, Lender or any present or proposed mortgagee or purchaser designated by Lessor, certifying: (i) that Lessee has accepted the Properties (or, if Lessee has not done so, that Lessee has not accepted the Properties, and specifying the reasons therefor); (ii) that this Lease is in full force and effect and has not been modified (or if modified, setting forth all modifications), or, if this Lease is not in full force and effect, the certificate shall so specify the reasons therefor; (iii) the commencement and expiration dates of the Lease Term, including the terms of any extension options of Lessee; (iv) the date to which the rentals have been paid under this Lease and the amount thereof then payable; (v) whether there are then any existing defaults by Lessor in the performance of its obligations under this Lease, and, if there are any such defaults, specifying the nature and extent thereof; (vi) that no notice has been 37 received by Lessee of any default under this Lease which has not been cured, except as to defaults specified in the certificate; (vii) the capacity of the person executing such certificate, and that such person is duly authorized to execute the same on behalf of Lessee; (viii) that neither Lessor nor Lender has actual involvement in the management or control of decision making related to the operational aspects or the day-to-day operations of the Properties; and (ix) any other information reasonably requested by Lessor, Lender or such present or proposed mortgagee or purchaser. B. If Lessee shall fail or refuse to sign a certificate in accordance with the provisions of this Section within 10 days following a written request by Lessor, Lessee irrevocably constitutes and appoints Lessor as its attorney-in-fact to execute and deliver the certificate to any such third party, it being stipulated that such power of attorney is coupled with an interest and is irrevocable and binding; provided, however, that Lessor's execution and delivery of such certificate on behalf of Lessee shall not cure any default arising by reason of Lessee's failure to execute and deliver such certificate. 26. ASSIGNMENT; SUBLETTING. A. Lessor shall have the right to sell or convey all, but not less than all, of the Properties or to assign its right, title and interest as Lessor under this Lease in whole, but not in part. In the event of any such sale or assignment other than a security assignment, provided Lessee receives written notice that such purchaser or assignee has assumed all of Lessor's obligations under this Lease, Lessee shall attorn to such purchaser or assignee and Lessor shall be relieved, from and after the date of such transfer or conveyance, of liability for the performance of any obligation of Lessor contained herein, except for obligations or liabilities accrued prior to such assignment or sale. B. Lessee acknowledges that Lessor has relied both on the business experience and creditworthiness of Lessee and the Permitted Sublessees and upon the particular purposes for which Lessee and the Permitted Sublessees intend to use the Properties in entering into this Lease. Without the prior written consent of Lessor and except as provided below and for the Permitted Subleases: (i) Lessee shall not assign, transfer or convey this Lease or any interest therein, whether by operation of law or otherwise; (ii) no interest in Lessee or Guarantor shall be assigned, transferred, conveyed, pledged or mortgaged, whether by operation of law or otherwise, including, without limitation, a dissolution of Lessee or Guarantor or a transfer of any of the voting stock of Lessee or Guarantor other than trades of Lessee's or Guarantor's common stock on a nationally recognized stock market or transfers of common stock of Guarantor in connection with a going private transaction so long as immediately following the transaction, Aaron Spencer directly or indirectly continues to control at least 51% of the outstanding voting capital stock of Parent (as defined below) and Parent continues to own at least 51% of the outstanding voting capital stock of Guarantor; and (iii) Lessee shall not sublet all or any part of any of the Properties. It is expressly agreed that Lessor may withhold or condition such consent based upon such matters as Lessor may in its reasonable discretion determine, including, without limitation, the experience and creditworthiness of any assignee, the assumption by any assignee of all of Lessee's obligations hereunder by undertakings enforceable by Lessor, payment to Lessor of any rentals owing under a sublease which are in excess of the rentals owing hereunder, the transfer to any assignee of all necessary licenses and franchises to continue operating the Properties for the purposes herein provided, receipt of such representations and warranties from any assignee as Lessor may request, including such matters as its organization, existence, good standing and finances and other matters, whether or not similar in kind. At the time of any assignment of this Lease which is approved by Lessor, the assignee shall assume all of the obligations of Lessee under this Lease pursuant to 38 Lessor's standard form of assumption agreement. No such assignment nor any subletting of any of the Properties shall relieve Lessee of its obligations respecting this Lease. Any assignment, transfer, conveyance, pledge, mortgage or subletting in violation of this Section shall be voidable at the sole option of Lessor. C. Notwithstanding the foregoing, Lessee shall have the right to sublease any of the Properties, without the prior written consent of Lessor or Lender, if the following conditions are satisfied: (1) no Event of Default shall have occurred and be continuing under this Lease as of the effective date of such sublease; (2) any such sublease shall be subordinate to this Lease and the Mortgage corresponding to the Property to which such sublease relates; (3) Lessee shall remain liable under this Lease notwithstanding such sublease; and (4) the Properties subject to such subleases shall be used as Permitted Facilities and shall otherwise be operated and maintained in accordance with the terms and conditions of this Lease. D. Notwithstanding the foregoing, if the voting capital stock of Guarantor is no longer publicly traded: (i) Uno Restaurant Holdings Corporation, a Delaware corporation, or such other Person that acquires all the voting capital stock of Guarantor in a transaction making Guarantor a privately held company ("Parent") may transfer so much of its capital stock in Guarantor for so long as Parent continues to own 51% or more of the outstanding voting capital stock of Guarantor; and (ii) Aaron Spencer may transfer so much of his capital stock in Parent for so long as he continues to own 51% or more of the outstanding voting capital stock of Parent (such 51% ownership interest, in each case the "Threshold Amount"). Neither Parent nor Aaron Spencer shall transfer any voting capital stock in Guarantor or Parent, respectively, resulting in Parent or Aaron Spencer owning voting capital stock in Guarantor or Parent, respectively, in an amount less than the Threshold Amount (each, an "Excess Threshold Transfer") without Lessor's and Lender's prior written consent, which consent shall not be unreasonably withheld if: (i) no Event of Default then exists and is continuing; and (ii) if an Excess Threshold Transfer occurs prior to the third anniversary of the Effective Date, Lessee provides Lessor with written reasonable evidence that following the Excess Threshold Transfer the following individuals will maintain their respective positions as officers of Guarantor for a period of not less than one year after the date of the Excess Threshold Transfer: (a) Craig S. Miller as President and CEO, (b) Robert M. Vincent, Executive Vice President and Chief Financial Officer, and (c) Paul W. MacPhail, Executive Vice President and Chief Operating Officer. Regardless of when an Excess Threshold Transfer occurs, from and after the occurrence of an Excess Threshold Transfer, Lessee shall cause Guarantor and Parent to maintain a "Corporate Fixed Charge Coverage Ratio" (as defined below) of not less than 1.20 to 1. The term "Corporate Fixed Charge Coverage Ratio" shall mean with respect to the twelve month period of time immediately preceding the end of each fiscal quarter of Guarantor and Parent (each, a "12 Month Period"), the ratio calculated for such period of time, each as determined in accordance with GAAP, of (a) the sum of Net Income, Depreciation and Amortization, Interest Expense and Operating Lease Expense, to (b) the sum of Operating Lease Expense, scheduled principal payments of long term Debt, 39 scheduled maturities of all Capital Leases and Interest Expense. Notwithstanding the foregoing to the contrary, a transfer of capital stock by: (i) Aaron Spencer to a family trust or other estate planning entity controlled by Aaron Spencer and in which Aaron Spencer's family members are beneficiaries, (ii) the estate of Aaron Spencer to family members, a family trust or other family-owned estate planning entity or (iii) transfers by family members, a family trust or other family-owned estate planning entity among themselves, shall not be deemed an Excess Threshold Transfer and such capital stock held by a family member, in a family trust or another family-owned estate planning entity controlled by Aaron Spencer and in which Aaron Spencer's family members are beneficiaries shall be deemed to be owned by Aaron Spencer for purposes of this Section 26.D. For purposes of this Section 26.D, the following terms shall be defined as set forth below: "CAPITAL LEASE" shall mean all leases of any property, whether real, personal or mixed, by Guarantor and Parent, which leases would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of Guarantor and Parent. The term "Capital Lease" shall not include any operating lease. "DEBT" shall mean with respect to Guarantor and Parent and for the applicable 12 Month Period (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, indentures, notes or similar instruments, (iii) obligations to pay the deferred purchase price of property or services, (iv) obligations under leases which should be, in accordance with GAAP, recorded as Capital Leases, and (v) obligations under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. "DEPRECIATION AND AMORTIZATION" shall mean the depreciation and amortization accruing during the applicable 12 Month Period with respect to Guarantor and Parent, as determined in accordance with GAAP. "INTEREST EXPENSE" shall mean for the applicable 12 Month Period, the sum of all interest accrued or which should be accrued in respect of all Debt of Guarantor and Parent, as determined in accordance with GAAP. "NET INCOME" shall mean with respect to the applicable 12 Month Period, the net income or net loss of Guarantor and Parent. In determining the amount of Net Income, (i) adjustments shall be made for nonrecurring gains and losses or non-cash items allocable to the applicable 12 Month Period, and (ii) deductions shall be made for, among other things, Depreciation and Amortization, Interest Expense, Operating Lease Expense and actual corporate overhead expense allocable to the applicable 12 Month Period. "OPERATING LEASE EXPENSE" shall mean the sum of all payments and expenses incurred by Guarantor and Parent under any operating leases during the applicable 12 Month Period, as determined in accordance with GAAP. E. Notwithstanding the prohibition on pledging set forth in subsection B, above, the holders of capital stock in Guarantor and Parent may pledge or otherwise encumber their capital 40 stock to secure obligations of Lessee, Guarantor, Parent and their Affiliates to institutional lenders for indebtedness and other obligations or any refinancings thereof (an "Institutional Loan"). Notwithstanding the prohibition on transfer set forth in subsection B, above, and without limiting any transfer permitted by the preceding subsection D, the interests in Guarantor and/or Parent may be assigned, transferred or conveyed: (i) in connection with a foreclosure or other sale of the interests in Guarantor and/or Parent as a result of a default or breach of the Institutional Loan or (ii) in connection with any subsequent transfer made by the Institutional Loan lender which acquired the interests by foreclosure or transfer-in-lieu thereof (each, the "Foreclosure Transfer"), and Lessor shall in each instance be deemed to have consented to such Foreclosure Transfer, provided that: (i) no Event of Default shall have occurred and be continuing at the time of the Foreclosure Transfer; (ii) after giving effect to such Foreclosure Transfer, whether as a single transaction or as a series of transactions, either (x) Guarantor, including any surviving entity as a result of such Foreclosure Transfer and/or successor of Guarantor, shall have a net worth determined in accordance with GAAP at least equal to $40,000,000.00 (the "Net Worth Condition") or (y) if Guarantor does not meet the Net Worth Condition concurrently with the completion of such Foreclosure Transfer, Lessee shall (1) pay to Lessor the Foreclosure Transfer Rent Prepayment Amount (as hereinafter defined) to the extent necessary to cause the Aggregate Fixed Charge Coverage Ratio for all of the Properties, taken as a whole, to be at least equal to 3.0:1 for the twelve-month period of time immediately preceding the end of the fiscal quarter of Lessee closed prior to the date on which Lessee gives the Foreclosure Transfer Notice (as hereinafter defined), and (2) pay to Lessor the Prepayment Charges payable by Lessor to Lender as a result of the prepayment of such Base Monthly Rental. Upon Lessee's payment of the Foreclosure Transfer Rent Prepayment Amount and Prepayment Charges as contemplated by the preceding sentence, Lessor agrees that the Base Monthly Rental beginning with the calendar month immediately following the month in which such payment is made (or, if such payment is made on the first day of a calendar month, beginning with the calendar month in which such payment is made) shall be equal to the Base Monthly Rental then in effect reduced by the Foreclosure Transfer Rent Reduction Amount (as hereinafter defined); (iii) after giving effect to such Foreclosure Transfer, whether as a single transaction or as a series of transactions, if Guarantor has a long term debt rating, such rating is no worse than the lesser of Guarantor's long term debt rating as of the Effective Date of the Lease and Guarantor's long term debt rating immediately prior to the consummation of such Foreclosure Transfer; (iv) Guarantor, including any surviving entity of such Foreclosure Transfer and/or successor of Guarantor, shall not be released from any of its obligations under this Guaranty, and such surviving entity or successor entity, as applicable, has assumed in writing or by operation of law (provided Lessor has received a satisfactory opinion of counsel to Guarantor confirming that such assumption will occur by operation of law) all of Guarantor's obligations under this Guaranty and Guarantor shall not be released from its obligations under this Guaranty; (v) Guarantor, after giving effect to such Foreclosure Transfer, shall have a Corporate Fixed Charge Coverage Ratio determined as of the end of Guarantor's most 41 recently closed fiscal quarter on a proforma basis after giving effect to the proposed Foreclosure Transfer of at least 1.20; (vi) the Properties will be operated as a nationally or regionally recognized casual dining concept; (vii) Guarantor or the operator of the Properties will have at least 5 years' experience operating a multi-unit casual dining restaurant concept with the same or greater number of units as are then operated by Guarantor and its Affiliates; and (viii) if and to the extent that the Loans have been subject to a Securitization, Lender shall have received a notice or confirmation of the rating agencies which have issued ratings in connection with such Securitization that such Foreclosure Transfer will not cause any of such rating agencies to downgrade, modify, withdraw or qualify any of such ratings. For purposes of this Section 26.E, the following terms shall be defined as set forth below: "FORECLOSURE TRANSFER RENT PREPAYMENT AMOUNT" means the present value, discounted on a monthly basis at [___%], of the Subject Transfer Rent Reduction Amount for each month beginning with the calendar month immediately following the month in which the Foreclosure Transfer Rent Prepayment Amount is paid (or, if the Foreclosure Transfer Rent Prepayment Amount is paid on the first day of a calendar month, beginning with the calendar month in which the Foreclosure Transfer Rent Prepayment Amount is paid) and ending with the calendar month of May, 2021, inclusive. "FORECLOSURE TRANSFER RENT REDUCTION AMOUNT" the product of (x) the Base Monthly Rental for the last month of the fiscal quarter of Lessee which ended prior to the date on which Lessee gives Lessor the Foreclosure Transfer Notice and (y) the Foreclosure Transfer FCCR Shortfall Percentage. For purposes of illustration and not limitation, if (i) Lessee's Aggregate Fixed Charge Coverage Ratio for the Fiscal Year ending May 27, 2010 was 2.0 (which results in a Foreclosure Transfer FCCR Shortfall Percentage of 33%), (ii) Lessee paid the Foreclosure Transfer Rent Prepayment Amount on August 15, 2010, and (iii) the Base Monthly Rental for August, 2010 was $100, then the Base Monthly Rental payment beginning on September 1, 2010 shall be equal to the Base Monthly Rental for August, 2010 reduced by the sum of $33.33. "FORECLOSURE TRANSFER FCCR SHORTFALL PERCENTAGE" means the percentage represented by (x) 1 minus (y) a fraction, the numerator of which shall be the Aggregate Fixed Charge Coverage Ratio for the twelve month period of time immediately preceding the end of the fiscal quarter of Lessee which closed prior to the date on which Lessee gives the Foreclosure Transfer Notice, and the denominator of which shall be 3. Lessee shall notify Lessor and Lender at least 30 days but not more than 90 days prior to the completion of any Foreclosure Transfer, whether or not the consent of Lessor to such Foreclosure Transfer is deemed given under the terms of this Section 26.E (each, a "Foreclosure Transfer Notice"). Lessee shall provide Lessor and Lender with information reasonably sufficient to enable Lessor and Lender to determine that Lessee has satisfied the conditions to any Foreclosure Transfer, including, without limitation, such financial information as Lessor and 42 Lender may reasonably require to enable them to determine that the Net Worth Condition and/or Aggregate Fixed Charge Coverage Ratio requirements set forth in Section 26.E have been satisfied, or will be satisfied simultaneously with the completion of the Foreclosure Transfer. In addition, to the extent that the loans contemplated by the Loan Documents have been subject to a Securitization, Lessee agrees to cooperate in good faith in connection with providing such information as the rating agencies may reasonably require to evaluate any such proposed Foreclosure Transfer. If the foregoing conditions are not satisfied, then the interests in Guarantor or Parent shall not be transferred pursuant to a Foreclosure Transfer. F. Except as provided in Section 12 of the Permitted Subleases, Lessee shall not amend, modify, alter, change, terminate or cancel any of the Permitted Subleases or grant any approval, consent or waiver under any of the Permitted Subleases without the prior written consent of Lessor and Lender and any such action which is not approved by Lessor and Lender shall be void. 27. OPTION TO EXTEND; NEW LEASE. A. Lessee shall have the option to continue this Lease in effect for four additional successive periods of five years each, provided that, at the time of exercise of such option or at the expiration of the Lease Term or, if applicable, the preceding extension of the Lease Term, no Event of Default shall have occurred and be continuing under this Lease. If Lessee exercises such option, this Lease shall continue for the applicable period in accordance with the terms and provisions of this Lease then in effect, except that the Base Annual Rental during each extension period shall be in an amount set forth on attached Exhibit C. Lessor and Lessee agree that the Base Annual Rental during each extension period represents the then fair market value of the Properties. Lessee may only exercise the first extension option by giving notice to Lessor of Lessee's intention to do so not later than November 30, 2019. If the first extension option is exercised by Lessee, Lessee may only exercise the second extension option by giving notice to Lessor of Lessee's intention to do so not later than August 31, 2025. If the first two extension options are exercised, Lessee may only exercise the third extension option by giving notice to Lessor of Lessee's intention to do so not later than August 31, 2030. If the first three extension options are exercised, Lessee may only exercise the fourth extension option by giving notice to Lessor of Lessee's intention to do so not later than August 31, 2035. 28. RIGHT OF FIRST OFFER TO PURCHASE PROPERTIES. If, during the Lease Term, Lessor desires to sell its interest in the Properties, as a result of a third party offer or expression of interest from a third party (which may be solicited by Lessor and with no requirement that an offer actually be made by such third party), then, provided no Event of Default has occurred and is continuing, Lessor shall give Lessee the right to purchase such interest (the "Interest") for a price and on terms and conditions, determined by Lessor and set forth in a notice given to Lessee (the "ROFO Notice"), Lessee shall have thirty (30) days after receipt of the ROFO Notice to elect, in writing, to acquire such Interest at the price and on such terms and conditions set forth in the ROFO Notice. Lessee's silence shall be deemed a rejection of its right to acquire such Interest. Any such election by Lessee shall only be effective if accompanied by Lessee's payment to Lessor of a non-refundable cash down payment equal to 10% of the price set forth in the ROFO Notice. If Lessee timely and properly elects to acquire such Interest, the closing shall take place within one hundred and twenty (120) days after the ROFO Notice. The balance of the purchase price shall be paid in cash at closing. If Lessee does not timely elect to acquire such Interest, Lessor shall be free to sell the Interest to any other Person within one (1) year of Lessee's rejection or deemed rejection without 43 being required to comply again with the foregoing provisions of this Section, provided that, if Lessor intends to sell the Interest after such one (1) year period or within such one (1) year period at a price less than 95% of the price described in the ROFO Notice or on terms materially more favorable to a purchaser than those set forth in the ROFO Notice, Lessor shall give Lessee written notice, setting forth the applicable purchase price and terms and conditions, and Lessee shall have thirty (30) days to elect in writing to purchase the Interest at such purchase price and on such terms and conditions. The right of first offer granted by this Section shall not survive the expiration or earlier termination of this Lease or the purchase of the Properties by a third party after Lessee's failure to exercise such right or Lessee's waiver thereof. Furthermore, the right of first offer granted by this Section shall not apply to a foreclosure of any of the Mortgages or the delivery to Lender of a deed in lieu of foreclosure and shall not survive any such foreclosure or delivery of a deed in lieu of foreclosure. Upon the termination of this right of first offer, Lessee shall execute such instruments as may be reasonably required by Lessor to provide constructive notice of the termination thereof. 29. NOTICES. All notices, consents, approvals or other instruments required or permitted to be given by either party pursuant to this Lease shall be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery service or (iv) certified or registered mail, return receipt requested, and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by facsimile, (c) the next Business Day, if delivered by express overnight delivery service, or (d) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested. Notices shall be provided to the parties and addresses (or facsimile numbers, as applicable) specified below: If to Lessee: SL Properties, Inc. 100 Charles Park Road West Roxbury, Massachusetts 02132 Attention: Robert M. Vincent Telephone: (617) 218-5215 Telecopy: (617) 218-5375 If to Lessor: Zuno Property LLC c/o U.S. Realty Advisors LLC 1370 Avenue of the Americas New York, NY 10019 Attention: Mr. David M. Ledy Telephone: (212) 581-4540 Telecopy: (212) 581-4950 With a copy to: Proskauer Rose LLP 1585 Broadway New York, NY 10036 Attention: Kenneth S. Hilton, Esq. Telephone: (212) 969-3000 Telecopy: (212) 969-2900 or to such other address or such other person as either party may from time to time hereafter specify to the other party in a notice delivered in the manner provided above. No such notices, 44 consents, approvals or other communications shall be valid unless Lender receives a duplicate original thereof at the following address: Dennis L. Ruben, Esq. Executive Vice President, General Counsel and Secretary FFCA Funding Corporation 17207 North Perimeter Drive Scottsdale, AZ 85255 Telephone: (480) 585-4500 Telecopy: (480) 585-2226 or to such other address or such other person as Lender may from time to time specify to Lessor and Lessee in a notice delivered in the manner provided above. 30. HOLDING OVER. If Lessee remains in possession of any of the Properties after the expiration of the term hereof, Lessee, at Lessor's option and within Lessor's sole discretion, may be deemed a tenant on a month-to-month basis and shall continue to pay rentals and other sums in the amounts herein provided, except that the Base Monthly Rental shall be increased by 150%, and to comply with all the terms of this Lease; provided that nothing herein nor the acceptance of rent by Lessor shall be deemed a consent to such holding over. Lessee shall defend, indemnify, protect and hold the Indemnified Parties harmless from and against any and all Losses resulting from Lessee's failure to surrender possession upon the expiration of the Lease Term, including, without limitation, any claims made by any succeeding lessee. The terms of this Section 30 shall survive the expiration of the Lease Term. 31. LANDLORD'S LIEN/SECURITY INTEREST. Lessee agrees that Lessor shall have a landlord's lien, and additionally hereby separately grants to Lessor a first and prior security interest, in, on and against all Personalty and Security Deposit Letter of Credit and any FCCR Letter of Credit, which lien and security interest shall secure the payment of all rental and other charges payable by Lessee to Lessor under the terms hereof and all other obligations of Lessee to Lessor under this Lease. Lessee further agrees to execute and deliver to Lessor from time to time such financing statements and other documents as Lessor may then deem appropriate or necessary to perfect and maintain said lien and security interest, and expressly acknowledges and agrees that, in addition to any and all other rights and remedies of Lessor whether hereunder or at law or in equity, in the event of any default of Lessee hereunder, Lessor shall have any and all rights and remedies granted a secured party under the Uniform Commercial Code then in effect in the states in which the Properties are located. If Lessee shall fail for any reason to execute any such financing statement or document within 15 days after Lessor's request therefor, Lessor shall have the right to execute the same as attorney-in-fact of Lessee, coupled with an interest, for, and on behalf, and in the name of Lessee. Lessee covenants to promptly notify Lessor of any changes in Lessee's name and/or organizational structure which may necessitate the execution and filing of additional financing statements (provided, however, the foregoing shall not be construed as Lessor's consent to such changes). 32. REMOVAL OF PERSONALTY. At the expiration of the Lease Term, and if Lessee is not then in breach hereof, Lessee may remove all Personalty from the Properties. Lessee shall repair any damage caused by such removal and shall leave the Properties broom clean and in good and working condition and repair inside and out. Any property of Lessee left on the Properties on the 45 tenth day following the expiration of the Lease Term shall, at Lessor's option, automatically and immediately become the property of Lessor. 33. FINANCIAL STATEMENTS. Within 45 days after the end of each fiscal quarter and within 120 days after the end of each fiscal year of Lessee and Guarantor, Lessee shall deliver to Lessor and Lender (i) complete financial statements of Lessee, Guarantor and Permitted Sublessees including a balance sheet, profit and loss statement, statement of cash flows and all other related schedules for the fiscal period then ended; and (ii) income statements for the business at each of the Properties. All such financial statements shall be prepared in accordance with GAAP and shall be certified to be accurate and complete by Lessee and Guarantor (or the Treasurer or other appropriate officer of Lessee and Guarantor). Lessee understands that Lessor and Lender will rely upon such financial statements and Lessee represents that such reliance is reasonable. In the event that Lessee's, Guarantor's and Permitted Sublessees' property and business at the Properties is ordinarily consolidated with other business for financial statement purposes, such financial statements shall be prepared on a consolidated basis showing separately the sales, profits and losses, assets and liabilities pertaining to each of the Properties with the basis for allocation of overhead of other charges being clearly set forth. The financial statements delivered to Lessor and Lender need not be audited, but Lessee shall deliver to Lessor and Lender copies of any audited financial statements of Lessee and Guarantor which may be prepared, as soon as they are available. 34. FORCE MAJEURE. Any prevention, delay or stoppage due to strikes, lockouts, acts of God, enemy or hostile governmental action, civil commotion, fire or other casualty beyond the control of the party obligated to perform shall excuse the performance by such party for a period equal to any such prevention, delay or stoppage, except the obligations imposed with regard to rental and other monies to be paid by Lessee pursuant to this Lease and any indemnification obligations imposed upon Lessee under this Lease. 35. TIME IS OF THE ESSENCE. Time is of the essence with respect to each and every provision of this Lease in which time is a factor. 36. LESSOR'S LIABILITY. Notwithstanding anything to the contrary provided in this Lease, it is specifically understood and agreed, such agreement being a primary consideration for the execution of this Lease by Lessor, that (i) there shall be absolutely no personal liability on the part of Lessor, its successors or assigns and the trustees, members, partners, shareholders, officers, directors, employees and agents of Lessor and its successors or assigns, to Lessee with respect to any of the terms, covenants and conditions of this Lease, (ii) Lessee waives all claims, demands and causes of action against the trustees, members, partners, shareholders, officers, directors, employees and agents of Lessor and its successors or assigns in the event of any breach by Lessor of any of the terms, covenants and conditions of this Lease to be performed by Lessor, and (iii) Lessee shall look solely to the Properties for the satisfaction of each and every remedy of Lessee in the event of any breach by Lessor of any of the terms, covenants and conditions of this Lease to be performed by Lessor, or any other matter in connection with this Lease or the Properties, such exculpation of liability to be absolute and without any exception whatsoever. 37. CONSENT OF LESSOR. (a) Unless specified otherwise herein, Lessor's consent to any request of Lessee may be conditioned or withheld in Lessor's sole discretion. Lessor shall have no liability for damages resulting from Lessor's failure to give any consent, approval or 46 instruction reserved to Lessor, Lessee's sole remedy in any such event being an action for injunctive relief. (b) It is understood and agreed that to the extent Lessor is required to obtain the consent, approval, agreement or waiver of Lender with respect to a matter for which Lessor's approval has been requested under this Lease, Lessor shall in no event be deemed to have unreasonably withheld Lessor's consent, approval, agreement or waiver thereof if Lender shall not have given its approval if required. 38. WAIVER AND AMENDMENT. No provision of this Lease shall be deemed waived or amended except by a written instrument unambiguously setting forth the matter waived or amended and signed by the party against which enforcement of such waiver or amendment is sought. Waiver of any matter shall not be deemed a waiver of the same or any other matter on any future occasion. No acceptance by Lessor of an amount less than the monthly rent and other payments stipulated to be due under this Lease shall be deemed to be other than a payment on account of the earliest such rent or other payments then due or in arrears nor shall any endorsement or statement on any check or letter accompanying any such payment be deemed a waiver of Lessor's right to collect any unpaid amounts or an accord and satisfaction. 39. SUCCESSORS BOUND. Except as otherwise specifically provided herein, the terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of the respective heirs, successors, executors, administrators and assigns of each of the parties hereto. 40. NO MERGER. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not result in a merger of Lessor's and Lessee's estates, and shall, at the option of Lessor, either terminate any or all existing subleases or subtenancies, or operate as an assignment to Lessor of any or all of such subleases or subtenancies. 41. CAPTIONS. Captions are used throughout this Lease for convenience of reference only and shall not be considered in any manner in the construction or interpretation hereof. 42. SEVERABILITY. The provisions of this Lease shall be deemed severable. If any part of this Lease shall be held unenforceable by any court of competent jurisdiction, the remainder shall remain in full force and effect, and such unenforceable provision shall be reformed by such court so as to give maximum legal effect to the intention of the parties as expressed therein. 43. CHARACTERIZATION. A. It is the intent of the parties hereto that the business relationship created by this Lease and any related documents is solely that of a long-term commercial lease between landlord and tenant and has been entered into by both parties in reliance upon the economic and legal bargains contained herein. None of the agreements contained herein, is intended, nor shall the same be deemed or construed, to create a partnership between Lessor and Lessee, to make them joint venturers, to make Lessee an agent, legal representative, partner, subsidiary or employee of Lessor, nor to make Lessor in any way responsible for the debts, obligations or losses of Lessee. B. Lessor and Lessee acknowledge and warrant to each other that each has been represented by independent counsel and has executed this Lease after being fully advised by said counsel as to its effect and significance. This Lease shall be interpreted and construed in a fair and impartial manner without regard to such factors as the party which prepared the instrument, 47 the relative bargaining powers of the parties or the domicile of any party. Whenever in this Lease any words of obligation or duty are used, such words or expressions shall have the same force and effect as though made in the form of a covenant. 44. EASEMENTS. During the Lease Term Lessor shall have the right to grant utility easements on, over, under and above any of the Properties without the prior consent of Lessee, provided that such easements will not materially interfere with Lessee's or a Permitted Sublessee's use. 45. BANKRUPTCY. A. As a material inducement to Lessor executing this Lease, Lessee acknowledges and agrees that Lessor is relying upon (i) the financial condition and specific operating experience of Lessee and Lessee's and Permitted Sublessees' obligation to use each of the Properties specifically in accordance with system-wide requirements imposed from time to time on Permitted Facilities, (ii) Lessee's timely performance of all of its obligations under this Lease notwithstanding the entry of an order for relief under the Code for Lessee and (iii) all defaults under this Lease as to all Properties being cured promptly and this Lease being assumed within 60 days of any order for relief entered under the Code for Lessee, or this Lease being rejected within such 60 day period and the Properties surrendered to Lessor. Accordingly, in consideration of the mutual covenants contained in this Lease and for other good and valuable consideration, Lessee hereby agrees that: (i) All obligations that accrue under this Lease (including the obligation to pay rent), from and after the date that an Action is commenced shall be timely performed exactly as provided in this Lease and any failure to so perform shall be harmful and prejudicial to Lessor; (ii) Any and all obligations under this Lease that become due from and after the date that an Action is commenced and that are not paid as required by this Lease shall, in the amount of such rents, constitute administrative expense claims allowable under the Code with priority of payment at least equal to that of any other actual and necessary expenses incurred after the commencement of the Action; (iii) Any extension of the time period within which Lessee may assume or reject this Lease without an obligation to cause all obligations coming due under this Lease from and after the date that an Action is commenced to be performed as and when required under this Lease shall be harmful and prejudicial to Lessor; (iv) Any time period designated as the period within which Lessee must cure all defaults and compensate Lessor for all pecuniary losses which extends beyond the date of assumption of this Lease shall be harmful and prejudicial to Lessor; (v) Any assignment of this Lease must result in all terms and conditions of this Lease being assumed by the assignee without alteration or amendment, and any assignment which results in an amendment or alteration of the terms and conditions of this Lease without the express written consent of Lessor shall be harmful and prejudicial to Lessor; (vi) Any proposed assignment of this Lease to an assignee: (a) that will not use the Properties specifically in accordance with a franchise, license and/or area development agreement with the franchisor of Permitted Facilities, (b) that does not possess financial 48 condition, operating performance and experience characteristics equal to or better than the financial condition, operating performance and experience of Lessee as of the Effective Date, or (c) that does not provide guarantors of the Lease obligations having a financial condition equal to or better than the financial condition of Guarantor as of the Effective Date, shall be harmful and prejudicial to Lessor; (vii) The rejection (or deemed rejection) of this Lease for any reason whatsoever shall constitute cause for immediate relief from the automatic stay provisions of the Code, and Lessee stipulates that such automatic stay shall be lifted immediately and possession of the Properties will be delivered to Lessor immediately without the necessity of any further action by Lessor; and (viii) This Lease shall at all times be treated as consistent with the specific characterizations set forth in Section 3 of this Lease, and assumption or rejection of this Lease shall be (a) in its entirety, (b) for all of the Properties, and (c) in strict accordance with the specific terms and conditions of this Lease. B. No provision of this Lease shall be deemed a waiver of Lessor's rights or remedies under the Code or applicable law to oppose any assumption and/or assignment of this Lease, to require timely performance of Lessee's obligations under this Lease, or to regain possession of the Properties as a result of the failure of Lessee to comply with the terms and conditions of this Lease or the Code. C. Notwithstanding anything in this Lease to the contrary, all amounts payable by Lessee to or on behalf of Lessor under this Lease, whether or not expressly denominated as such, shall constitute "rent" for the purposes of the Code. D. For purposes of this Section addressing the rights and obligations of Lessor and Lessee in the event that an Action is commenced, the term "Lessee" shall include Lessee's successor in bankruptcy, whether a trustee, Lessee as debtor in possession or other responsible person. 46. NO OFFER. No contractual or other rights shall exist between Lessor and Lessee with respect to the Properties until both have executed and delivered this Lease, notwithstanding that deposits may have been received by Lessor and notwithstanding that Lessor may have delivered to Lessee an unexecuted copy of this Lease. The submission of this Lease to Lessee shall be for examination purposes only, and does not and shall not constitute a reservation of or an option for Lessee to lease or otherwise create any interest on the part of Lessee in the Properties. 47. OTHER DOCUMENTS. Each of the parties agrees to sign such other and further documents as may be necessary or appropriate to carry out the intentions expressed in this Lease. 48. ATTORNEYS' FEES. In the event of any judicial or other adversarial proceeding between the parties concerning this Lease, to the extent permitted by law, the prevailing party shall be entitled to recover all of its reasonable attorneys' fees and other costs in addition to any other relief to which it may be entitled. Lessor shall, upon demand, be entitled to all attorneys' fees and all other costs incurred in the preparation and service of any notice or demand hereunder, whether or not a legal action is subsequently commenced. References in this Lease to 49 Lessor's attorneys' fees and/or costs shall mean both the fees and costs of independent counsel retained by Lessor with respect to the matter and the fees and costs incurred in connection with the matter. 49. ENTIRE AGREEMENT. This Lease and any other instruments or agreements referred to herein, constitute the entire agreement between the parties with respect to the subject matter hereof, and there are no other representations, warranties or agreements except as herein provided. Without limiting the foregoing, Lessee specifically acknowledges that neither Lessor nor any agent, officer, employee or representative of Lessor has made any representation or warranty regarding the projected profitability of the business to be conducted on the Properties. Furthermore, Lessee acknowledges that Lessor did not prepare or assist in the preparation of any of the projected figures used by Lessee in analyzing the economic viability and feasibility of the business to be conducted by Lessee at the Properties. 50. FORUM SELECTION; JURISDICTION; VENUE; CHOICE OF LAW. Lessee acknowledges that this Lease was partially negotiated in the State of Arizona, this Lease was partially executed and delivered in the State of Arizona, all payments under this Lease will be delivered in the State of Arizona (unless otherwise directed by Lessor or its successors) and there are substantial contacts between the parties and the transactions contemplated herein and the State of Arizona. For purposes of any action or proceeding arising out of this Lease, the parties hereto expressly submit to the jurisdiction of all federal and state courts located in the State of Arizona. Lessee and Lessor consent that they may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, Lessee and Lessor waive and agree not to assert in any such action, suit or proceeding that they are not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. The creation of this Lease and the rights and remedies of Lessor with respect to the Properties, as provided herein and by the laws of the states in which the Properties are located, as applicable, shall be governed by and construed in accordance with the internal laws of the states in which the Properties are located, as applicable, without regard to principles of conflicts of law. With respect to other provisions of this Lease, this Lease shall be governed by the internal laws of the State of Arizona, without regard to its principles of conflicts of law. Nothing contained in this Section shall limit or restrict the right of Lessor or Lessee to commence any proceeding in the federal or state courts located in the states in which the Properties are located to the extent Lessor or Lessee deems such proceeding necessary or advisable to exercise remedies available under this Lease. 51. COUNTERPARTS. This Lease may be executed in one or more counterparts, each of which shall be deemed an original. 52. MEMORANDUM OF MASTER LEASE. Concurrently with the execution of this Lease, Lessor and Lessee are executing the Memorandum to be recorded in the applicable real property records with respect to each of the Properties. Further, upon Lessor's request, Lessee agrees to execute and acknowledge a termination of lease and/or quit claim deed in recordable form with respect to each of the Properties to be held by Lessor until the expiration or sooner termination of the Lease Term. 53. NO BROKERAGE. Lessor and Lessee represent and warrant to each other that they have had no conversation or negotiations with any broker concerning the leasing of the 50 Properties. Each of Lessor and Lessee agrees to protect, indemnify, save and keep harmless the other, against and from all liabilities, claims, losses, costs, damages and expenses, including attorneys' fees, arising out of, resulting from or in connection with their breach of the foregoing warranty and representation. 54. WAIVER OF JURY TRIAL AND PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES. LESSOR AND LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR OCCUPANCY OF ANY OF THE PROPERTIES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. FURTHERMORE, LESSEE AND LESSOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHTS THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM EACH OTHER AND ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER PARTY OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY EITHER PARTY OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN. 55. RELIANCE BY ENVIRONMENTAL INSURER AND LENDER. (a) Lessee acknowledges and agrees that Environmental Insurer may rely on the representations, warranties and covenants set forth in Section 16 of this Lease, that Environmental Insurer is an intended third-party beneficiary of such representations, warranties and covenants and that Environmental Insurer shall have all rights and remedies available at law or in equity as a result of a breach of such representations, warranties and covenants, including to the extent applicable, the right of subrogation. (b) Lessee acknowledges and agrees that Lender may rely on all of the representations, warranties and covenants set forth in this Lease, that Lender is an intended third-party beneficiary of such representations, warranties and covenants and that Lender shall have all rights and remedies available at law or in equity as a result of a breach of such representations, warranties and covenants, including to the extent applicable, the right of subrogation. 56. DOCUMENT REVIEW. In the event Lessee makes any request upon Lessor requiring Lessor, Lender or the attorneys of Lessor or Lender to review and/or prepare (or cause to be reviewed and/or prepared) any documents, plans, specifications or other submissions in connection with or arising out of this Lease, then Lessee shall reimburse Lessor or its designee 51 promptly upon Lessor's demand therefor for all out-of-pocket costs and expenses incurred by Lessor in connection with such review and/or preparation plus a reasonable processing and review fee. 57. SUBSTITUTION. A. Subject to the fulfillment of all of the conditions set forth in the following subsection B, Lessee shall have the right to deliver a rejectable offer to Lessor (each, a "Rejectable Substitution Offer") to substitute a Substitute Property for a Property if: (i) the terms of Section 21.B of this Lease permit such substitution (each, a "Casualty/Condemnation Substitution"); or (ii) the terms of Section 23.A(ix)(1) of this Lease permit such substitution (each, a "FCCR Substitution"). From and after the third anniversary of the Effective Date and subject to the fulfillment of all of the conditions set forth in the following subsection B, Lessee shall also have the right to deliver a Rejectable Substitution Offer to substitute any Property with a Substitute Property (each a "Discretionary Substitution"); provided, however, the number of Properties for which Lessee may do a Discretionary Substitution or FCCR Substitution shall not exceed three (3) Properties in the aggregate (the "Maximum Substitution Threshold"). Once Lessee has reached the Maximum Substitution Threshold, Lessee shall no longer be entitled to make any Discretionary Substitutions, but nevertheless shall be entitled to make a Rejectable Substitution Offer in order to pursue a FCCR Substitution. Each Rejectable Substitution Offer shall identify the proposed Substitute Property in reasonable detail and contain a certificate executed by a duly authorized officer of Lessee pursuant to which Lessee shall certify that in Lessee's good faith judgment such proposed Substitute Property satisfies as of the date of such notice, or will satisfy as of the date of the closing of such substitution, all of the applicable conditions to substitution set forth in this Section 57. Lessee agrees to deliver to Lessor all of the diligence information and materials contemplated by the provisions of Section 57.B of this Lease within 30 days after the delivery to Lessor of a Rejectable Substitution Offer. Lessor shall have 90 days after the delivery of a Rejectable Substitution Offer notice satisfying the requirements of the preceding paragraph to deliver to Lessee written notice of its election to either accept or reject the Rejectable Substitution Offer. Lessor's failure to deliver such notice within such time period shall be deemed to constitute Lessor's acceptance of the Rejectable Substitution Offer. If the Mortgage corresponding to the Property to be replaced is still outstanding, any rejection of the Rejectable Substitution Offer by Lessor shall not be effective unless it is consented to in writing by Lender. If Lessor accepts the Rejectable Substitution Offer or is deemed to have accepted the Rejectable Substitution Offer or if Lender does not consent in writing to any rejection of the Rejectable Substitution Offer by Lessor, then Lessee shall complete such substitution, subject, however, to the satisfaction of each of the applicable terms and conditions set forth in this Section 57. If Lessor rejects the Rejectable Substitution Offer pursuant to the previous paragraph for reasons other than that, in Lessor's reasonable judgment, the proposed Substitute Property would not have satisfied the applicable substitution conditions set forth in this Section 57, and such rejection is consented to by Lender, then: 52 (X) if such rejected Rejectable Substitution Offer was made with respect to a Casualty/Condemnation Substitution, the provisions of the last paragraph of Section 21.B and the last sentence of the second paragraph of Section 21.B shall be applicable; (Y) if such rejected Rejectable Substitution Offer was made with respect to a FCCR Substitution, then the breach of the Aggregate Fixed Charge Coverage Ratio requirement which was the basis of such Rejectable Substitution Offer shall be deemed waived; and (Z) if such rejected Rejectable Substitution Offer was made with respect to a Discretionary Substitution, this Lease shall terminate with respect to the Property which Lessee proposed to replace on the next scheduled Base Monthly Rental payment date (the "Early Substitution Termination Date") provided Lessee has paid to Lessor all Base Annual Rental, Additional Rental and all other sums and obligations then due and payable under this Lease as of such Early Substitution Termination Date. On the Early Substitution Termination Date, and provided Lessee shall have paid to Lessor all Base Annual Rental, Additional Rental and other sums and obligations then due and payable under this Lease as of the Early Substitution Date: (i) the Base Annual Rental then in effect shall be reduced by an amount equal to the product of (x) the Applicable Rent Reduction Percentage for the Property which Lessee proposed to replace, and (y) the Base Annual Rental then in effect; and (ii) all obligations of Lessor and Lessee shall cease as of the Early Substitution Termination Date with respect to such Property; provided, however, Lessee's obligations to Lessor with respect to such Property under any indemnification provisions of this Lease with respect to such Property (including, without limitation, Sections 16 and 19 of this Lease) and Lessee's obligations to pay any sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Early Substitution Termination Date shall survive the termination of this Lease with respect to such Property or otherwise. This Lease shall, however, continue in full force and effect with respect to all other Properties. B. The substitution of a Substitute Property for a Property pursuant to the preceding subsection A shall be subject to the fulfillment of all of the following terms and conditions: (i) The Substitute Property must: (1) be a Permitted Facility, in good condition and repair, ordinary wear and tear excepted; (2) have a Fixed Charge Coverage Ratio (with the definitions of Section 8.A being deemed to be modified, as contemplated by the following sentence to provide for a calculation of an individual "Fixed Charge Coverage Ratio" for the Substitute Property only) for the FCCR Period of not less than the greater of (X) 1.25:1 or (Y) the Fixed Charge Coverage Ratio for the Property to be replaced for such FCCR Period; provided that, with respect to each FCCR 53 Substitution, the Fixed Charge Coverage Ratio for the Substitute Property for such FCCR Period must also be high enough (after taking into account any other substitutions for Properties which are being consummated simultaneously therewith) to result in a cure of the breach of the Aggregate Fixed Charge Coverage Ratio requirement (it being understood and agreed that the determination of the Fixed Charge Coverage Ratio for the Substitute Property shall be based on an assumption that the Operating Lease Expense for the Substitute Property would be the same amount as the Operating Lease Expense for the Property to be replaced, as determined in accordance with the last sentence of this subitem (2)). For purposes of this subitem (2), the definitions set forth in Section 8.A of this Lease with respect to the calculation of the Aggregate Fixed Charge Coverage Ratio shall be deemed modified as applicable to provide for the calculation of a Fixed Charge Coverage Ratio for each Property on an individual basis rather than on an aggregate basis with the other Properties. For purposes of such calculation, the Operating Lease Expense with respect to this Lease for each such Property shall equal the product of (x) the Applicable Rent Reduction Percentage for such Property, and (y) the Base Annual Rental then in effect; (3) have a fair market value no less than the greater of the then fair market value of the Property being replaced or the fair market value of such Property as of the Effective Date (in each case, determined without regard to this Lease, but assuming that while this Lease has been in effect, Lessee has complied with all of the terms and conditions of this Lease), as determined by Lessor, and consented to by Lender, utilizing the same valuation method as used in connection with the closing of the transaction described in the Sale-Leaseback Agreement, which was based upon the sum of (x) the fair market value of the land comprising such Property and (y) the replacement cost of the improvements located thereon; (4) have improvements which have a remaining useful life substantially equivalent to, or better than, that of the improvements located at the Property to be replaced; (5) be conveyed to Lessor (or, if directed by Lessor, to Lessor and a person designated to acquire the remainderman interest) by special or limited warranty deed, free and clear of all liens and encumbrances, except such matters as are reasonably acceptable to Lessor (the "Substitute Property Permitted Exceptions"); and (6) be located in either (a) the same state as the Property to be replaced is then located, or (b) in another state acceptable to Lessor in Lessor's reasonable discretion; (ii) Lessor shall have inspected and approved the Substitute Property utilizing Lessor's customary site inspection and underwriting approval criteria. Lessee shall have reimbursed Lessor and Lender for all of their reasonable costs and expenses incurred with respect to such proposed substitution, including, without limitation, Lessor's third-party and/or in-house site inspectors' costs and expenses with respect to the proposed Substitute Property. Lessee shall be solely responsible for the payment of all costs and expenses 54 resulting from such proposed substitution, regardless of whether such substitution is consummated, including, without limitation, the cost of title insurance and endorsements for both Lessor and Lender, survey charges, stamp taxes, mortgage taxes, transfer fees, escrow and recording fees, the cost of environmental policies or endorsements to the Environmental Policies as applicable, income and transfer taxes imposed on Lessor as a result of such substitution and the reasonable attorneys' fees and expenses of counsel to Lessee, Lessor and Lender; (iii) Lessor shall have received a preliminary title report and irrevocable commitment to insure title by means of an ALTA extended coverage owner's policy of title insurance (or its equivalent, in the event such form is not issued in the jurisdiction where the proposed Substitute Property is located) for the proposed Substitute Property issued by Title Company and committing to insure Lessor's good and marketable title in the proposed Substitute Property, subject only to the Substitute Property Permitted Exceptions (as defined in the Sale-Leaseback Agreement) and containing endorsements substantially comparable to those required by Lessor at the Closing (as defined in the Sale-Leaseback Agreement) and Lender shall have received such title report and irrevocable commitment to insure its first priority lien encumbering the proposed Substitute Property as Lender shall reasonably require; (iv) Lessor shall have received a current ALTA survey of the proposed Substitute Property, the form of which shall be comparable to those received by Lessor at the Closing and sufficient to cause the standard survey exceptions set forth in the title policy referred to in the preceding subsection to be deleted; (v) Lessor shall have received an environmental insurance policy with respect to the proposed Substitute Property, or to the extent applicable, an endorsement to the Environmental Policies, the form and substance of which shall be satisfactory to Lessor in its sole discretion; (vi) Lessee shall deliver, or cause to be delivered, with respect to Lessee and the Substitute Property, opinions of Counsel (as defined in the Sale-Leaseback Agreement) in form and substance comparable to those received at Closing (but also addressing such matters unique to the Substitute Property as may be reasonably required by Lessor); (vii) no Event of Default shall have occurred and be continuing under any of the Sale-Leaseback Documents; (viii) Lessee shall have executed such documents as may be reasonably required by Lessor as a result of such substitution, including amendments to this Lease and the Memorandum (the "Substitute Documents"), all of which documents shall be in form and substance reasonably satisfactory to Lessor; (ix) the representations and warranties set forth in the Substitute Documents, this Lease and the Sale-Leaseback Agreement applicable to the proposed Substitute Property shall be true and correct in all material respects as of the date of substitution, and Lessee shall have delivered to Lessor an officer's certificate certifying to that effect; 55 (x) Lessee shall have delivered to Lessor certificates of insurance showing that insurance required by the Substitute Documents is in full force and effect; (xi) Lessor shall have obtained an endorsement to the policy of residual value insurance issued to Lessor and Lender in connection with the transaction described in the Sale-Leaseback Agreement with respect to the proposed Substitute Property, which endorsement shall be in form and substance reasonably satisfactory to Lessor and Lender; (xii) Lender shall have consented to the substitution of the proposed Substitute Property; and (xiii) the date of the closing of the substitution shall occur no later than 20 days after the date of acceptance (or deemed acceptance) by Lessor of the Rejectable Substitution Offer. C. Upon satisfaction of the foregoing conditions set forth in Section 57.B and provided Lessor has accepted the Rejectable Substitution Offer or is deemed to have accepted the Rejectable Substitution Offer, or while the Mortgage corresponding to such Property is still outstanding, any rejection of the Rejectable Substitution Offer by Lessor is not consented to in writing by the Lender: (i) the proposed Substitute Property shall be deemed substituted for the Property to be replaced; (ii) the Substitute Property shall be referred to herein as a "Property" and included within the definition of "Properties"; (iii) the Substitute Documents shall be dated as of the date of the substitution; and (iv) Lessor shall convey the Property to be replaced to Lessee or a designee of Lessee "as-is" by quit-claim deed, subject to all matters of record (except for the Mortgage corresponding to the Property to be replaced and any other consensual liens granted by Lessor other than those granted by Lessor at the request of Lessee), and without representation or warranty. D. Notwithstanding the foregoing, nothing in this Section 57 shall be construed as limiting or otherwise adversely affecting the representations, warranties, covenants and characterizations set forth in Lease, including, without limitation, those provisions set forth in Section 3 of this Lease. 58. REJECTABLE PURCHASE OFFER. A. If Lessor shall have given Lessee notice of a breach of the Aggregate Fixed Charge Coverage Ratio requirement under this Lease, Lessee shall have the right to deliver a rejectable offer to Lessor (a "Rejectable Purchase Offer") to purchase such of the Properties as is contemplated by Section 23.A(ix)(2), subject to the fulfillment of all of the conditions set forth in this Section 58. Lessor shall have 90 days from the delivery of the Rejectable Purchase Offer notice to deliver to Lessee written notice of its election to either accept or reject the Rejectable Purchase Offer. Lessor's failure to deliver such notice within such time period shall be deemed to 56 constitute Lessor's acceptance of the Rejectable Purchase Offer. If the Mortgage corresponding to the Property to be purchased is still outstanding, any rejection of the Rejectable Purchase Offer by Lessor shall not be effective unless it is consented to in writing by Lender. If Lessor accepts the Rejectable Purchase Offer or is deemed to have accepted the Rejectable Purchase Offer or if Lender does not consent in writing to any rejection of the Rejectable Purchase Offer by Lessor, then Lessee shall complete such purchase, subject, however, to the satisfaction of each of the terms and conditions set forth in the following subsection B. If Lessor rejects the Rejectable Purchase Offer pursuant to the previous paragraph, and such rejection is consented to by Lender, then, the breach of the Aggregate Fixed Charge Coverage Ratio requirement which was the basis of such Rejectable Purchase Offer shall be deemed waived. B. The purchase of a Property pursuant to the preceding subsection A shall be subject to the fulfillment of all of the following terms and conditions: (i) no Event of Default shall have occurred and be continuing under any of the Sale-Leaseback Documents; (ii) Lessee shall have delivered to Lessor a certificate executed by a duly authorized officer of Lessee certifying to Lessor that Lessee does not own any properties which are available for substitution and which meet the applicable requirements for substitution set forth in Section 57; (iii) the purchase of such Property (together with any other Properties which are being purchased simultaneously therewith) must result in a cure of the breach of the Aggregate Fixed Charge Coverage Ratio requirement; (iv) Lessee shall have paid to Lessor the Subject Purchase Price (as defined below), together with all Base Annual Rental, Additional Rental and other sums and obligations then due and payable under this Lease as of the date of the closing of such purchase; (v) Lessee shall be solely responsible for the payment of all costs and expenses resulting from such proposed purchase, regardless of whether the purchase is consummated, including, without limitation, to the extent applicable, the cost of title insurance and endorsements, including, survey charges, stamp taxes, mortgage taxes, transfer taxes and fees, escrow and recording fees, taxes imposed on Lessor as a result of such purchase, the attorneys' fees of Lessee and the reasonable attorneys' fees and expenses of counsel to Lessor and Lender; and (vi) the date of the closing of such purchase shall occur on the next scheduled Base Monthly Rental payment date following Lessor's acceptance (or deemed acceptance) of the Rejectable Purchase Offer, but in no event later than 20 days after the date of acceptance (or deemed acceptance) by Lessor of such Rejectable Purchase Offer. On the date of the closing of the purchase of a Property pursuant to this Section (the "Rejectable Purchase Closing Date"), subject to satisfaction of the foregoing conditions: 57 (1) this Lease shall be deemed terminated with respect to such Property only, but this Lease shall continue in full force and effect with respect to all of the other Properties; provided, however, such termination shall not limit Lessee's obligations to Lessor with respect to such Property under any indemnification provisions of this Lease (including, without limitation, Sections 16 and 19 of this Lease) and Lessee's obligations to pay any sums (whether payable to Lessor or a third party) accruing under this Lease with respect to such Property prior to the Rejectable Purchase Closing Date shall survive the termination of this Lease; (2) the Base Annual Rental shall be reduced for each such Property by an amount equal to the product of (x) the Applicable Rent Reduction Percentage for such Property and (y) the Base Annual Rental then in effect; and (3) Lessor shall convey such Property to Lessee "as-is" by quit-claim deed, subject to all matters of record (except for the Mortgage corresponding to the Property to be replaced and any other consensual liens granted by Lessor other than those granted by Lessor at the request of Lessee), and without representation or warranty. For purposes of this Section 58, the term "Subject Purchase Price" shall mean the product of the amount specified on SCHEDULE I attached hereto which corresponds to the time period during which such purchase occurs multiplied by the Purchase Price for the Property being purchased. 59. STATE SPECIFIC PROVISIONS. The provisions and/or remedies which are set forth on SCHEDULE II shall be deemed a part of and included within the terms and conditions of this Lease. 60. CERTIFICATE. At any time, and from time to time, at or following the assignment by any Permitted Sublessee of its right, title and interest in any Permitted Sublease, Lessor, provided all of the conditions in Section 12 of the Permitted Sublease have been satisfied, agrees, promptly and in no event later than twenty (20) Business Days after a request from Lessee to execute, acknowledge and deliver to Lessee and any such Permitted Sublessee a certificate from Lessor, certifying that such Permitted Sublessee has been released from all liabilities, obligations and duties to Lessor under the Permitted Sublease. IN WITNESS WHEREOF, Lessor and Lessee have entered into this Lease as of the date first above written. LESSOR: ZUNO PROPERTY LLC, a Delaware limited liability company By: Zuno Equity LLC, a Delaware limited liability company, its member By: _________________________________ Printed Name: _______________________ Its: ________________________________ 58 LESSEE: SL PROPERTIES, INC., a Massachusetts corporation By: _______________________________ Printed Name: _____________________ Its: ______________________________ Lessee's Tax Identification Number: ___________________________________ 59 EX-2.3 4 a2050677zex-2_3.txt EXHIBIT 2.3 EXHIBIT 2.3 UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE 1. FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned ("Guarantor"), unconditionally, absolutely and irrevocably guarantees and promises to pay to ZUNO PROPERTY LLC, a Delaware limited liability company (together with its successors and assigns under the Lease (as defined below), "Lessor"), or order, any and all amounts, including, without limitation, Base Annual Rental, Base Monthly Rental, taxes, insurance premiums, impounds, reimbursements, late charges, default interest, damages, indemnity obligations and all other amounts, costs, fees, expenses and charges of any kind or type whatsoever, which may or at any time be due to Lessor pursuant to the following agreements (collectively, the "Documents"): A. Sale-Leaseback Agreement, dated as of the date hereof, between Lessor and Saxet Corporation, a Delaware corporation, Franklin Mills Pizzeria, Inc., a Pennsylvania corporation, and Uno Restaurants, Inc., a Massachusetts corporation ("Sellers"), with respect to the sale and purchase of certain parcels of real property and the improvements located thereon (the "Properties"); B. Master Lease (the "Lease"), dated as of the date hereof, between Lessor and SL Properties, Inc., a Massachusetts corporation ("Lessee") by which Lessor leases the Properties to Lessee; C. Acknowledgement of Master Lease Assignment and Subordination, Nondisturbance and Attornment Agreement dated as of the date hereof among Lessee, Lessor, PiOne Remainder LLC, a Delaware limited liability company, and FFCA Funding Corporation, a Delaware corporation ("Lender"); D. Any other document, agreement, instrument or certificate contemplated by the Lease, or any other documents, agreements, instruments or certificates now or hereafter entered into between Lessor and Lessee with respect to the Lease; and E. Any amendment of the foregoing documents, agreements, instruments or certificates now or hereafter entered into between Lessor and Lessee. Initially capitalized terms not otherwise defined in this Guaranty shall have the meanings set forth in the Lease. 2. Guarantor also unconditionally guarantees the truthfulness and accuracy of all representations, warranties and certifications of Lessee, the satisfaction of all conditions by Lessee and the full and timely performance of all obligations to be performed by Lessee, under or pursuant to the Documents (the matters which are guaranteed pursuant to Sections 1 and 2 are hereinafter collectively referred to as the "Obligations"). 3. The obligations of Guarantor under this Guaranty are primary, joint and several and independent of the obligations of Lessee and any and every other guarantor of the Obligations, and a separate action or actions may be brought and executed against Guarantor or any other such guarantor, whether or not such action is brought against Lessee, Sellers or any other such guarantor and whether or not Lessee, Sellers or any other such guarantor be joined in such action or actions. 4. This is an absolute and unconditional guaranty of payment and performance and not of collection and Guarantor unconditionally (a) waives any requirement that Lessor first make demand upon, or seek to enforce or exhaust remedies against, Lessee, Sellers or any other person or entity (including any other guarantor) or any of the collateral or property of Lessee, Sellers or such other person or entity before demanding payment from, or seeking to enforce this Guaranty against, Guarantor; (b) waives and agrees not to assert any and all rights, benefits and defenses which might otherwise be available under the provisions of Ariz. Rev. Stat. Sections 12-1641, 12 - -1642 ET SEQ., 44-141, 44-142 or 47-3605, Arizona Rules of Civil Procedure Rule 17(f), or any other Arizona statutes or rules (including any statutes or rules amending, supplementing or supplanting same) which might operate, contrary to Guarantor's agreements in this Guaranty, to limit Guarantor's liability under, or the enforcement of, this Guaranty; (c) covenants that this Guaranty will not be discharged until all of the Obligations are fully satisfied; and (d) agrees that this Guaranty shall remain in full effect without regard to, and shall not be affected or impaired by, any invalidity, irregularity or unenforceability in whole or in part of any of the Documents, or any limitation of the liability of Lessee or Guarantor thereunder, or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever. 5. This Guaranty is a continuing guaranty, and the obligations, undertakings and conditions to be performed or observed by Guarantor under this Guaranty shall not be affected or impaired by reason of the happening from time to time of the following with respect to the Documents, all without notice to, or the further consent of, Guarantor: (a) the waiver by Lessor of the observance or performance by Lessee, Sellers or Guarantor of any of the obligations, undertakings, conditions or other provisions contained in any of the Documents, except to the extent of such waiver; (b) the extension, in whole or in part, of the time for payment of any amount owing or payable under the Documents; (c) the modification or amendment (whether material or otherwise) of any of the obligations of Lessee or Sellers under, or any other provisions of, any of the Documents, except to the extent of such modification or amendment; (d) the taking or the omission of any of the actions referred to in any of the Documents (including, without limitation, the giving of any consent referred to therein); (e) any failure, omission, delay or lack on the part of Lessor to enforce, assert or exercise any provision of the Documents, including any right, power or remedy conferred on Lessor in any of the Documents or any action on the part of Lessor granting indulgence or extension in any form; (f) the assignment to or assumption by any third party of any or all of the rights or obligations of Lessee or Sellers under all or any of the Documents; 2 (g) the release or discharge of Lessee or any of the Sellers from the performance or observance of any obligation, undertaking or condition to be performed by Lessee or any of the Sellers under any of the Documents by operation of law, including any rejection or disaffirmance of any of the Documents in any bankruptcy or similar proceedings; (h) the receipt and acceptance by Lessor or any other person or entity of notes, checks or other instruments for the payment of money and extensions and renewals thereof; (i) any action, inaction or election of remedies by Lessor which results in any impairment or destruction of any subrogation rights of Guarantor, or any rights of Guarantor to proceed against any other person or entity for reimbursement; (j) any setoff, defense, counterclaim, abatement, recoupment, reduction, change in law or any other event or circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor, indemnitor or surety under the laws of the State of Arizona, the state in which the Properties are located or any other jurisdiction; (k) any substitution of a Substitute Property for a Property pursuant to the terms and conditions of the Lease; and (l) the termination or renewal of any of the Obligations or any other provision thereof. 6. Guarantor represents and warrants to Lessor that: (a) Neither the execution nor delivery of this Guaranty nor fulfillment of nor compliance with the terms and provisions hereof will conflict with, or result in a breach of the terms or conditions of, or constitute a default under, any agreement or instrument to which Guarantor is now a party or by which Guarantor may be bound, or result in the creation of any lien, charge or encumbrance upon any property or assets of Guarantor, which conflict, breach, default, lien, charge or encumbrance could result in a material adverse change in the financial condition of Guarantor; (b) No further consents, approvals or authorizations are required for the execution and delivery of this Guaranty by Guarantor or for Guarantor's compliance with the terms and provisions of this Guaranty; (c) This Guaranty is the legal, valid and binding agreement of Guarantor and is enforceable against Guarantor in accordance with its terms; (d) Guarantor has the full power, authority, capacity and legal right to execute and deliver this Guaranty, and, to the extent Guarantor is a corporation, partnership, limited liability company or other form of entity, the parties executing this Guaranty on behalf of Guarantor are fully authorized and directed to execute the same to bind Guarantor; (e) Guarantor is not a "foreign individual," "foreign corporation," "foreign partnership," "foreign limited liability company," "foreign trust," or "foreign estate," as those terms are defined in the U.S. Internal Revenue Code and the regulations promulgated 3 thereunder. Guarantor's Federal Tax Identification Number is accurately set forth herein next to the signature of Guarantor; (f) Guarantor has delivered to Lessor either audited financial statements or, if Guarantor does not have audited financial statements, certified financial statements. Such financial statements and other information relating to Guarantor heretofore delivered to Lessor are true, correct and complete in all material respects as of the date of this Guaranty. Guarantor understands that Lessor is relying upon such information, and Guarantor represents that such reliance is reasonable. The financial statements of Guarantor delivered by Lessee to Lessor pursuant to the Lease have been prepared in accordance with generally accepted accounting principles consistently applied and accurately reflect, as of the date of this Guaranty, the financial condition of Guarantor; and (g) The Documents are conclusively presumed to have been signed in reliance on this Guaranty, and the assumption by Guarantor of its obligations under this Guaranty results in direct financial benefit to Guarantor. 7. (a) Guarantor covenants to Lessor that, during the term of this Guaranty, Guarantor will not transfer or dispose of any material part of its assets except in the ordinary course of business for full and fair consideration and reasonably equivalent value; provided, however, that at any time and from time to time during the term of this Guaranty, the Guarantor, except as prohibited by the Master Lease, may (i) pledge and grant security interests in any or all of its assets to secure indebtedness of Guarantor and/or any of its subsidiaries or other affiliates (including, without limitation, indebtedness with respect to letters of credit, interest rate protection agreements, ACH exposure and any other extension of credit) to banks, insurance companies and other institutional lenders (collectively the "Lenders") and the Lenders may exercise all of their rights and remedies under all such pledges and security interests and (ii) transfer any or all of its assets in full or partial payment of any indebtedness of Guarantor and/or any of its subsidiaries or other affiliates (including, without limitation, indebtedness with respect to letters of credit, interest rate protection agreements, ACH exposure and any other extension of credit) to the Lenders provided such transfer is for full and fair consideration and reasonable equivalent value. (b) During the term of this Guaranty, without the prior written consent of Lessor, Guarantor shall not permit any interest in Guarantor or Parent (as hereinafter defined) to be assigned, transferred, conveyed, pledged or mortgaged, whether by operation of law or otherwise, including, without limitation, a dissolution of Guarantor, provided, however, the foregoing shall not apply to (i) any transfer of stock traded publicly during such period of time that Guarantor or Parent is a publicly traded company, (ii) any other transfer of stock that does not result in a change of voting control in Guarantor or Parent or (iii) transfers of capital stock of Guarantor and Parent in connection with a going private transaction so long as immediately following the transaction, Aaron Spencer directly or indirectly continues to own at least 51% of the outstanding voting capital stock of Parent and Parent continues to own at least 51% of the outstanding voting capital stock of Guarantor. (c) Notwithstanding the foregoing, if the capital stock of Guarantor is no longer publicly traded, Guarantor may permit: (i) Uno Restaurant Holdings Corporation, a Delaware corporation, or such other Person that acquires all the capital stock of Guarantor in a transaction 4 making Guarantor a privately held company ("Parent") to transfer its capital stock in Guarantor so long as Parent continues to own 51% or more of the outstanding voting capital stock of Guarantor and (ii) Aaron Spencer to transfer so much of his capital stock in Parent so long as he continues to own 51% or more of the outstanding voting capital stock of Parent (such 51% ownership interest, in each case the "Threshold Amount"). Neither Parent nor Aaron Spencer shall transfer any voting capital stock in Guarantor or Parent, respectively, resulting in Parent or Aaron Spencer owning voting capital stock in Guarantor or Parent, respectively, in an amount less than the Threshold Amount (each, an "Excess Threshold Transfer") without Lessor's and Lender's prior written consent, which consent shall not be unreasonably withheld if: (i) no Event of Default under the Lease then exists and is continuing; and (ii) if an Excess Threshold Transfer occurs prior to the third anniversary of the Effective Date, Guarantor provides Lessor with written reasonable evidence that following the Excess Threshold Transfer the following individuals will maintain their respective positions as officers of Guarantor for a period of not less than one year after the date of the Excess Threshold Transfer: (a) Craig S. Miller as President and CEO, (b) Robert M. Vincent, Executive Vice President and Chief Financial Officer, and (c) Paul W. MacPhail, Executive Vice President and Chief Operating Officer. Regardless of when an Excess Threshold Transfer occurs, from and after the occurrence of an Excess Threshold Transfer, Guarantor and Parent shall maintain a "Corporate Fixed Charge Coverage Ratio" (as defined below) of not less than 1.20 to 1. The term "Corporate Fixed Charge Coverage Ratio" shall mean with respect to the twelve month period of time immediately preceding the end of each fiscal quarter of Guarantor and Parent (each, a "12 Month Period"), the ratio calculated for such period of time, each as determined in accordance with GAAP, of (a) the sum of Net Income, Depreciation and Amortization, Interest Expense and Operating Lease Expense, to (b) the sum of Operating Lease Expense, scheduled principal payments of long term Debt, scheduled maturities of all Capital Leases and Interest Expense. Notwithstanding the foregoing to the contrary, a transfer of capital stock by: (i) Aaron Spencer to a family trust or other estate planning entity controlled by Aaron Spencer and in which Aaron Spencer family members are beneficiaries, (ii) the estate of Aaron Spencer to family members, a family trust or other family-owned estate planning entity, or (iii) transfers by family members, a family trust or other family-owned estate planning entity among themselves, shall not be deemed an Excess Threshold Transfer and such capital stock held by a family member, in a family trust or another family-owned estate planning entity controlled by Aaron Spencer and in which Aaron Spencer's family members are beneficiaries shall be deemed to be owned by Aaron Spencer for purposes of this Section 7(c). For purposes of this Section 7, the following terms shall be defined as set forth below: "CAPITAL LEASE" shall mean all leases of any property, whether real, personal or mixed, by Guarantor and Parent, which leases would, in conformity with GAAP, be required to be accounted for as a capital lease on the balance sheet of Guarantor. The term "Capital Lease" shall not include any operating lease. "DEBT" shall mean with respect to Guarantor and Parent and for the applicable 12 Month Period (i) indebtedness for borrowed money, (ii) obligations evidenced by bonds, indentures, notes or similar instruments, (iii) obligations to pay the deferred purchase price of property or services, (iv) obligations under leases which should be, in accordance with GAAP, recorded as Capital Leases, and (v) obligations under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or 5 otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (iv) above. "DEPRECIATION AND AMORTIZATION" shall mean the depreciation and amortization accruing during the applicable 12 Month Period with respect to Guarantor and Parent, as determined in accordance with GAAP. "INTEREST EXPENSE" shall mean for the applicable 12 Month Period, the sum of all interest accrued or which should be accrued in respect of all Debt of Guarantor and Parent, as determined in accordance with GAAP. "NET INCOME" shall mean with respect to the applicable 12 Month Period, the net income or net loss of Guarantor and Parent. In determining the amount of Net Income, (i) adjustments shall be made for nonrecurring gains and losses or non-cash items allocable to the applicable 12 Month Period, and (ii) deductions shall be made for, among other things, Depreciation and Amortization, Interest Expense, Operating Lease Expense and actual corporate overhead expense allocable to the applicable 12 Month Period. "OPERATING LEASE EXPENSE" shall mean the sum of all payments and expenses incurred by Guarantor and Parent under any operating leases during the applicable 12 Month Period, as determined in accordance with GAAP. (d) Notwithstanding the prohibition on pledging set forth in subsection (b), above, the holders of capital stock in Guarantor and Parent may pledge or otherwise encumber their capital stock to secure obligations of Lessee, Guarantor, Parent and their Affiliates to institutional lenders for indebtedness and other obligations or refinancings thereof (an "Institutional Loan"). Notwithstanding the prohibition on transfer set forth in subsection (b), above, and without limiting any transfer permitted by the preceding subsection (c), the interests in Guarantor and/or Parent may be assigned, transferred or conveyed: (i) in connection with a foreclosure or other sale of the interests in Guarantor and/or Parent as a result of a default or breach of the Institutional Loan or (ii) in connection with any subsequent transfer made by the Institutional Loan lender which acquired the interests by foreclosure or transfer-in-lieu thereof (each, the "Foreclosure Transfer"), and Lessor shall in each instance be deemed to have consented to such Foreclosure Transfer, provided that: (i) no Event of Default shall have occurred and be continuing at the time of the Foreclosure Transfer; (ii) after giving effect to such Foreclosure Transfer, whether as a single transaction or as a series of transactions, either (x) Guarantor, including any surviving entity as a result of such Foreclosure Transfer and/or successor of Guarantor, shall have a net worth determined in accordance with GAAP at least equal to $40,000,000.00 (the "Net Worth Condition") or (y) if Guarantor does not meet the Net Worth Condition concurrently with the completion of such Foreclosure Transfer, Guarantor shall cause Lessee to (1) pay to Lessor the Foreclosure Transfer Rent Prepayment Amount (as hereinafter defined) to the extent necessary to cause the Aggregate Fixed Charge Coverage Ratio for all of the Properties, taken as a whole, to be at least equal to 3.0:1 for the twelve-month period of time immediately preceding the end of the fiscal quarter of Lessee closed prior to the date on 6 which Lessee gives the Foreclosure Transfer Notice (as hereinafter defined), and (2) pay to Lessor the Prepayment Charges payable by Lessor to Lender as a result of the prepayment of such Base Monthly Rental. Upon Lessee's payment of the Foreclosure Transfer Rent Prepayment Amount and Prepayment Charges as contemplated by the preceding sentence, Lessor agrees that the Base Monthly Rental beginning with the calendar month immediately following the month in which such payment is made (or, if such payment is made on the first day of a calendar month, beginning with the calendar month in which such payment is made) shall be equal to the Base Monthly Rental then in effect reduced by the Foreclosure Transfer Rent Reduction Amount (as hereinafter defined); (iii) after giving effect to such Foreclosure Transfer, whether as a single transaction or as a series of transactions, if Guarantor has a long term debt rating, such rating is no worse than the lesser of Guarantor's long term debt rating as of the Effective Date of the Lease and Guarantor's long term debt rating immediately prior to the consummation of such Foreclosure Transfer; (iv) Guarantor, including any surviving entity of such Foreclosure Transfer and/or successor of Guarantor, shall not be released from any of its obligations under this Guaranty, and such surviving entity or successor entity, as applicable, has assumed in writing or by operation of law (provided Lessor has received a satisfactory opinion of counsel to Guarantor confirming that such assumption will occur by operation of law) all of Guarantor's obligations under this Guaranty and Guarantor shall not be released from its obligations under this Guaranty; (v) Guarantor, after giving effect to such Foreclosure Transfer, shall have a Corporate Fixed Charge Coverage Ratio determined as of the end of Guarantor's most recently closed fiscal quarter on a proforma basis after giving effect to the proposed Foreclosure Transfer of at least 1.20; (vi) the Properties will be operated as a nationally or regionally recognized casual dining concept; (vii) Guarantor or the operator of the Properties will have at least 5 years' experience operating a multi-unit casual dining restaurant concept with the same or greater number of units as are then operated by Guarantor and its Affiliates; and (viii) if and to the extent that the Loans have been subject to a Securitization, Lender shall have received a notice or confirmation of the rating agencies which have issued ratings in connection with such Securitization that such Foreclosure Transfer will not cause any of such rating agencies to downgrade, modify, withdraw or qualify any of such ratings. For purposes of this Section 7(d), the following terms shall be defined as set forth below: "FORECLOSURE TRANSFER RENT PREPAYMENT AMOUNT" means the present value, discounted on a monthly basis at [___%], of the Subject Transfer Rent Reduction Amount for each month beginning with the calendar month immediately following the month in which the Foreclosure Transfer Rent Prepayment Amount is paid (or, if the Foreclosure Transfer Rent Prepayment Amount is paid on the first day of a calendar month, beginning 7 with the calendar month in which the Foreclosure Transfer Rent Prepayment Amount is paid) and ending with the calendar month of May, 2021, inclusive. "FORECLOSURE TRANSFER RENT REDUCTION AMOUNT" the product of (x) the Base Monthly Rental for the last month of the fiscal quarter of Lessee which ended prior to the date on which Lessee gives Lessor the Foreclosure Transfer Notice and (y) the Foreclosure Transfer FCCR Shortfall Percentage. For purposes of illustration and not limitation, if (i) Lessee's Aggregate Fixed Charge Coverage Ratio for the Fiscal Year ending May 27, 2010 was 2.0 (which results in a Foreclosure Transfer FCCR Shortfall Percentage of 33%), (ii) Lessee paid the Foreclosure Transfer Rent Prepayment Amount on August 15, 2010, and (iii) the Base Monthly Rental for August, 2010 was $100, then the Base Monthly Rental payment beginning on September 1, 2010 shall be equal to the Base Monthly Rental for August, 2010 reduced by the sum of $33.33. "FORECLOSURE TRANSFER FCCR SHORTFALL PERCENTAGE" means the percentage represented by (x) 1 minus (y) a fraction, the numerator of which shall be the Aggregate Fixed Charge Coverage Ratio for the twelve month period of time immediately preceding the end of the fiscal quarter of Lessee which closed prior to the date on which Lessee gives the Foreclosure Transfer Notice, and the denominator of which shall be 3. Guarantor shall notify Lessor and Lender at least 30 days but not more than 90 days prior to the completion of any Foreclosure Transfer, whether or not the consent of Lessor to such Foreclosure Transfer is deemed given under the terms of this Section 7(d) (each, a "Foreclosure Transfer Notice"). Guarantor shall provide Lessor and Lender with information reasonably sufficient to enable Lessor and Lender to determine that Guarantor has satisfied the conditions to any Foreclosure Transfer, including, without limitation, such financial information as Lessor and Lender may reasonably require to enable them to determine that the Net Worth Condition and/or Aggregate Fixed Charge Coverage Ratio requirements set forth in this Section 7(d) have been satisfied, or will be satisfied simultaneously with the completion of the Foreclosure Transfer. In addition, to the extent that the loans contemplated by the Loan Documents have been subject to a Securitization, Guarantor agrees to cooperate in good faith in connection with providing such information as the rating agencies may reasonably require to evaluate any such proposed Foreclosure Transfer. If the foregoing conditions are not satisfied, then the interests in Guarantor or Parent shall not be transferred pursuant to a Foreclosure Transfer. (e) Within 45 days after the end of each fiscal quarter and within 120 days after the end of each fiscal year of Guarantor, Guarantor shall deliver to Lessor complete financial statements of Guarantor, including a balance sheet, profit and loss statement, statement of changes in cash flows and all other related schedules for the fiscal period then ended. All such financial statements shall be prepared in accordance with generally accepted accounting principles, consistently applied from period to period, and shall be certified to be accurate and complete by Guarantor (or the Treasurer or other appropriate officer of Guarantor). Guarantor understands that Lessor is relying upon such financial statements and Guarantor represents that such reliance is reasonable. The financial statements delivered to Lessor need not be audited, but Guarantor shall deliver to Lessor copies of any audited financial statements of Guarantor which may be prepared, as soon as they are available. 8 8. This Guaranty shall commence upon execution and delivery of any of the Documents and shall continue in full force and effect until all of the Obligations are duly, finally and permanently paid, performed and discharged and are not subject to any right of reborrowing or extension by Lessee, and Lessor gives Guarantor written notice of the full and final satisfaction of the Obligations. The Obligations shall not be considered fully paid, performed and discharged unless and until all payments by Lessee to Lessor are no longer subject to any right on the part of any person whomsoever, including but not limited to Lessee, Lessee as a debtor-in-possession and/or any trustee in bankruptcy, to disgorge such payments or seek to recoup the amount of such payments or any part thereof. The foregoing shall include, by way of example and not by way of limitation, all rights to recover preferences voidable under Title 11 of the United States Bankruptcy Code, 11 U.S.C. Sec. 101 ET SEQ., as amended (the "Code"). In the event that any such payments by Lessee to Lessor are disgorged after the making thereof, in whole or in part, or settled without litigation, to the extent of such disgorgement or settlement, Guarantor shall be liable for the full amount Lessor is required to repay plus interest, late charges, attorney's fees and any and all expenses paid or incurred by Lessor in connection therewith. 9. Guarantor shall neither have any right of subrogation, indemnity or reimbursement nor hold any other claim against Lessee or Sellers, and Guarantor does hereby release Lessee and Sellers from any and all claims by Guarantor now or hereafter arising against Lessee or Sellers. Furthermore, Guarantor hereby unconditionally and irrevocably waives (a) any right to participate in any security now or hereafter held by Lessor or in any claim or remedy of Lessor or any other person against Lessee and Sellers with respect to the Obligations, (b) any statute of limitations affecting Guarantor's liability hereunder, (c) all principles and provisions of law which conflict with the terms of this Guaranty, and (d) diligence, presentment, protest, demand for performance, notice of nonperformance, notice of intent to accelerate, notice of acceleration, notice of protest, notice of dishonor, notice of execution of any Documents, notice of extension, renewal, alteration or amendment, notice of acceptance of this Guaranty, notice of defaults under any of the Documents and all other notices whatsoever. 10. Notwithstanding the preceding Section 9, in the event that Guarantor shall have any claims against Lessee or Sellers, any indebtedness of Lessee or Sellers now or hereafter held by Guarantor is hereby subordinated to the indebtedness of Lessee or Sellers to Lessor. Any such indebtedness of Lessee or Sellers to Guarantor, if Lessor so requests, shall be collected, enforced and received by Guarantor as trustee for Lessor and be paid over to Lessor on account of the Obligations, but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty. 11. It is not necessary for Lessor to inquire into the powers of Lessee, Sellers or their officers, directors, partners or agents acting or purporting to act on its behalf, and Guarantor shall be liable for the Obligations in accordance with their terms notwithstanding any lack of authorization or defect in execution or delivery by Lessee or Sellers. 12. In addition to the amounts guaranteed under this Guaranty, Guarantor agrees to pay (i) all of Lessor's attorneys' fees and other costs and expenses which may be incurred by Lessor in the enforcement of this Guaranty and (ii) interest (including postpetition interest to the extent a petition is filed by or against Lessee under the Code) at the Default Rate on any Obligations not paid when due. 9 13. This Guaranty shall apply to the parties hereto and their successors and assigns according to the context hereof and without regard to the number or gender of words or expressions used herein. 14. Guarantor hereby agrees to indemnify and hold harmless Lessor for, from and against any loss, cause of action, claim, cost, expense or fee, including but not limited to attorney's fees and court costs, suffered or occasioned by the failure of Lessee or Sellers to satisfy their obligations under the Documents. The agreement to indemnify Lessor contained in this paragraph shall be enforceable notwithstanding the invalidity or unenforceability of the Documents or any of them or the invalidity or unenforceability of any other paragraph contained in this Guaranty. 15. All moneys available to Lessor for application in payment or reduction of the liabilities of Lessee or Sellers under the Documents may be applied by Lessor to the payment or reduction of such liabilities of Lessee, in such manner, in such amounts and at such time or times as Lessor may elect. 16. All notices, demands, requests, consents, approvals or other instruments required or permitted to be given pursuant to this Guaranty shall be in writing and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery service or (iv) certified or registered mail, return receipt requested, and shall be deemed to have been delivered upon (a) receipt, if hand delivered, (b) transmission, if delivered by facsimile, (c) the next Business Day, if delivered by express overnight delivery service or (d) the third Business Day following the day of deposit of such notice with the United States Postal Service, if sent by certified or registered mail, return receipt requested. Notices shall be provided to the addresses (or facsimile numbers, as applicable) specified below: If to Guarantor: Uno Restaurant Corporation 100 Charles Park Road West Roxbury, Massachusetts 02132 Attention: Robert M. Vincent Telephone: (617) 218-5215 Telecopy: (617) 218-5375 If to Lessor: Zuno Property LLC c/o U.S. Realty Advisors, LLC 1370 Avenue of the Americas New York, NY 10019 Attention: Mr. David M. Ledy Telephone: (212) 581-4540 Telecopy: (212) 581-4950 10 With a copy to: Proskauer Rose LLP 1585 Broadway New York, NY 10036 Attention: Kenneth S. Hilton, Esq. Telephone: (212) 969-3000 Telecopy: (212) 969-2900 or to such other address or such other person as either Guarantor or Lessor may from time to time hereafter specify to the other party in a notice delivered in the manner provided above. No such notices, demands, requests, consents, approvals or other communications shall be valid unless Lender is provided a duplicate original thereof at the following address: Dennis L. Ruben, Esq. Executive Vice President, General Counsel and Secretary FFCA Funding Corporation 17207 North Perimeter Drive Scottsdale, AZ 85255 Telephone: (480) 585-4500 Telecopy: (480) 585-2226 or to such other address or such other person as Lender may from time to time specify to Lessor and Guarantor in a notice delivered in the manner provided above. 17. This Guaranty is delivered in the State of Arizona, and it is the intent of Guarantor and Lessor that this Guaranty shall be deemed to be a contract made under and governed by the internal laws of the State of Arizona, without regard to its principles of conflicts of law. For purposes of any action or proceeding involving this Guaranty, Guarantor submits to the jurisdiction of all federal and state courts located in the State of Arizona and consents that it may be served with any process or paper by registered mail or by personal service within or without the State of Arizona in accordance with applicable law. Furthermore, Guarantor waives and agrees not to assert in any such action, suit or proceeding that it is not personally subject to the jurisdiction of such courts, that the action, suit or proceeding is brought in an inconvenient forum or that venue of the action, suit or proceeding is improper. Nothing contained in this section shall limit or restrict the right of Lessor to commence any proceeding in the federal or state courts located in the state in which the Properties are located and/or where Guarantor maintains its chief executive office to the extent Lessor deems such proceeding necessary or advisable to exercise remedies available under the Documents. 18. Guarantor and Lessor, by its execution of the Lease and its acceptance of this Guaranty, intend that: (i) the Lease constitutes a single master lease of all, but not less than all, of the Properties and that Lessor and Lessee have executed and delivered the Lease with the understanding that the Lease constitutes a unitary, unseverable instrument pertaining to all, but not less than all, of the Properties, and that neither the Lease nor the duties, obligations or rights of Lessee may be allocated or otherwise divided among the Properties by Lessee; 11 (ii) the Lease is a "true lease" and not a financing lease, capital lease, mortgage, equitable mortgage, deed of trust, trust agreement, security agreement or other financing or trust arrangement, and the economic realities of the Lease are those of a true lease; and (iii) the business relationship created by the Lease and any related documents is solely that of a long-term commercial lease between landlord and tenant and has been entered into by both parties in reliance upon the economic and legal bargains contained herein. The expressions of intent set forth in this Section are a material inducement to Lessor entering into the Lease. 19. Guarantor acknowledges that Lessor did not prepare or assist in the preparation of any of the projected financial figures used by Lessee in analyzing the economic viability and feasibility of the transactions contemplated by the Lease. 20. All of Lessor's rights and remedies under the Documents and this Guaranty are intended to be distinct, separate and cumulative and no such right and remedy is intended to be in exclusion of or a waiver of any of the others. 21. Except as otherwise contemplated by Section 27 of this Guaranty, this Guaranty is solely for the benefit of Lessor, its successors and assigns and is not intended to nor shall it be deemed to be for the benefit of any third party, including, without limitation, Lessee. 22. If any provision of this Guaranty is unenforceable, the enforceability of the other provisions shall not be affected and they shall remain in full force and effect. 23. Guarantor agrees to take such action and to sign such other documents as may be appropriate to carry out the intent of this Guaranty. 24. This Guaranty may be executed in one or more counterparts, each of which shall be deemed an original. 25. LESSOR, BY ACCEPTING THIS GUARANTY, AND GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY LESSOR OR GUARANTOR AGAINST THE OTHER OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY, THE RELATIONSHIP OF LESSOR, LESSEE AND/OR GUARANTOR, LESSEE'S USE OR OCCUPANCY OF THE PROPERTIES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY LESSOR AND GUARANTOR OF ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR LESSOR ACCEPTING THIS GUARANTY. FURTHERMORE, GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM LESSOR OR ANY OF LESSOR'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO 12 ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY GUARANTOR AGAINST LESSOR OR ANY OF LESSOR'S AFFILIATES, OFFICERS, DIRECTORS, MEMBERS OR EMPLOYEES OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY DOCUMENTS CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY GUARANTOR OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED AND IS A MATERIAL INDUCEMENT FOR LESSOR ACCEPTING THIS GUARANTY. 26. Guarantor shall be liable under this Guaranty for the maximum amount of such liability that can be incurred hereby without rendering this Guaranty, as it relates to Guarantor, voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. Guarantor agrees that the Obligations may at any time and from time to time exceed the amount of the liability of Guarantor hereunder without impairing this Guaranty or affecting the rights and remedies of Lessor hereunder. 27. This Guaranty is executed and delivered to induce Lessor to enter into the Lease and is solely for the benefit of Lessor and its successors and assigns, including, without limitation, Lender and its successors and assigns under the Loan Documents, and is not intended to nor shall it be deemed to be for the benefit of any other third party, including, without limitation, Lessee. This Guaranty is a continuing Guaranty and shall be binding upon Guarantor and its successors and assigns; provided, however, without the prior written consent of Lessor, Guarantor shall not assign this Guaranty or any of the rights or obligations of Guarantor hereunder. 28. Guarantor acknowledges and agrees that (i) Lessor intends to collaterally assign all of its right, title and interest under the Lease and this Guaranty to Lender pursuant to the Loan Documents and (ii) upon the exercise of Lender's remedies set forth in such Loan Documents, all of the rights, powers and privileges of Lessor shall be deemed the rights, powers and privileges of Lender and Lender shall be entitled to exercise all of the rights and remedies of "Lessor" under this Guaranty, the Lease and the Loan Documents. Guarantor hereby consents to, and no further consent by Guarantor shall be required for, any further assignment of rights of Lessor hereunder or in connection with any transfer by Lender. All notices, certificates, reports or other information required to be delivered to Lessor under this Guaranty shall be delivered simultaneously to Lender. Notwithstanding any provision herein to the contrary, this Guaranty shall not be deemed to create any obligation of or liability for Lender. Guarantor intends that Lender shall be an intended third party beneficiary of this Guaranty but without any corresponding responsibility, liability or obligation to Guarantor. 29. Guarantor agrees that: (a) the Guaranty shall not be changed, amended, altered, modified, or terminated without the prior written consent of Lender; (b) any consent, approval, agreement or waiver provided by Lessor pursuant to this Guaranty shall not be valid unless consented to in writing by Lender; and 13 (c) Lessor shall in no event be deemed to have unreasonably withheld any approval under this Guaranty if Lender shall not have given its approval. 30. If a tender offer for or other acquisition of any of the outstanding common shares of Guarantor for the purposes of taking the Guarantor private occurs prior to the third anniversary of the Effective Date, then Guarantor, prior to the third anniversary of the Effective Date, shall not incur total funded indebtedness of more than $75,000,000, excluding the then remaining balance of Guarantor's current existing indebtedness to Metropolitan Life Insurance Company, which as of December 31, 2000, was $4,320,039. IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty effective as of the 11th day of May, 2001. GUARANTOR: Federal Tax I.D. Number: UNO RESTAURANT CORPORATION, a Delaware corporation 04-2953702 By :/s/ Robert M. Vincent ------------------------------- Robert M. Vincent Chief Financial Officer, Executive Vice President, Treasurer and Assistant Secretary The undersigned are executing this Agreement solely for the purposes of accepting the terms of Sections 7(c) and 7(d). /s/ Aaron Spencer ----------------- Aaron Spencer UNO RESTAURANT HOLDINGS CORPORATION, a Delaware corporation By: /s/ Robert M. Vincent ------------------------------- Robert M. Vincent Executive Vice President, Treasurer and Assistant Secretary 14 -----END PRIVACY-ENHANCED MESSAGE-----